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Unknown A
If you would give me a 2025 investing primer, I want to know, for the person who just wants like a set and forget investing strategy, where should they be putting their money right now?
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Unknown B
Well, each person's different, right? Some people have different risk profiles, other people have different knowledge sets. But I think that a lot of the timeless investing principles are really important. So you should basically create a system that you can automate and it pays to pay yourself first. So, so what most people do is they get paid, they take the money, they spend it in all their expenses, and they hope there's a little bit of money left over. But a great way to ensure that you're able to invest is to actually take out of your paycheck your investment money first and then spend what is left over. So that's kind of the first thing is you got to get money to be able to invest. Then what do you do with that investment money? And really, I think for the average person, what you want to be able to do is you want a dollar cost average every time you get a paycheck, you want to take some portion of it, you want to put it into the S&P 500, NASDAQ.
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Unknown B
And then I like Bitcoin as well. And the reason why those three assets is because they likely have very long term resilience. They have a return profile that is pretty good. And also they're very simple to understand. You kind of know what you're buying. I think where people tend to get in trouble is if you are a amateur, but you are trying to make professional moves. And so I say, just like the person who goes and plays pickup basketball on the Saturday wouldn't try to go play in the NBA. I don't think that the person who says, hey, I'm going to spend 30 minutes a month on the investing world should try to go and pick individual stocks or use leverage or short things or anything like that. And so understand kind of what your knowledge set is, understand what your kind of competitive advantage would be.
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Unknown B
And for the average person, it's actually discipline. Just simply continue to dollar cost average into very simple kind of plan and then let time and the market do its thing. And usually it turns out pretty well for those people.
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Unknown A
All right, when I look at the market now, it feels like something is changing. It could be that I just only have one lifetime, I've only been paying attention for so long, but it feels like things are really collapsing down to very few assets. So when I look at The S&P 500 that to me is synonymous with the S&P 7, aka the Magnificent Seven, that that's driving the bulk of the returns, that if you really just look, and I think I've heard you say this before, if you were even just to focus on AI and Bitcoin, you would have mopped up most of the recent gains. Is it atypical for things to collapse down to so few assets or is this really just a different moment?
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Unknown B
Yeah, what's really interesting is if you take the US economy in general, it has gone through a shift over the last 50 years or so. It used to be that the US economy was dominated by industrial businesses, manufacturing businesses. You know, you can think of these companies as businesses that created physical things for the physical world. And so whether it was car manufacturers or, or construction or, you know, home builders, et cetera, but we've transitioned very much to a world where now you have what is considered these kind of capital light businesses. They're pretty much software oriented, they're able to create a product they don't need, a manufacturing facility, they don't need nearly as many employees per revenue as they used to need. And those businesses are really capturing a ton of the revenue. And so a very simple example would be, look at the media industry.
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Unknown B
It used to be all about newspapers and magazines. You had to make that stuff and you had to get that logistically out to people and you paid, you know, subscribers and all this stuff. Now you can simply just use the Internet and you can create it. You don't need that plant to print the newspaper or print the magazine. You don't need the logistics. You simply are able to just put it out there in software. And so naturally, as that transition has occurred, the businesses that are better, right, they're more capital efficient, they're able to drive more revenue per employee or more profit per employee, they continue to grow while the businesses that are left in the traditional economy have more of a headwind. And so that shift from industrial manufacturing kind of physical world businesses to these kind of software oriented businesses really is the story of the last 50 years.
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Unknown B
And you can see that in the concentration you're talking about, right? The top seven companies in kind of the S&P 500, the Magnificent Seven, they're all software based businesses that really are pretty special and by a number of different measurements. But also look at the richest people in the world, right? Really, other than Bernard Arnault, who sells kind of a luxury physical item, everyone else is based in the technology world. And so that shift, I think is really driving Changes in our everyday lives. And so naturally that shift in our everyday lives is showing up in investment returns. And you're seeing those tech stocks are doing much, much better than maybe the rest of the s and P500. And so that, I think is going to be the story for the next 10 or 15 years is a continuation of this software story. Marc Andreessen famously wrote this piece about a decade ago or so and he said software is eating the world.
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Unknown B
And we now are seeing very real examples of this. Right. You know, obviously Amazon used software to eat the bookstores. You can see Facebook was able to use software to eat into the yellow Pages. And you kind of go through all these examples. But software is also eating gold with Bitcoin. You know, the kind of, this software based money is really kind of much better and more popular right now than gold. You can also then take that even a step further, obviously with the media companies. But I think AI is really interesting. Like AI is starting to actually eat into the number of employees a company actually hires or employs. And so software is coming for all of these different use cases. And it's going to make the world more efficient. It's going to empower some really exciting cool things around robotics and self driving cars and AI agents and kind of, you know, quote unquote, the future.
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Unknown B
But also as investors, you have to understand, am I betting on things that I hope don't change that would kind of be more of like a Warren Buffett style of investing? Or am I actually betting on things that I hope do change? And that would be more kind of a venture capitalist or tech stock investor? Once you understand who you are and what you're trying to do, then that really allows you to figure out where you're going to go put the money.
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Unknown A
If we're looking back though, over say the last 20 years, are you going to capture value by betting on things staying the same? Or would you have missed basically all of the recent gains if you don't go for the, the software revolution?
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Unknown B
Yeah, what's really fascinating about this is I always like to remind people there's multiple ways up a mountain, right? So there are plenty of people take a Warren Buffett who have been super successful betting on the world not changing. You know, he's owned Coca Cola and American Express and a number of these companies that are really good brands have good business models kind of integrated into American life. And those businesses have continued to compound for a long time now. With that said, obviously companies like Nvidia or Tesla or you know, Microsoft And Amazon, Amazon and Facebook and Google, they have had, you know, a pretty spectacular return over that same time period. They've outperformed in many cases. Now, when you look at a portfolio, I think a lot of young people say to themselves, hey, I use the technology products. I'm digitally native. This is what I understand.
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Unknown B
Kind of my competitive advantage is I can actually tell you, are my friends all using Instagram or are they not right? What is going on? Am I actually shopping on Amazon? Am I using some of these technologies? And so I think that the younger you are, the more you're going to gravitate towards those technology companies. And I think the older you are, the more likely it is that you came up in a time where you really understood some of those more physical world economies. And so it's just two different kind of demographics, really just investing in, frankly, what they know. And so for young people, most who are probably watching this, they're going to be much more attracted to the technology companies. And those have done very well over the last decade.
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Unknown A
So my question becomes though, is, is the Warren Buffett play still a valid play? Or, and, and let me define how I read that. So Warren Buffett, to me, value investing, you look at a company that you think has the fundamentals right, and because they have the fundamentals right, they are going to continue to go up in value over a long period of time. Now, admittedly I am not a Warren Buffett studier, so I don't have a complete breakdown of how successful he been over the last, let's call it seven years. But my gut instinct is that, and I think he's even said, like, you're not going to see another thing like what Berkshire Hathaway did moving forward. Our gains all came from getting into value investing a long time ago and holding for a very long period of time. And so when I think about, okay, I've got somebody out there who wants to set and forget.
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Unknown A
They don't want to be in the mix every day trying to bet on individual stocks. But it seems like the thing that they should be doing if they want to get more aggressive returns without taking undue risk would be to focus on the thesis of software is going to eat the world, that everything is transitioning from the old world of what we're betting on is that value creation maintains over time based on fundamentals in the business to technology is the thing that has the cultural energy. And therefore, as more and more young people begin to invest in a system that they understand, not necessarily a system with Fundamentals, but a system that they understand that they interact with every day, that that's where the gains are going to come from. And I'm just curious if, you know, do the numbers bear that out or am I delusional and Warren Buffett is still just killing it year after year?
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Unknown B
Yeah, maybe. The way that I would describe the difference is Warren Buffett really is trying to do something that most people would consider value investing. And really all value investing is, although it is associated with a lot of the industrial manufacturing businesses, he's basically trying to buy things less than they're worth. So he looks at a company and he's got a bunch of different calculations he'll do and he'll say, I think that this company is worth, you know, a billion dollars. But right now in the stock market, the market cap is only $700 million. And so if I go ahead and I buy this business at a 700 million dollar valuation, then I am pretty much guaranteed to make money because it's actually worth a billion. And so as long as I can wait and don't have to sell this stock, at some point the company will trade back to at least what it's worth, if not more money.
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Unknown B
And so anytime you're buying things for less than they're worth, if you actually do the evaluation correctly, you should make money. Right. And so I think that the value investing style will always kind of be in favor as long as you implement it correctly. Now, to your point, and a point that frankly I agree with and think is probably the focus for most young people, is if you're not a superstar investor in terms of your ability to underwrite companies and do cash flow evaluations and understand, you know, kind of cash on cash returns and things like that, your better bet is to try to say to yourself, okay, well where do I think the technology world is going and how do I go and get exposure to that? And so, you know, my view of the future is one that people would probably put on the spectrum of very excited about what technology will do to our lives.
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Unknown B
You know, I fully believe that we are going to have self driving cars and there may be even a world where humans are banned from actually driving vehicles. I think that we will all have humanoid robots that we interact with on a day to day basis. You can see this obviously in places like, you know, warehouse and things like that. But it's not a farce, you know, kind of thought process to think that we're going to have these humanoids in our homes right now. I always Say that there are, you know, cleaning devices that people put into their homes and it will go around and it'll kind of clean the floor. Well, what happens when all of a sudden you can have a humanoid, they'll do the dishes or do kind of household chores and stuff like that. People probably be pretty interested in that.
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Unknown B
If you go and you look at things like DNA sequencing and crispr technology and the ability to either biohack yourself to more longevity or more kind of healthy years, or maybe to avoid certain diseases with babies and things like that, that seems like a huge, you know, area of opportunity. Then you go to places like Bitcoin and obviously there is hundreds of millions of people around the world who have chosen to take some portion of their wealth and store that economic value in a decentralized asset that is software based, that can't be taken from them and can't be debased by somebody else. And then you go and you look at things like drones and it's obviously changing kind of the entire battlefield and how these things are being used and it's removing humans and it's now becoming much more of a technology batt in these wars.
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Unknown B
And then you can kind of go even a step further and say to yourself, okay, well if all those technologies are happening here on Earth, what happens when you introduce rockets and the ability to inexpensively go up off of the Earth's surface and get into space? Whether that is to go to Mars or to explore more about the moon, or I'm an investor in a company called Varda that is literally putting manufacturing units in space. So they bring pharmaceutical drugs up, they manufacture them in zero gravity and then they bring them back to Earth. And so you think about this stuff and you say, you know, the future is very, very bright because technology is now got the capital flowing to it to be able to build these things. And really we are only limited by our creativity. What ideas can we think of that we can now kind of use software to actually go and implement?
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Unknown B
And so if that is the trend, then really what it is challenging investors to say is hey, do you want to be more of a professional and go pick individual stocks? You can do that. There's more access to information than ever. You have direct access to the market through things like robinhood, public webull, etc. Or you can go and you can simply index, you can buy the NASDAQ 100 or you know, any of these kind of tech oriented indexes and say, hey, look, I actually just want exposure to technology in general, regardless of the way you choose to actually get kind of exposed. I do think that technology has performed very well and will continue to perform very well as long as you don't have to time markets and say, I'm buying today, I'm going to try to sell tomorrow. If you can say, hey, I'm going to buy technology today and I'm going to hold it for a decade.
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Unknown B
Very hard to see how technology does not continue on the trend that it's on.
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Unknown A
Mm. Okay, let me give you my burgeoning thesis. This is a burgeoning thesis, so hopefully the audience will give me space to, to start formulating these thoughts versus being able to give it as crisp as I would like. But I believe, I think it was Elon that said, over the next 10 years we're going to have 100 years of innovation. That quote alone drives my thinking on what's about to happen. And it's a twofold thing. One, I believe that all of the stock market is gambling, full stop, period, end of story. You have gambling with COVID story and you have just pure gambling. So gambling with COVID story would be value investing. I, I, unless you're buying only dividend producing stocks that actually pay you for holding them, you are simply saying, I'm going to buy this because I believe somebody else will buy it for more money down the road.
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Unknown A
And that's exactly how you make your money. But make no mistake, this is just gambling. Okay? If you're gambling, the thing that you want to bet on is cultural energy. Now I like you don't think unless you're going to be in this full time and even then you're probably going to lose your money. I don't think you want to think short term. I don't think you want to be a day trader. I think you want to look at movements that happen over years, ideally half a decade or a full decade at a time. But the next decade to me feels like it is going to be driven almost exclusively by technological changes and rapid advancement. So I'm going to be focusing in sectors that have a lot to do with AI or like Bitcoin. To me, my whole thesis there is, it is a migration from not just fiat but analog money to digital money.
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Unknown A
And so every day that I hold Bitcoin, whether price goes up or the price goes down, I'm just asking myself, is tomorrow going to be more or less digital than today? If tomorrow is going to be more digital, meaning every kid that becomes aware of money and starts dealing with that is going to prefer a Software based money over an analog money, then cool. I want to be where the software based money is going to be and I think that that trend is going to continue as far as the eye can see. With the rapid rate of change we're about to live through, I think this moment is wildly unprecedented. I think the rate of change is going to be unlike anything we've ever seen. I think it is going to be more dramatic than the printing press. I just think it's really, really going to be something quite manic.
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Unknown A
So if this is a, if this is all betting, gambling and the most obvious gamble to me is that everything is going to be more digital tomorrow than it is today, then for a set and forget strategy, while I agree do it at the index level, you want to be focused on technology. I treat bitcoin as my, the place where I store my wealth. That feels like the right play and that what has been happening historically with something like a Berkshire Hathaway is it just isn't going to work on mass is my gut instinct. And it's going to be harder and harder to get value out of that. What I'll call the boomer strategy. And a more likely bet is to bet on the continued migration from analog to digital. Does that make sense to you?
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Unknown B
I do think it makes a lot of sense. If you think about bitcoin, right. The way I treat bitcoin is it is an asset that I buy and I'm going to give it to my grandkids. Now the reason why that's really important is that's not a new phenomenon with just bitcoin. If you think of, let's take the country of India, in their culture, gold is passed down from generation to generation to generation. It could be jewelry or kind of the family, family gold, right. If you think in the United States, land a lot of times is passed down from generation to generation to generation. And the ability to pass these assets on from generation to generation really drives quite a bit of wealth, right. Whether it's real estate, land, gold or any other asset, bitcoin has a lot of the same properties of these assets.
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Unknown B
So if you think about land, it's a finite asset. They're not making more of it. Same thing with bitcoin, right? It's a finite asset. There's only 21 million that will ever be available. If you think of gold, it has sound money principles. It's outside of the system and no one can devalue it. Same thing with bitcoin, right? It's outside of the system. And no one can devalue it. And so I like to think of there's a very small amount of assets that you can buy today. You can hold your entire life. You can pass it on to your kids or grandkids, and that is going to set up your family and kind of those that come after you to be in a really good position. So that's Bitcoin for me. It stores economic value really well over a long period of time. So I want to make sure I have that for some portion of my portfolio.
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Unknown B
When it comes to technology, I am not like a Warren Buffett. I don't want to try to bet on the world not changing. That's not how my mind think. It's not what I'm intellectually stimulated by. I am much more interested in how things are going to change and where that change is going to occur and who is driving that change. And so these new technologies in my mind are absolutely fascinating. And what I notice in the market is that now not only are entrepreneurs having capital available to them, there's tons of people who want to give people money to go and kind of change the world. But also the technology that is available to these entrepreneurs to do this makes them 10, 20, 50, 100 times more effective. And so if you think back to businesses, it used to take forever for them to get to a million dollars of revenue or $10 million of revenue.
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Unknown B
We are now seeing businesses launch and get to $1 million of revenue in the first couple of months. Right. In some cases we have seen businesses that literally are getting to $100 million of revenue in two or three years. And so any time that you can use technology to be a more effective company, to grow faster, to be more efficient, obviously value is going to accrue there. And the way that I think about kind of this brand new future is two things remain true. Who is the person who's actually building the company, whether they're in the public market, the private market, whatever, you're betting on a person, right? The same way that somebody would come and bet on somebody building a manufacturing business or a food business or anything, you're betting on a person. You need to make sure you get that right. And then the second thing is you need to bet on these long trends.
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Unknown B
And the beauty right now is that technology has the tailwind because ultimately there's an economic incentive. And I think that that's really something that gets lost on this, right? If you think about somebody who wants to go start like a local restaurant, and they go and they talk to investors and you say, well, how much money could I make here? There's usually a cap, right? Hey, we have 50 seats, we can turn over the seats three times a night. We're open six days a week. And you do the math and you're like, okay, the most amount of money that this business can make is X dollars. And it doesn't matter how long they're in business, it's just capped. That's what this business can do. But these technology companies, they kind of have exponential growth. So if they start today, they say, hey look, we're making X or Y product or service and we're going to sell that.
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Unknown B
And when we get started, we think we can sell it to a certain number of people. But over the next 10 years, we think that that number can literally go up 10 or 100x. And so there's no cap to the upside of these companies. And a great place to watch this is a company like Palantir. I mean Palantir hit $100 billion market cap. They literally started off basically as a service. They went to companies or organizations that said, hey, we have this, you know, really unique technology capability. Why don't you pay us some money and we'll kind of custom solution for you. And then over time they began to build that into a technology product. Now that technology product is used by people all around the world and they built a hundred billion dollar company. It's insane. And so that's where ultimately I see from an investor standpoint is I want to be in businesses that have unlimited upside potential.
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Unknown B
And if the entrepreneur is good and continues to do what they're supposed to do, then I can put a dollar in today and get back way more in the future. And I'm not capped by physical space or the number of times I can turn over a table or something like that. And so I do think this technology trend is just really, really big. But it's showing up everywhere, right? And I think that but for the people who are watching this, regardless of what industry you're in, technology is probably infiltrating it. And if you think it's not, then you're not looking hard enough. Because right now, if you take AI maybe as the easiest example, AI is coming after blue collar jobs and it's going to come after white collar jobs. You know, the AI and machine learning and self driving cars. Is it going to take away Uber and taxi drivers at some point?
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Unknown B
Yes. When? I don't know. But it's also going to take away truck drivers. And it's going to take away a lot of people who are employed as drivers. But then if you go and you take a look at, well, I know a lot of companies, I was having breakfast with a founder today and he said that he thinks that he can take his company, which currently has 85 employees, and he think he can actually use AI to shrink the number of employees from 85 to 50. But during that time frame, he's going to 5x his revenue, which means that he can take his AI and he can actually replace some of his software engineers, he can replace some of the marketers, he can replace some of the designers, and the software is going to start to do this stuff. And so if that is the path that we're on, is things like AI are going to infiltrate every industry.
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Unknown B
It doesn't matter if you're an accounting, if you're an engineer, if you're a designer, if you're an ops, if you're in sales, whatever. The way that you insulate yourself from this is you become the most knowledgeable person at your company on these new tools because they will be the last person that they can fire is you. And so one quote, unquote, investment you can make, yeah, you can make financial investments, but I also think you can make a kind of career or personal investment by becoming an expert using these things because it will help you continue to be employed, it will help you to continue to drive income, whether you're an entrepreneur or an employee. And that will give you the funds to then go invest in the market. And so this idea that, hey, we're just investing is partially true. I think it's really important that people understand these tools are coming for people's jobs.
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Unknown B
And the people who will survive are the people who know how to control them, who know how to use them to be better at their jobs. And so don't ignore it, actually embrace it. Go become the expert and you'll become more valuable to your company.
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Unknown A
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Unknown A
Use Code Impact. When you sign up and fund your account to get a hundred dollar bonus, just click the link in the show notes and use Code Impact. This is a paid advertisement. Now back to the show. Ooh buddy, do I agree with that? So I think that 2025 is going to be the year of just massive anxiety around AI. You've got Salesforce making their announcement. We're no longer hiring any more engineers. There are going to be a gazillion conversations like the one that you had this morning where people are looking at their headcount and saying how do I shrink this? So not even staying static but, but how do I actively reduce this? I think what that leads to is not in 25 but as we go down the road and that proliferation of AI becomes super ubiquitous that we're going to have to print more money to create a bigger social safety net which is going to push people.
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Unknown A
And this goes back to my thesis that all of investing is gambling. It's going to force more people to become people want me to say educated investors. I'm going to say degenerate gamblers. It's going to force people to be degenerate gamblers to outpace the inflation of printing all of that money to take care of the people that are getting their jobs just absolutely obliterated by AI. And so now all of a sudden it's driving more people into this, okay, where are the big returns going to be? I think that those are going to be in technology. So you get this really weird loop of the more that technology begins eating the world, the more people need that social safety net, the more that we are printing money which requires more people to invest. What are they investing in? They're investing in the very technology that's eating them which causes it to eat the world even faster.
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Unknown A
And so it is this crazy self reinforcing loop. And that's where I start to get very uneasy about what's going to happen to people psychologically during this spiral. But being aware that that's where the opportunity lies, certainly for people that are paying attention, you can begin to position yourself again. I'm an index guy do not think that you can pick the right company, but if you can pick the right sector and hold for long enough to your point about, look for those term trends that I think people can really set themselves up to win. Now, one thing I want to talk about, that to me is tied to that. When I look at microstrategies and what they're doing is I say, okay, people, people that invest actively, you are going to be able to predict their behavior far better if you think of them as a degenerate gambler than if you think of them as some sophisticated Investor.
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Unknown A
And what MicroStrategy has done a brilliant job because he has a company that adds value. It's just not growing. And so from the stock market's perspective, that's a bad company. Not interested, it's not going to grow, not going to invest. And so what he did was say, okay, I know that people want to gamble. They don't care if my company is solid, solvent, well run. All they care about is whether they're going to be able to gamble on this. So let me start doing a bitcoin treasury strategy and then overlay basically the entire stock market. All of the shorts, the options trading, all of that on top of cryptocurrency, which already attracts the most extreme gamblers. And so what you're seeing with MicroStrategy is gambling mainlined. Do you see something else when you look at the just unbelievable success of microstrategies?
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Unknown B
Yeah. So I think, think if you put yourself in Michael Saylor's seat, why does he buy bitcoin to begin with? Right. Do I think that there's an element of, hey, if I buy bitcoin, then the bitcoiners will notice me and they'll start to buy my stock? Definitely. But I think probably the bigger story was I'm sitting on $500 million of dollars of cash. And if I keep holding this cash and it's being devalued, you know, since 2020, the US dollars lost more than 25% of its purchasing power. That would be very detrimental to somebody who's sitting on $500 million of cash. And so I need something else, whether that's real estate, land, gold, bitcoin, whatever. And so I think that was kind of a huge piece of this is, hey, I'm now convicted that inflation is going to be a problem. The currency is losing value.
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Unknown B
I need to convert it to something else. He buys Bitcoin. And I think that it's kind of this thing where, you know, you ever, like Go to the pool. You're like, I wonder if it's cold or not. So you dip your toe in. Oh, it's not that bad. Then you put your ankle in, right? Then you put your knee, and then eventually you go all the way in the water. That's kind of what happened here, right? As he, like, dipped his toe in, he bought, you know, $400 million or so of bitcoin. He waited. He's like, that worked. Let me buy more. Let me buy some more. And then eventually he was just like, I'm jumping in the deep end. I don't need to check the water. I'm buying as much bitcoin as I can. And so naturally, as you go through that progression, it definitely begins to attract people who are much more kind of speculating on the stock.
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Unknown B
And really, the genius of his strategy is he's not just attracting speculators from kind of the equity market. He's also attracting speculators from the debt market as well. The debt market is massive in the United States. And so he's giving the ability for people who have a mandate to buy bonds, say, hey, come and buy these convertible bonds at MicroStrategy. I'm going to give you underlying exposure to bitcoin. So now he just unlocked a whole new pool of capital that wants exposure to bitcoin. And so that has played out very well for them. And you see all these copycats around the world that are all kind of popping up saying, hey, that works so well. Maybe I'll do the same thing. How do I start to raise capital and go and do it? But maybe the bigger story here to me is in the public markets, companies previously had two levers they could pull to improve their business.
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Unknown B
They could drive more revenue, so there's a revenue lever. And then they could also cut expenses so they could pull the expense lever. Micro strategy kind of open people's eyes to know there's a third lever, which is your balance sheet. So you have revenue, you have expenses. But what he's doing is he's buying bitcoin. And by putting things on your balance sheet that go up in value, that is a third lever you can pull. And real estate investors kind of sort of knew this before, right? Because they would have their ability to borrow against their balance sheet and things like that. But this is a whole new way of thinking about it. It. And so I am predicting that there are going to be a ton of public companies that are going to say, wait a second, we don't pull the revenue or the expense lever, we pull that third lever, the balance sheet lever, and we're some people are going to do with Bitcoin.
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Unknown B
We already see companies like Soul Strategies, which I'm involved with in Canada, they're doing it with Solana, but there's going to be companies that do with all kinds of assets. They're going to say, look, let's put this on the balance sheet and let's wait for some capital appreciation to happen and let's continue to play this game where we can now pull the lever of the balance sheet sheet. In that world, the ability to evaluate companies, the ability to be a capital allocator is going to be really, really important. And so I always say that, you know, to be successful in the world going forward, you need to be able to operate companies, you need to be able to allocate capital, and then you need to be able to create content. If you can do those three things, you're kind of a triple threat. And if you look at what is Michael Saylor or Jeff Bezos or a Mark Zuckerberg, right?
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Unknown B
Mark Zuckerberg operates a business, he allocates capital and he's creating content. It may not be the content that you think of, you know, in terms of Mark Zuckerberg as a content creator, but he's able to do this. If you think of Warren Buffett, Warren Buffett operates a business, he allocates capital and he creates incredible content, writes his annual letter, he's got an amazing conference, all this stuff. And so I think the challenge for people moving forward in kind of a digitally connected world with all these technologies accelerating everything, is can you be the triple threat? Can you do those three things to position yourself to be able to capitalize, to be able to actually build the businesses, attract the capital and then go and get customers in a cost effective way? And I think the people who can do that will benefit significantly from these tech trends.
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Unknown B
And if you are one of those beneficiaries, you'll have a lot of capital that you can turn back around. And that kind of spiral that you talked about, you're going to invest it back into the tech companies, which is going to only further your kind of economic status. If you continue to do that over and over again, you will be one of the big winners over the next 10 or 15 years.
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Unknown A
That, that all makes a lot of sense to me. I, I am trying to develop a predictive engine so that when I look at the world, I can say, when this thing happens, it's going to lead to this thing. And when I look at investors as, quote, unquote investors, meaning, oh, there's something of value here, I'm going to put money into this. It does not lead to accurate predictions. When I look at that people's desire, not only desire, that the current printing of money forces people to dodge the devaluation of their money by gambling in the financial system to outpace the rate of inflation. And I look at everybody as these gamblers that are trying to beat inflation, they're being forced into this, then my predictive validity seems to skyrocket. And so I would love for you to point out if there's anything in the following statement that you think is crazy.
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Unknown A
When I look at microstrategies, I see one brilliant move that towers so far above everything else, but it only makes sense when you look at people as gamblers, is that sailor was like, oh, wait a second, I'm not going to dip my toe in the water. I don't need to. I'm going to run a mathematical equation about what people would be willing to bet on. And I'm taking the highest volatility, longest performing asset, and I'm going to put over the top of it all of the. The gambling mechanisms of the stock market. And this is why I think the average person, which I will very much consider myself of, they don't understand. The stock market has almost nothing to do with whether the company is valuable. People do not give a Anthony. All they care about is the really fancy guys. They want to know, can I beat other people at guessing whether this goes up or down?
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Unknown A
Which is why in the stock market, you can make a ton, billions of dollars betting against something saying, this is a trash company and it's going to go down. And Saylor's like, hey, I don't care whether you think it's going to go up or down. I'm going to let you pick the amount of volatility that you want. It is so brilliant. I'm literally. It melts my brain to think about what he's done to go, ooh, you like this high volatility thing. Oh, word. Let me give you all of these different ways that you can bet for it, against it. Short term, long term, high risk, low risk. It's unbelievable. But it only makes sense when you look at it as the entire. I don't want to limit it to the stock market. People may get the wrong idea. The financial system, for the most part, part, is just a big casino.
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Unknown A
And once you understand that, oh, I'm being forced to Play at the casino to beat inflation. And Saylor has built the greatest casino ever. And this is why this guy is. It is he can borrow money hand over fist. It's unbelievable. But it, for me, it didn't click into place until I was like, oh, wait, this is just gambling. Once I was like, oh, he built a casino. Now I get it. It all made sense. Tell me why that's crazy.
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Unknown B
Well, I think a good kind of framework for people to think about is if you want to drive a financial return, you have to take risk, right? And a, you know, kind of old adage in the financial world is the risk you take is the return that you make. So whatever risk you're taking, if you take a small risk, you can only expect a small profit. If you take a huge risk, then you can expect a potentially huge profit, right? But the risk and the return is very much married together. And so obviously the best investors in the world are looking for, how do I take almost no risk and make a massive return? It's just that that doesn't exist very often, right? So usually it is small risk. Big or small risk. Small return, Big risk, big return. And what I think Michael Saylor figured out is this bitcoin thing is highly volatile, you know, 80, 90, 100 Vol asset.
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Unknown B
And it goes up and down, up and down, up and down. But over a long run, it goes up. And so if I put this highly volatile thing into the public market, there's a ton of people who are going to have an opinion to your point, and some of them are going to think that it's going to go up a lot. And some of them are thinking it's going to go down a lot and they're going to bet in either direction. But again, it goes back to people who are investing in that asset. They are betting knowing they're taking a big risk, and so they're expecting a big return, and that's what they've gotten. If you have bet and said that MicroStrategy was going to go short, short, for the most part, you've lost money and you probably lost money big because it has gone the exact opposite way.
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Unknown B
But if you've bet on MicroStrategy and it's gone up a lot, you probably made a lot of money. And so when I think about that type of company is you can expect it to have the same volatility as the underlying asset. There have been times where MicroStrategy has gone up, you know, hundreds of percent. There's been times where it's been cut in half and lost 50% of its value. But it goes back to that idea of, of what is your time frame, right? There was this great study done, I think by Fidelity where they looked at all of the best performing accounts and they tried to find commonality between them. And so what are the best people from a return perspective do? And two of the insights they got were the best performing accounts were from people who lost their passwords or people who had died because people just didn't look at the account for 5, 10, 15, 20 years.
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Unknown B
And so naturally, the same thing here is if you buy some of these stocks, whether it's an index or the individual stock stocks, and they're good companies and you don't look day to day, you just come back in two years, it's probably going to be doing better than it was when you bought it. But the problem that people have is if there's a daily ticker price, it went up today, went down today, went up today, went down today. They're like entire mood is affected. You know, I have some friends who are public market investors. They literally are in a bad mood when the market's down. They're in a good mood when the market's up, right? I'm like, dude, the stock market is determining whether you're having a good or bad day day, like stop looking. And I think that is the challenge for young people is how as you're learning, as you're investing, how do you figure out how to deploy capital but also remain emotionally disciplined so that when the market goes up or down, you don't actually get, you know, upset or excited?
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Unknown B
Because if you go back to the Warren Buffett, Buffett actually gets excited when the price goes down. He's already convinced himself, I'm going to buy, you know, whatever stock if it goes down, I'm excited because I get to buy more of it at a cheaper price. So the joke about bitcoiners is the people who really understand bitcoin, they get excited when it goes down because they can buy more at a cheaper price, right? Same thing with some of these, these businesses. But you got to make sure it's an asset that's going to be around in 10 years, right? That's got, got kind of longevity, got resilience to it, et cetera. And so I think your point about kind of this high volatility, you know, really elicits people who want to speculate is 100% true. And Wall street is better than anyone at creating, you know, kind of speculation Tools or, you know, casino games, as you say.
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Unknown B
Sure. They've got, you know, kind of better ways to describe it. They've got all these models and all this stuff. But at the end of the day, they're risking dollars for a potential return. If they're right, the market rewards them. If they're wrong, they're. They lose. The key thing is there's probably better odds in, you know, the stock market than there is at a casino table. Right. And I think that that's where a lot of people get attracted to. Hey, let me go over here. And one of my favorite stories, I don't know if you know the story of Susquehanna Investment Group. Susquehanna was a couple guys in college, they actually started betting on horses and they were trying to use all this math to figure out which horses were most likely to win the races and do all this stuff. And somebody came to them and said, hey, you guys are pretty good at this like horse betting thing.
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Unknown B
But like, did you know that you don't have to wait for the horse races to bet every day? Like, there's a stock market, it trades every day, right? You can go over here and there's all these horses called stocks. You could pick different ones and run your math models and whatever. And they ended up becoming one of the great investment firms. But it literally was people saying, hey, why don't we take something that works in, you know, kind of the risk taking and gambling world and let's bring it to kind of a more orderly market that we have more access to, there's more opportunities, and let's go and implement it there. And so I do think that there's a lot of these stories where people have crossed over from, you know, kind of pure risk taking with very, you know, unattractive odds to a market like the stock market where they say, hey, there's much more attractive odds here.
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Unknown B
Let me go and, you know, kind of invest here.
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Unknown A
Okay. So to me, that is the perfect illustration of my point that the guys who are betting on horses end up doing great in the stock market because it is the same skill set. My question becomes, why do you think the government and society at large is cool with people betting on the stock market, but not cool with betting on sports?
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Unknown B
So I think that's changing. But what I would say is, you know, there's this really interesting dynamic where people will say, what do you want to do? Why do you want to do it? And the why do you want to do it? Is actually a really important component to whether they like what you're doing or not. Maybe it shouldn't be that way, but that's how it is. I'll give you a couple of examples. Why do you want to invest in companies? Somewhere, someone somewhere along the line said, you know, I want to invest in companies because I want to give capital to entrepreneurs so as entrepreneurs can use it to build products and services and corporations and create jobs and economic activity and, you know, GDP growth and all these things. That sounds really good. People said, hey, we like that idea. Let's empower, let's.
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Unknown B
Let's fund kind of American companies. So that, that, that's okay. Somebody came along and said, you know what we should do? We should create a lottery system. System. And you know what would be a great thing to do with the proceeds? We can use it to fund the education system within a state. And so there's many states across the United States where they literally have a lottery and the odds are not good. You know, there's like one in a billion chance of winning or something. And the proceeds are actually used to pay into the education system, the schools, the teachers, you know, all that kind of stuff. Well, all of a sudden, what do you want to do when I create a lottery? Well, I don't know if I like that. Why do you want to do it? Oh, we're gonna help fund the schools.
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Unknown B
Great idea that gets approved. Sports gambling right now is very much. What do you want to do? I want to bet on sports. Why do you want to do it? Because it's fun. That answer hasn't been so, you know, well accepted. But I do think that it is changing now because really what ended up happening is kind of twofold. One, there was like this, like, black market of gambling that had been going on for a long time time. And they kind of realized, hey, we can't control this. So it actually may be better to pull it into the regulatory apparatus, put some rules around this kind of sanction this stuff. And it probably is better actually for the market participants. But two is there's revenue source. And so states started to really say, hey, look, we should legalize this because we're actually going to make some money.
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Unknown B
And I forget the exact numbers. So somebody will probably correct me if I. If I get this wrong, but I think it's something like in the first two or three years, the state of New York has generated like $12 billion in revenue from sports gambling. And so again, whether it's 12 billion, it's 1 billion, or it's, you know, 20 billion, it's some Big number that is going to the state. And so whenever you see that, you say to yourself, why is it that this was not legal and now it's becoming legal? Why do you want to do it? Oh, because the state's going to get money. And so that, I think, is really what's kind of transitioning it. Now, what I will say is there is a potential risk where it all comes down to the odds, right? So again, if you're investing in a company, the company, some are winners, some are losers, but there's disclosures.
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Unknown B
There's a lot of things that happen in the public markets that make an investment, quote, unquote, safer than maybe trying to pick what color is the Gatorade going to be when somebody dumps it on the coach at the end of the gate game. That is like, you know, very pure play. Kind of, you're right or you're wrong. Now I'm in the situation where I always say to myself, look, I think Americans should be able to do what they want with their money, right? That's kind of the beauty of America. The. The kind of belief in financial freedom is you should be able to do what you want with your money. But I also think whether you're investing in a company or you're betting on sports or you're doing something in between, you also should have as much information available to you as as needed needed.
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Unknown B
And so things like company disclosures, et cetera, is really important. The public markets, things like in sports betting, having an understanding of the odds and various other topics is really important as well. And I think you see a lot of states saying, hey, what is the standardization of that stuff? And the beauty of this is there's going to be winners. Like, there will be people who are very good at sports gambling, right? There will be people who are very good at stock picking, and there will be people who somehow continue to be really good at lottery, you know, participation. I'm not an expert at gambling or the lottery, but there are people who understand this stuff, right? No different than somebody like an Ed Thorpe. Ed Thorpe, you know, went to Las Vegas and he figured out a couple of different tricks of how he could actually outsmart the casinos, made a lot of money doing it.
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Unknown B
And so there's this economic incentive that sits out there. And if you look at. Think about sports gambling, I'm aware of a number of different outfits where they might as well be hedge funds, right? I mean, they're calculating all this data. They're really trying to get smart about what odds are Priced correctly and not correctly, and where's the risk reward and all this kind of stuff. And then I would actually even take it a step further. Maybe one of my big predictions over the next 10 or 15 years is that these prediction markets are going to become a massive part of society. So when I talk about sports gambling, I'm literally talking about, hey, the super bowl is coming up, there's going to be two teams that play. I can bet on the game, I can bet on the score, I can maybe do some prop betting in that specific game.
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Unknown B
But right now, a really interesting detail is there's a platform in the United States that is approved by the CFTC called Kalshi K A L S H I And I was recently talking to their team and just trying to get an understanding, hey, how does this work? What are people betting on? You know, where are these people coming from? Are these hedge funds? Are the individuals, whatever? And the guy pulled up the platform and he said, you want to know what people are betting on today? He goes, one of our biggest markets, people are betting $25 million a day on what the highest temperature will be in New York City tomorrow. And I sat there and I said to myself, oh my God, there's $25 million per day that is being wagered on what is the temperature going to be tomorrow in New York City?
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Unknown B
And so is it going to be 14 to 15 degrees? Is it going to be 15 to 16 degrees? It's going to be 16 to 17 degrees. Tens of millions of dollars. And this stuff just started, right? I mean, this stuff is all pretty brand new in the last year or so. So as that continues, there will be prediction markets for everything. You'll be able to bet on who wins an Emmy or an Oscar. You'll be able to bet on. Does a certain thing happen in the world, right? Does somebody get elected or we saw the presidential election, like, who's going to win the debate, who's going to win certain seats, who's going to become the president, all of these things. Now you're going to start to be able to bet on it. But one of the things that I think is really important to call out here is, although there will be plenty of critics to say, oh, that's just another form of gambling, gambling, I do think that there is going to be this kind of meshing of many of these markets, whether it's sports gambling, prediction markets or stocks.
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Unknown B
And maybe a good example is, let's say that I am very interested in Tesla and I continue to look at the company and evaluate it. And I know that an earnings call is coming up and I want to bet not on what is going to happen with the price movement of the stock. I have an opinion on are they going to hit their delivery number or not. And right now in the stock market, what people have to do is they say, okay, if Tesla hits their delivery number or beats it, the stock's going to go up. But what in practice happens is Tesla will beat this delivery number and then Elon will say something in the commentary and the stock will dump because people will say, oh, Elon is bearish about next quarter or something. So now all of a sudden you said, hey, I was right on the thing that I wanted to bet on.
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Unknown B
But there was all these other factors around it that actually the stock market moved against sense to me. Well, in a prediction market, you can actually go and you can bet just on will Tesla beat on the delivery number or not. It doesn't. Nothing else matters. It's just a yes or no. It's a binary thing. And so you can imagine in the financial world all these different details that people would want to bet on. What is the delivery number you could even do? Well, Elon mention, you know, dogecoin three times or more in the earnings call. That could be a prediction market. And so you get into this very interesting world where I think the mainstream media is going to start to cover these prediction markets, because these prediction markets actually are telling us the truth. Because it's a market dynamic that's determining it, rather than kind of opinions of journalists, bloggers, you know, people with Twitter accounts, etc.
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Unknown B
And so if that starts to happen now you have stocks, gambling, you know, kind of in sports and prediction markets, we now become in a society where, where actually economic value being wagered is a signal for what you believe or how you think the world is going to play out. Which sounds a hell of a lot like investing in companies and trying to predict which one's going to succeed and which one isn't. Right?
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Unknown A
Ding, ding, ding. Yeah, that. That is exactly what I'm talking about. That is an utterly fascinating glimpse into a potential future that I think is all too plausible, that basically people are just going to turn into gambling machines. Yeah, it's interesting because I think the stock market has. There's so much knowledge required that it keeps out the average person. I don't know if it's a good or bad thing, because as we go to things that people think that they already understand, like sports or, you know, will he mention Something three times in the next earnings call that you're just going to see a lot of people gambling, gambling, gambling, which then brings about squid games type people getting themselves in trouble. It's. It can be dystopian really fast. Okay, so speaking of people's pension for gambling, what do you think about meme Coins?
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Unknown B
Yeah, so, you know, I should say first, before we talk about the meme coins, like the gambling in general, I actually think is a pretty big fool's errand for 99 of people I just described. In sports gambling, there are basically the equivalent of hedge funds being set up where they're calculating all this data, etc. Etc. If you think you're going to sit down on a Sunday morning, you know, go to the store, get some beers, get ready for the games, and then all of a sudden you're going to like, outperform the hedge funds. It's probably going to be pretty difficult to do. And so what we're seeing is the kind of the professionalization of these markets. And so if the odds are further tilted against you, your odds of losing obviously are much higher and there can become a spiral. It's why you see the gambling hotline numbers and stuff having to be be promoted alongside any of these companies.
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Unknown B
And so I don't think we want to become a gambling society. Like, I actually think that would be pretty detrimental to the United States. And so there's like a, like a paradox of we want people to be able to do what they want with their money, but also we can recognize that if everyone was just gambling all the time, that probably wouldn't be great for the productivity of the United States and happiness and things like that. And so meme coins are kind of like the final maybe version of this. And I'll give you maybe an analogy of kind of how we get to meme code. Meme coins, Right. So we talk about Berkshire Hathaway. If you think about Berkshire, 90% of the value of the stock is because it's a great company. They have cash flows, they've bought things less than they're worth. Like, Warren Buffett has really perfected the value investing kind of approach.
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Unknown B
But 10% is the, like, Buffett bump, right? People love Warren Buffett. He's kind of like the aw shucks grandpa from Omaha. He's been able to build this brand and kind of, I would argue, almost like a pseudo religion around his approach. And, you know, he's got his annual substack that he sends out, but really it's just called an Annual letter. He's got a conference that people, you know, kind of go to Mecca in Omaha or the financial mecca, and they go and they check it out. It's kind of like this, like, finance influencer for boomers, right? And that's really important because 90% of the value is the company and the cash flows and the assets, etc. But 10% is that Buffett bump, the Buffett premium. And so that's been amazing for Berkshire because it obviously helps on the stock price. But more importantly, he wins deals because of it.
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Unknown B
People want to sell their company. Because Warren Buffett bought my company, he's able to attract capital, all that stuff. So you can think of that as like 90% company, 10% meme, right? And people are like, oh, Buffett's not a meme, whatever. But, like, it's the same idea, right? The brand, the meme, whatever you want to call it, 10% of Berkshire go to Tesla. Tesla is maybe 50, 60% company, 40 or 50% mean, Elon's the greatest marketer of our generation. He's got this rabid fan base online at times. Tesla's traded at massive premiums. He's been able to attract capital. He's been able to do things because he's got that brand or that meme, right? And so you get Berkshire is kind of there. Tesla is the next step. Take it to the third step, which is the Trump Media stock. DJT is the stock ticker. It's like a $7 billion company on $4 million of revenue revenue.
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Unknown B
So that's like 10% company, 90% meme or 90% brand, right? Now, if we look at, they basically inverted from Buffett, 90% business, 10% meme to DJT is like 10% business, 90% me. Well, the next logical step is literally a meme coin, which is 0% business, 100% meme, right? And so, like, we've been going down this path now for 40, 50, 60 years. It's just that we finally reached the final form, which is people are saying, like, screw it, we don't even need a business. We can just launch these things and whatever brands tied to it, people will ascribe some value to it. And so the scary thing for somebody who is thoughtful, who thinks of themselves as kind of a sophisticated investor, they say, what is underlying this? How do I underwrite it? And the answer is, you're never going to be able to underwrite it.
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Unknown B
So from that standpoint, you think this is insane, crazy, you'll never buy it. And you think it's stupid. Stupid, right? 80% of my body is in that category, but 20% of my body is in the category of man. Something's going on here, right? First we saw kind of no name people do this. Then we started to see kind of smaller brands or celebrities. Then we saw bigger ones do it. Now it's the President of the United States, it's Donald Trump, right? These are the biggest brands in the world doing this thing. And they've created 30, 50, $70 billion of market cap depending on. When you look at the, the, at the coin, is it sustainable? I have no clue. Am I buying it? Absolutely not. But we gotta pay attention to this thing because it feels like this is some version of a collectible or a trading card or whatever.
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Unknown B
And so I think there's a lot of people looking at it through a financial lens, but I actually wonder, is that the wrong lens to look through and instead you should look at it through the entertainment lens. People are buying these things because they want to be entertained. It's almost like a video game to them. And if we get into a world where people's portfolio starts to look like a video game, people are going to lose money. It's going to be more akin to gambling. Like there's all those issues that we talked about, but doesn't mean that we're going to stop, doesn't mean that they're not going to be more of those in the world. And so to me, that is the difficulty of evaluating kind of the meme coin world world is there's nothing underlying it, there's no utility, it's not used for anything.
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Unknown B
There's no product, there's no service, there's no revenue, there's no anything. But there's a brand attached to it. Is the brand worth $30 billion? You'd be hard pressed to find someone that's like, yeah, 100%, but it's probably worth something. But again, you're playing a game where there's massive risk and the question becomes, is there enough juice worth the squeeze? Right. Like, you know, if you go and you buy these Meme coins, if there is no assets, no product, no service whatever, what do you do? Well, like I think you're to your point, you're just gambling, right? And if you want to go gamble for entertainment purposes, like, hey, you should be able to do whatever you want with your money. That's not my investing style. Right. So I, I kind of take a different approach.
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Unknown A
Yeah, I think Meme coins are where we all just admit, oh, this is what it always has been from top to bottom. The stock market, all the financial system, it. It is all gambling from top to bottom. And when you get to a meme coin, everyone just agrees that the emperor has no clothes. But everywhere else, I point and I say, oh, the emperor has no clothes. And people like, oh, Tom, you're an idiot. You don't know what you're talking about. And I'm like, nope, There's. There's virtually no predictive validity to people's behavior. When I think of them as like a strategic Investor, there is 100% predictive validity. When I say, oh, you think that you'll be able to sell this for more money down the road? Now, I'll go back to this idea of a cover story. A good business with sound financials. All of that gives you a great cover story.
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Unknown A
But I think the real reason that works is it. It becomes like legal contracts where the vast majority of people just get. They get blocked out of the system because they don't understand it. So most people don't invest because they just don't understand it. And so they don't go gamble on that thing. They'd rather just go gamble on sports. Because at least the sports they gamble, they can gamble based on emotions. And I get it. There are going to be people of all intellectual strata that cannot stop themselves from betting on something, to your point, which is how people get themselves in trouble. They do things on leverage, and so they can lose more than everything. It can literally be a wildly negative balance. But once you understand all of it is gambling, and some people just have way stricter. Like, if I go to a casino, first of all, I don't gamble.
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Unknown A
But if I were going to go to a casino, I would find the thing where I can play the longest, I can enjoy myself, that I'm not going to lose a ton of money. Cool. That's my strategy. So I'm going to play something like the stock market, where I can be like, well, if I stay in for 10 or 20 years, I'm probably going to be fine. I'm not going to get the big upside that other people are going to get. But cool. But as we really take off the shackles, when the President is launching his own meme coin, I think we can agree that we're more or less, at least for the next four years, we're taking off the shackles here, here. And we're just saying, all right, why do people want to bet on the Donald Trump mean coin? Because it's going to have extreme volatility because people are going to pay attention because he is going to be constantly in the news.
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Unknown A
And so now you're just allowing people to bet on that without having to go to polymarket or something else like that, where it's like, okay, how many times is he going to say greatest of all time in the next speech? Instead you just go, trump brand up, down. But ultimately it. The reason that people are going to gravitate towards these big cultural moments is because where the cultural energy goes now you're able to bet on that. And again, it makes sense when you just go, oh, that's all any of this is. Agreed that it's degrees of risk. It's some people really need to embrace. No, no, no. There are fundamentals here. There's something that I can base my underwriting on, all of that, but all of that is just to facilitate people gambling. Now with the stock market, the one thing I will give it is by creating this gambling pool around these companies, you're able to let those companies raise money and do incredible things.
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Unknown A
So in terms of is it justified to let people gamble on it? I like it way better in the stock market because it does something for the economy. The betting on meme coins is never going to do. And in fact, I think there's an argument to be made that by letting people gamble on meme coins, you're really dissipating capital because all the capital that would otherwise be forced to gamble inside of a system that brings capital to businesses, that create things that we want, that generate gdp, all of that, that sounds like it has a better knock on effect. But to what you said earlier, oh man, it's like you gotta let people decide what they're gonna do with their own money, but it really won't be only positive. And so this is where I think we're. I'm very glad that we don't just do what I think we should.
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Unknown A
I'm very glad that this will be something that will be decided by a lot more people than me. But whoo, buddy. Like, this is. I don't think there's any way to say people shouldn't be able to do it other than to say you're too dumb and you need a nanny.
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Unknown B
One of the things that recently kind of came back up in my memory is in 2016 or 2017, I went to Nigeria. And in Nigeria, you know, most people would think about the country and they'd say, oh, they're probably way behind the United States. It's Probably a very different culture, etc. Nigeria has about 200 million people that live there. It is a very young demographic. It's growing very quickly and it's estimated by about 2050, 2055, there will be more Nigerians in the world than Americans, to give you a sense.
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Unknown A
Right.
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Unknown B
So growing very quickly. There's very high Internet penetration and very high mobile phone usage. And so it's a kind of a technology forward country given those demographics and the penetration. And one of the most eye opening experiences I had in Nigeria was the country's love for soccer, what they call football. And they, everywhere we went they were watching games. And I think I kind of expected that part. But I saw one thing that I wrote about when I came home and I said, I saw the future nature which was in Nigeria. They had these betting houses so you could basically go to physical location and you could walk up to the counter and you could make a bet on whatever game was coming up. And you know, I wasn't really paying enough attention to know was it prop bets or just, you know, bet on the score or what people were going and they were exchanging physical money, but they had a bunch of the TVs on.
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Unknown B
So you could literally sit there in the room, you could watch the games that you just bet on, right, with your friends and then you go back, you bet on more games, whatever, whatever. But on the far right of all these screens was one game. And when all the other games were either over or done with or a commercial or whatever, this game kept playing. And it was kind of far for me to see. So I walked over and said, what are they watching? And I realized that they were actually watching video games. It was a video game of soccer. And so I said to one of the kids, I said, hey man, who's playing? He said, oh no, none of us are playing the game. It's a simulation. And they were betting, they were betting on the simulated video game. So if you ever play like Madden or you know, NCAA or you know, NBA 2K, whatever, now you can like simulate a game and it'll have the teams play each other, but nobody's actually playing.
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Unknown B
That's what was going on. And they were betting on it. And so I was sat there and you know, kind of the, the naive American saying, like, well, how do you know this not rigged? How do you know that? You know, like whatever.
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Unknown A
Literally just wondering who, who oversees the algorithm that creates.
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Unknown B
Like of course, right in America there's like no trust whatsoever. But these guys were sitting there and they were playing this game. They were like betting on this simulated game. And so I think that, that actually, if you extrapolate that out, the meme coins, there's quote unquote, some algorithm. The algorithm is just the market is making this thing go up and down, and it's got people's attention and they're betting on it. And we're sitting there saying, like, this is insane, but it's actually just a natural progression. It doesn't mean that you should go do it. But it's not hard to see, again, going back to volatility, if there's something with a big brand on it, with lots of volatility, that can get the media to talk about it, of course people are going to pay attention. And then if you essentially dangle an opportunity in front of them to say, do you want to bet on whether this goes up or down?
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Unknown B
Like, go to the local state fair, and people are trying to shoot basketballs that are too big to go into the basketball rim. I wonder if I could do it right. They're trying to slam the hedge, the sledgehammer to see can I hit it hard enough to make the, you know, thing go up. They're trying to shoot, you know, paper target with a pellet gun that doesn't quite shoot straight. So when you think about all those things, you say to yourself, like, man, do you think they're not going to bet, go up or go down? Of course they're going to bet on go up or go down. Right? And so I think that it is much more an entertainment lens than it is a financial lens. The question is going to be people are putting real money into these things, and are the regulators, are certain people going to step in and say, hey, I know that human nature is to bet up or down.
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Unknown B
We're not going to let that happen. Or we're going to. We need to change the rules or standardize, or there's going to be disclosures, you know, whatever. I think that's the stuff that now is going to really come to the forefront, that the president's got a meme coin.
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Unknown A
All right? You have the impulse that people should be able to do whatever they want with their money. But do you think that. That meme coins should be regulated and really tamped down on? Or do you want to see people betting on anything they want, including simulations, meme coins, whatever.
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Unknown B
I think that there's a middle ground. Doesn't have to be yes or no. I think it's yes with changes is probably the right way to Think about it. And so, you know, disclosures, who's launching this, how much do they own? Could they sell in the market? When are they selling in the market? And one of the things that I think the public markets really gets right is, is if you're the, you know, CEO of a company and you own a lot of the stock, you got to tell people when you sell, like that seems pretty fair, right? And so those are the types of things where rather than attack individuals ability to do what they want with their money, maybe actually what you should do is you should attack the other side of the problem and say, how do we give these people as immense amount of information as possible?
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Unknown B
You know, if you want to go and let's say that you're the CEO of a company and you want to write a tweet about your own business, there's tons of disclosures, there's tons of rules and regulations, all this kind of stuff with a meme coin, that stuff doesn't exist. And so it may actually be less about do we tell people what they can do with their money or what they can't. And more about if people are going to do this, if they're going to issue these things, if they're going to, you know, kind of offer these opportunities, there's a ton of rules, regulations, standardizations, etc that get put in kind of in place. And you know, what this really feeds into is if you think about the public markets, probably one of the biggest, maybe complaints from public market investors right now is that the public market is much less popular than it used to be.
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Unknown B
There used to be 8, 000 public companies. Now there's like 4,000 public companies. So people look at, yeah, huge drop, 50% drop. And if you think about that drop, people are like, oh, companies are staying private for longer. They've got more access to capital. It's really expensive to be a public company. That's really erroneous in terms hard it is to comply with all the regulations and you know, all these things. And so naturally companies want to stay in the private market if they have access to that capital. But what they don't suggest is actually the public markets are more popular today than ever before. We have 4,000 publicly traded companies on what we would consider the traditional stock exchanges. But there are hundreds of thousands of publicly traded tokens. And so people not only said, hey, if I have a company, I want to stay in the private market, but also there's a bunch of people who said, hey, I want things that are publicly tradable But I'm going to not go to your stock market.
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Unknown B
I'm going to go to these new markets and have them publicly trade over here. And so it's very clear that it is the cost of regulation, the burden of the regulation, all that kind of stuff. But you want people to be protected. And so that's a natural tension that I think has to get worked out of. Is there a way to make this less costly for people to have public companies? Is there a way to allow more and more people to participate earlier in the life cycle of these innovative businesses that are getting built in America, but also still get them the information they need? But that crypto world is all these new public kind of assets that are trading means that that young generation that everyone thinks is an interest in the stock market, they want liquidity, they want public markets. They just don't want to do it in the world that the stock market currently exists in.
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Unknown B
And maybe one of the best examples is I invested in the private market in Red Reddit and Reddit went public. And when Reddit went public, I was really excited about the ipo. I was like, oh, my God, look at this. All these guys on Reddit who use it all day long that talk about stocks, they're gonna go buy the Reddit IPO because that's the platform they use. Great. You have, you know, some stock, there's more demand, the price should go up. And the stock did pretty well. But a couple days before the ipo, so a bunch of people started tweeting at me and I was like, what is going on here? And they kept talking about Reddit. And then all of a sudden I realized they were talking about Reddit Coin, not Reddit, the stock. I said, what is Reddit Coin? I went and I looked, and someone had created a Reddit Coin right before the stock went public.
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Unknown B
Well, on the day that it went public, guess what happened? They both went up. But the Reddit coin went up way more than the Reddit stock stock.
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Unknown A
Why?
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Unknown B
Because you just had people who were looking for a traditional stock. Investor wants to understand what are the assets we own? What's the cash flow? What's my downside protection? Where am I in the capital stack? Right? What is our future plans? What is kind of our 2025 outlook? How are we thinking about, you know, AI as a threat or an opportunity, all these things. So there's a ton of evaluation that goes into it, and there's just as much focus on what's the downside as what's on the Upside. Upside. But actually, there's usually a lot of people who want to buy a stock who simply say, I want pure price exposure. I don't care if I have a, you know, a claim on the assets. I don't care if I have a claim on the cash flows. All that stuff is for the smart Wall street people.
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Unknown B
I just want to speculate on the price. And so the coin has none of this stuff. I just want to know, coin up or coin down. And you can imagine for me, from an investor seat, I'm holding the equity, right? I did the smart thing. I did, you know, frankly, the legal thing. And so I'm like, oh, okay, wait a minute. The world is changing. How is it that on IPO day, the people on the Internet are buying a coin that's going up more and it's somehow tied to this thing? And so I walked away from that day saying to myself, if you don't understand something, you can't knock it, right? Because maybe you're missing something, maybe you don't understand something. And I really went. I spent a lot of time trying to understand this and that. My conclusion was there are investors who want to own businesses, kind of, you know, the Buffett or maybe the tech investors, et cetera.
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Unknown B
They want to own the equity in the business. They want downside protection. They want to claim on assets, cash flows, et cetera. But there is enough people in the world, they just want pure price speculation. And a coin gives them more volatility. And if the Reddit stock goes up, the coin goes up more. If the red stock goes down, the Reddit coin goes down more. And so it's almost like a levered price, you know, a levered volatility on the price. And so that's when I said, you know, look, man, this game is hard. This game is real hard, right? And you just got to kind of tip your hat and say, look, things change very quickly and try to do your best to keep up.
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Unknown A
What do you think? How much of that is the Wall street bets? Fuck the man ethos going on with that.
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Unknown B
It's impossible to put, like, a percentage on it, but it definitely plays into it for sure. You know, one of the interesting things is if you go back and you look, you know, I recently read a book on Carl Icahn, and Carl Icahn is this famed, you know, kind of corporate raider. He is known as one of the best activist investors in history. And when you read the book, you know, he's called King Icon, title of the book. And in the book they talk about how Carl Icahn thought of himself as an outsider and he had the like, f the man, you know, mentality. And the reason why he became an activist investor is because he felt like corporate executives and CEOs were flying around on private jets and they had country club memberships and these big salaries and they were taking the money from the shareholders to enrich themselves, but they actually owned very little equity in the businesses that they were running.
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Unknown B
And therefore they were incentivizing themselves to get rich at the expense of the shareholder. And so he would start buying up the stock and he would go and say, you guys are enriching yourself. You should do this, this and this to the company so that the shareholders actually make more money. And you know, activist investing, short investing, this stuff is very important to the market. It's kind of a check and balance on what's happening in the market. But people wouldn't think of famed Carl Icahn, you know, kind of the king of Wall street and activist investing, as the guy who's saying like, f the man. But that's, that's literally why he started doing some of the stuff. And so again, people want to point to like Wall street bets like this brand new, it's actually not. Right, right. It's just that it's a new form for that same energy.
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Unknown B
And so I think that the form factor is much more kind of interesting and worth paying attention to than the energy of like, you know, f the man. There's plenty of people over the years who've had that mentality. And some of the funny things are like, the biggest billionaires in the world have that same mentality. You know, Elon Musk sitting at the, I think it was the Dealbook Summit one year, and Andrew Ross Sorkin asked him about advertisers and he said, you know, go F yourself. And he said, what did you say? And he turned to the audience and he said, just so I'm super clear, advertisers, go F yourself. And you're like, all right, well that guy's like the richest guy in the world. And he definitely has the like fu, you know, man energy, right? It's just a different form factor. And so I do think Wall street bets is, you know, one cohort of this rise of self directed investors.
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Unknown B
And to me, the self directed investor trend is fascinating because the self directed investor is the doctor lawyer who sits at home and is investing. The self directed investor is also the mid level manager who goes home and studies stocks on the weekend the self directed investor is the portfolio manager at J.P. morgan or at a hedge fund that's trading their personal money. Everyone feels like they personally are a self directed investor now. And self directed investor means that you have access to information. So you're on Twitter, you're on Reddit, you're you know, reading the news, etc, you don't need to call up the bank and say, hey, what do you think? What's going on? You just get the information yourself. And then there's been a rise of these tools, things like, you know, Etoro, Robinhood, Public Webull, etc, where now I don't need to call financial advisor or a broker and actually go and execute trades.
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Unknown B
So now what I've done is I've broken down the friction to information and to the market and I've empowered individuals to be able to go and do this. Why is those self directed investors start allocating in the market, do you think some of them are going to be like, well, screw the hedge funds, screw the, you know, the CEOs, screw the man, screw the incumbents, of course. And so you know, is the best way to kind of put that forward buying certain stocks like you know, Gamestop and you know, kind of f demand and let's go and short squeeze people, people, it's one form. Buying the, you know, Reddit coin instead of the Reddit stock, is that another form? Absolutely. Buying meme coins and trying to make more money than your dad or grandfather or mother or grandmother is in the stock market, that's another form, right?
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Unknown B
Like these are all different variations of the same thing where people are saying, hey, I'm trying to get ahead, I'm trying to risk capital and get a return. And maybe it looks different, different, but it's something that I understand or I believe in or I'm gambling on whatever. And so I think the question just comes back to, you know, if we fast forward 10 years and we look backwards, who's going to make more money? The speculators who are trying to time markets and you know, look at these different trends or the people who are trying to allocate capital to kind of highly resilient assets that'll be around in 10 years. They're both speculating, right? But I think that young investors, the best thing they can do and the reason why I said, you know, buying, buy the indexes, buy Bitcoin, things like that is what you really want to be able to do is not optimize for what is the thing that I can buy that can go up the Most what you want to do is you want to buy the thing that you have the highest degree of confidence will continue to grow
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Unknown B
year after year after year for a long period of time. And it's really hard for young people to think about compounding. Right. You know, when you're 22 years old, you're not thinking about when I'm 55. When you're 55, you wish you were thinking about it when you're 22, right. And so it comes down to this idea of are you trying to buy an asset that's going to go up 20x in a single year, or would you rather buy an asset that's going to go up 20% a year for 20 years? That's the question people face, right? And I think that the people who are kind of more long term thinking throughout history, the data shows they tend to do much better than the people, you know, kind of just trying to win, you know, the short term, kind of get rich quick games.
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Unknown A
I have to keep running this thought against more historical examples, but I have a feeling that a very substantive percentage of what's happening among the young people that are investing in things like Reddit Coin instead of Reddit the stock is this is an echo of the Occupy Wall street movement where they feel isolated from a financial system. They're in a worse place now than their parents were at the same age. They feel like the American dream of buy a house and everything else is going to take care of itself. It doesn't exist that something has happened to the system that has leveraged it towards the old and against them. And I think there's a lot of resentment built up in the system. And the thing that people just do not think enough about is you're going to have incredibly intelligent people that are going to find a way to get out from under that system.
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Unknown A
And so I think they're the. The old proverb of is if somebody is not embraced by the village, they will burn it down to feel its warmth like this is. There is a reason that they launched Reddit Coin at the same time that Reddit the stock was going live. Now part of it is it's just smart because you know that people are going to be talking about it. So now there's going to be attention. You can run in the parallel system, but you also know that you're going to take that liquidity just like you were expecting that, oh, this is going to flood in because all these guys use it and they're going to want to be participating in the system. It feels like the stock that was made for them, them and they're like not, you guys had your chance. We're going to create a parallel financial system.
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Unknown A
Now you're bringing up a really interesting point which is in this parallel financial system, I think that there, there isn't the long term trend. This is all cultural energy. It's very fickle, very high volatility. And so people that are day trading are going to get a lot of mileage out of it if they can win in the long run, which most of them will not be able to. But I get the attraction. Not thinking about compounding, getting something right away, but over time, what will the market that they control turn into? Because boomers are going to die and they're ultimately going to control what this financial system becomes. And I am so curious to see if it's just a classic example of you're very rebellious when you're young and suddenly you start having kids and you realize, whoa, whoa, whoa, I can't deal with this level of extreme volatility.
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Unknown A
I need something that's going to earn over time. So I'm curious what it becomes. But I again, going back to this idea of building a predictive engine, when I look at it and say there's a lot of resentment here, it makes more sense than if I just assume that it's something that's more familiar or they're more digitally native.
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Unknown B
That's part of it.
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Unknown A
But it feels like if you don't account for the resentment, it doesn't make as much sense.
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Unknown B
There's this whole element of kind of revenge or, you know, kind of the resentment you're talking about. And historically there's a lot of people who probably were upset by something, but they couldn't really do anything. And you know, it's funny because in the book, one of the things I talk about is compete, don't complain. And what's really interesting about this idea is let's take for example the, the United Healthcare shooter, which you know, obviously is incredibly tragic. And in that scenario you have an individual who was upset with the insurance company and rather than compete, he essentially decided that he was gonna go find somebody in the industry and kill them. But in a competitive world, the better story and probably what would have affected more change and obviously wouldn't have led to the death of an individual and then ruining of his life is he sat down and he said, I'm a smart guy, I've got an engineering degree, I'm going to build a better health insurance business.
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Unknown B
And I'm going to figure out how to do this so that it helps people. And so if you then extrapolate that and say, look at what Mark Cuban is doing with cost plus drugs. Healthcare system is pretty broken. Prescription drugs are really high. He's figured out this model to go and actually do cheaper drugs online. Competing, not complaining. Right? And so it goes back to this idea of like, maybe a part of in the financial world is people are saying, hey, I'm done complaining. Occupy Wall street, did it really affect any change or should we compete? Now you're going up against a highly regulated industry. And so naturally there's going to be a lot of, you know, kind of questions about laws and securities and things like that.
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Unknown A
But.
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Unknown B
But is that part of the story? Absolutely. Compete, don't complain. And so I think that if you go throughout history, how many companies were started out of spite or out of revenge, right? Somebody gets fired and they go and they start a company to take on their old employer. How many people, you know, applied for a job and didn't get it? I mean, if you look at WhatsApp, WhatsApp was bought for like $22 billion. Jan, the CEO and founder, it's got a famous story. He applied for a job at Facebook and got turned down. Down. So then he only started WhatsApp and then WhatsApp bought his company for $22 billion. Right. Like, how many stories are there of that in history? Tons. Creating a, you know, crypto coin almost seems amateur hour compared to building a $22 billion, you know, company that gets bought by the people who turned you down.
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Unknown B
But it's still the same theme, right, is somebody got scorned somewhere and, you know, they're on a mission.
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Unknown A
No doubt. What's interesting here, to your point about this, is a highly regulated industry that they're going to be competing against. One of the things that young people, I think, think are really aware of and they're taking advantage of is the rate of change of these technologies is too fast for regulators to keep up with. And so they're able to get in, spin these companies up, bet like crazy, move on to the next, onto the next, onto the next, before regulators are going to be able to do anything. And if the thesis is right, that in the next 10 years, we're going to see a hundred years of innovation, good luck keeping up with the regulatory burden on that. There's just going to be so much wild Westeries, it is going to be crazy. So, yeah, what comes out on the other side really does feel like it's on the other side of the technological singularity.
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Unknown A
I can't see around that corner. I just know that when there is this rate of change and you get smart, fast acting people, the change will be the thing that dominates. And the only option that the government will have, which I think will get pushed back on aggressively in America, is to be authoritarian and clamp down from the top down. And this is why it scared me so much with what the Biden administration was doing with AI where they were just like. And this from Mark Andreessen was really unnerving when he said, oh, they just told us outright do not build AI companies because we are going to control, there's going to be a very few. And while I doubt they use the phrase regulatory capture, that was the implication that we're going to work hand in glove with them. They're going to be compliant, there's not going to be anybody else.
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Unknown A
And when I think already how much I rely on AI, oh man, it is crazy to think that the government would be able to get their tendrils in there and really control it. So with Trump in office now, I don't think we're going to see that same push for top down control. I think we're going to see a push for innovation, things that hit the bottom line, gdp, so that he can point to that and brag about it, quite frankly. And so it's going to be wild, man, these next four years are going to be wild.
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Unknown B
If you put somebody in the White House that measures the success of the US economy by the stock market and by the bitcoin price, odds are those things are going higher. Right? And so if you need those to go higher, there's a bunch of manipulation that can happen with monetary and fiscal policy. But also you just need the companies to be better, you need to make more money, you need them to drive revenue, you need them to innovate, you need, you know, the R and D, et cetera. And so a great way to do that is to deregulate, is to empower them to do more. And so if you think about Trump's plan, he is really saying, hey, I want to reduce taxes, I want to deregulate, I want to, you know, kind of empower our entrepreneurs, which likely should drive to more profits, higher stock prices, higher asset prices, more money in individuals pocket, you know, that are invested in the market, market.
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Unknown B
And all of that leads back to him claiming victory, that hey, I implemented my agenda. And so I think that the odds, you know, barring some sort of external shock is that that stuff's going to happen. And so if you take that to the extreme, you say to yourself, okay, with these AI companies, if now all of a sudden they do have the freedom to go and innovate, what are they capable of? We're probably underestimating. You know, one of my favorite quotes is Bill Gates has this famous line where he says, says we underestimate or excuse me, we overestimate what is possible in two years and we underestimate what is possible in 10. And so if you think back 15 years ago, who could have ever thought coming out of the global financial crisis that we'd be here where we are today? Nobody. Who would have thought, Just look at Bitcoin, one asset.
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Unknown B
Who would have thought that Bitcoin would be a $2 trillion asset? Nobody, right? And so if you start to look at this, you say to yourself, okay, well what about, about 10 years from now, 15 years from now? It's crazy. The iPhone is less than 20 years old, right? And you think about just how ubiquitous that is. Do you think about just how much this idea of a touchscreen supercomputer in our pocket has changed our lives? If you think about something like that iPhone release also came with gps, which empowered things like Uber and food delivery and all of these other use cases releases simply because there was GPS in the phone. Now those things all got unlocked by one single product release. And so if you then take that, what other product releases are going to come out? You know what's possible now because chatgpt or Perplexity or name your different thing.
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Unknown B
Three years ago, four years ago, nobody talked about prediction markets. Prediction markets were the first and most accurate market to determine the US Presidential election. Right?
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Unknown A
That's crazy to watch.
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Unknown B
That's four years ago. No one that wasn't even in the lexicon. And so you kind of look at these things and you say, man, we're getting this rapid innovation now. And some of it's because we're all digitally connected, some of it's because capital is more abundant. But a lot of it, frankly, is. I blame the social network, the movie. If you think about that movie, that movie red pilled an entire generation of people that they want to be founders, founders. And they watched the movie and they're like, that looks cool, I want a startup. And it made startups from like the nerd activity that your parents would yell at you because you didn't go get a real job to. Then all of a sudden it said startups are cool. You can go and you can do this. And it's actually a high status thing. And we had an influx of people that went and started companies.
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Unknown B
And so if you think about things like even movies or music or whatever, completely change society in a way that is really hard to know in the moment, but you only can see it with hindsight. And so what movies are going to come out next? Right. You know, one of the stories right now that I think is just absolutely incredible is J.D. vance. J.D. vance was born, I believe, in West Virginia to a drug addicted single mother, one of the poorest countries, one of the poorest parts of the country. He was just sworn in as the Vice President of the United States. States should not be possible anywhere in the planet that you can go from the situation he was born into to the second most powerful person in the world. Only in America is that possible. Economic and social mobility. And along the way, he was in the Marines.
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Unknown B
He went to college. He then went to Yale and got a law degree. Right. He became an investor. He, like did all these things. Then he became senator. Senator. He was a senator for less than two years, I believe, and became the Vice President, United States. So you look at that and you say, when is that movie going to come out? Because that movie would probably be pretty inspiring and empowering to a lot of people in the United States who are saying, hey, I was dealt a bad card, a bad hand of cards. I need to figure out, how do I get out of here? I need to figure out, how do I improve my life? How do I improve my family, family's life? And the craziest part of that entire story is that when he was sworn in the other day, he had his wife, his three kids standing beside him.
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Unknown B
And a lot of people didn't notice, but there was a woman standing next to the person who was reading him. You know, what to repeat? That woman was his mother. And she's been sober for 10. She's been sober for 10 years. And I was reading into her story and actually one of the reasons why she got sober is because she was inspired by her son.
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Unknown A
Wow.
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Unknown B
And so you say to yourself, a story like that comes out in a movie, it will empower the country, it will inspire people, it will tell people that in this country there is mobility. The same way that the social network kind of red pilled all these people and said, hey, you can become a founder. And so then it asks the question of, we talked a lot about technology and the rapid, you know, kind of acceleration that we're watching AI is going to change the way movies are made. And you know, I know you know quite a bit about all the ideas of brands and various things. Right. As AI starts to change the way that movies and content is created now we're basically going to empower and democratize access to moviemaking and we can actually accelerate. How many people can we empower and inspire? How many people can help spread ideas in a way that's entertaining for folks?
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Unknown B
Folks? And so the same way that military movies are really, really instrumental for the US army or Navy or Marines to be able to go and recruit people to join the military. These movies are really important for society. And so I think about these technologies not just from a pure hey, what socks do you buy? But the kind of second and third order effect. If now all of a sudden we can triple or 10x or 30x the number of movie makers and they can do it because it's cheaper, they got the tools at home and they don't actually need to go spend all this money to, you know, film all these different scenes. What's possible? I don't know. I don't have a crystal ball, but it feels like that's a pretty important thing that's really going to change the fabric of society as more and more people can tell inspiring stories.
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Unknown A
Yeah, no doubt about that. That, that is going to get weirder than people think in terms of just the amount of stuff that will come out the way that people will try to influence slash control you with media. And now that the cost drops to zero, you're going to be getting pulled in a thousand directions. What's real, what's not real? Yeah, that, that one is something I think a lot about is somebody who sees himself in that, in that world. Yeah, that I will say the entertainment side of my business is the one that has has existential AI risk. Just because once it is truly ubiquitous, it'll be amazing. From our ability to take in incredible stories to your point, it will all be democratized, demonetized, will be very easy for very talented, very incredible storytellers to make sweeping epics, you know, on, on the scale of a Marvel movie, Cutting through the Noise is going to be a different story.
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Unknown A
But, but that's going to be really fascinating. Before we go too far down that road though, I want to talk about inflation. So underlying all of this is a story of inflation. I think that the fact that we can't run a balanced budget and we're printing money like crazy, Trump is in office and is going to do what some people think is going to be very inflationary. What do you think is going to happen to inflation in the near term term?
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Unknown B
So inflation, the headline, you know, title right now is that inflation has come down, but that's not really true because inflation was sub 2%, meaning that it was growing, you know, 1.8% year over year before the pandemic. It then spiked at one point, was growing at 9% year over year. And that's the official metrics. There's an unofficial measurement that's much higher, but let's just use the official ones for this conversation. And so now what we have is inflation has come down. It's like 2.9%. And so people say, wow, it fell from 9% to 2.9%. That doesn't mean that inflation stopped. It just means that it has slowed and it's still growing at 2.9% year over year. 2.9% is 50% higher than what the Federal Reserve's target of 2% is. So we are still elevated levels from where they would like us to be. The reason why that's important is because you compound inflation.
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Unknown B
So if it goes up 2% in one year, it goes up 5% the next year, then it goes up 9% the next year, and it goes up 3% the next year. Right. Obviously that is not sustainable. And so what we have seen is there's been a bifurcation from an impact standpoint in the economy. People who had financial assets benefit from inflation. When inflation happens, those asset prices go up. So you see in countries like Argentina. Argentina or in Venezuela or other places that have high inflation, those are some of the best performing stock markets every year, because a stock is one share, right. And the denominator is usually the local currency. And so if you're devaluing it, well, it used to be, you know, a hundred pesos to buy that one share. But now this currency has lost so much value that now it's a thousand I10X.
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Unknown B
And so the same thing happens in the US is as inflation hits, the asset prices go up. So if you're holding assets, you're getting richer. The problem is 50% of Americans don't hold investments. They sit in 100% of their net worth in cash. So what is happening is, as that inflation is happening, the rich people with assets are getting richer, and those without the investment assets are actually losing money. So if you've sat at a hundred dollars in a bank account Since January of 2020 till today, your hundred dollars can buy only about 70 to 75 cents worth of goods. From 2020, it's lost 25 to 30% of its purchasing power. And that is why you see the bifurcation. And we have this wealth inequality gap. It's not some evil billionaire thing. It's not, you know, anything other than it's actually an education gap gap, which is some people know that you have to buy investments and they benefit from the dollar devaluation.
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Unknown B
Other people don't know that, and they save. And so savers are losers in this economy and investors are winners. And so it's a structural thing that really affects people. And it's why you see, why are wealthy families or asset owners, their kids usually do pretty well. Some of it may be environment, or maybe their parents are good or, you know, whatever thing. But a huge part of it is they teach their kids, buy assets, don't sit in cash. Like that is the one lesson. If you could teach every kid in America one thing, and you wanted it to have the most profound impact on their financial future, you would teach them, invest, don't save. So if you think about inflation going forward, we're still elevated to that 2.9%. There are a number of things to be excited about that could potentially get inflation to come down.
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Unknown B
Technology is very deflationary. So if you look in all areas where technology has an impact, those prices tend to come down over time. If you think of Uber, used to be really expensive for you to get a private car. Now you can press a button on your phone and it's pretty inexpensive and it shows up within minutes. That is a deflationary element of technology. If you think of TVs, it's like one of the craziest things. If you ever wanted to go buy like an 80 inch, you know, screen TV, you'd go to the stores like thousands of dollars. You can go now, they're like 400 bucks bucks. Still not, you know, $5. But the cost has drastically compressed. And the TVs are better. They're higher quality, more definition, better surround sound, like all these things, right? And so you've got a better product for less money.
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Unknown B
That is technology being deflationary. And the beauty is that if you're able to get tons of technology into the economy, it's this downward pressure on inflation because that deflationary element is applying now. The problem is that while technologists and entrepreneurs and business owners are trying to create productivity, they're trying to drive this kind of deflationary aspect of technology. We have politicians who didn't get the memo. And so the politicians are spending money. They're creating inflation. One of my, you know, favorite quotes of all time is Milton Friedman, the famed economist. He says that inflation is only created in one place as Washington, D.C. easy. It's nobody else's fault. It's not created anywhere else. The politicians create inflation by spending money, by printing. And so if you look at right now, the US national debt is increasing by $1 trillion every 100 days. But here is the more concerning part, is that it used to be maybe every two years, then it was every year, then it was every six months, then it was every three months, it was every two months.
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Unknown B
Now we're at 100 days. And so every hundred days we are adding a trillion dollars to the debt. At some point, if we continue on this path, it'll be every 90 days, it'll be every 80 days, there'll be every 50 days. Because what we're watching happen is not just that inflation is going, but interest rates are higher, higher. So the interest expense on the national debt is higher, meaning the government's having to pay more and more money to interest. Right now we spend more money on the interest expenses for the national debt than we do on the defense industry of our country.
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Unknown A
That's so crazy, crazy.
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Unknown B
We're basically paying more on our interest payments than we are to defend our country. And so you start to say to yourself, okay, that's obviously a big problem, so what can we do? Another thing that we can do to positively impact inflation is we can actually go and we can cut cost. We can say, hey, right now we have a $2 trillion annual deficit. All that means is we spend about $6 trillion a year and we take in about 4 trillion. There's $2 trillion deficit. That's not good. That's like making $80,000, but actually you spend 100. How long can you do that for? Right? Got to keep taking on debt, debt. That's what the US Does. And so what we can do is we can start to put a dent in that, and we have to get back to a surplus. Now. The United States has not operated at an economic surplus in more than 20 years.
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Unknown B
I think it was like 2000 or 2001 was the last time we operated at a surplus. So it's been nearly 25 years since we actually did not have that annual deficit. And cutting cost would be a big boom to doing that. That's why you see the establishment of the Department of government efficiency, Doge with Elon, etc. And so can they do it remains to be seen. They're going to try, though. Pretty important, you have Trump coming into office saying, hey, we're not going to spend on some of this stuff. We're actually going to get rid of some of these departments. We're actually going to stop some of the, you know, insane spending that they're doing. But on top of that, he also wants to go and drive revenue. So, again, if you go back to an individual's, you know, kind of financial statement or you go to a business, they have two levers.
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Unknown B
They can drive revenue or they can cut expenses. Cutting expenses is what Doge is tasked with. That would really make a dent in that national annual deficit. But if you want to make more money as a country, you have two options. You can look internal, the Internal Revenue Source Service, irs, they tax you so we can raise taxes so that we make more money. It's like raising prices in the grocery store. The, the grocery store makes more money. And so naturally, people don't want their taxes raised. So the next option is, rather than look internal, we can look external for more revenue. And so Trump has established something via executive order called an External Revenue Service. Just exactly what it sounds like. Look outside the US Rather than tax the people, find me other revenue. One of the areas where he believes there's a lot of revenue to be captured, structured is tariffs.
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Unknown B
Tariffs are basically a tax on foreign countries and corporations if they would like to bring their products to the United States. So if you make the products in the US you don't worry about the tariff. If you make the product somewhere else, you want to bring it to the country, you got to pay a higher tariff. We have tariffs on some countries, other countries have tariffs on us. It's the way that global commerce works. Now, if you go back in history and you look, look, actually a bulk of or majority of the US Revenue used to be from tariffs, and there was almost no income tax. So it used to be that we taxed other people to benefit the American people, but at some point, that switched, and now income tax is the bulk of the, the revenue, kind of internal revenue comes from taxing the people, and tariffs is a very small percentage.
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Unknown B
So now we are taxing the people in the United States to benefit people outside the United States. And so Trump's entire idea is, let's switch that back. Let's start tariffing and taxing these other people internationally so that then it can benefit the United States. We don't have to raise taxes here. We can drive more revenue. We can get the balanced budget, and then we can get inflation come back down. Now that sounds amazing. One of the big questions that people have is if you add that tariff, tariff to these products that are coming into the United States, won't the companies just raise their prices? So now it becomes more expensive for Americans to buy these products, which would then contribute back to inflation. So the question of our tariffs actually inflationary, very highly debated topic right now. And so one, it really depends on how do you implement the tariffs.
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Unknown B
Right. If you're talking about 1, 2, 3, 5%, probably not that big of a deal. There's been numbers like 25% that have been thrown out out. A 25 tariff would have a significant impact in the market. And so how you do it and who you do it to is pretty important. And so I.
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Unknown A
So he's already put 25 on Mexico and Canada. Do you think that that is going to be inflationary or do you think that it's somehow not?
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Unknown B
So I think that he's threatened Canada and Mexico and he said, hey, I'm gonna do it. But both of them came to the table very quickly and said, hey, let's negotiate, let's do, let's kind of make some deals. And so his supporters will say the tariffs are actually a bargaining chip. He, you know, he's the art of the deal. He's a master negotiator. What he's doing is he's threatening them with a stick and then he's offering them a carrot in his other hand. And so they're showing up to the table and they're saying, I don't want the 25% tariff. Please don't do that. You're going to destroy our economy. You're going to really make a big problem for me. What do you want? He says, fine, I won't put the 25% tariff if you close the southern border. If you, you know, ABCD other thing.
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Unknown B
And so that's one idea is that these are just negotiating tactics remains to be seen. But the other thing is, what he also has said is that he is trying to incentivize people to manufacture in the United States. So he says, look, the tariffs aren't a problem if you just make your stuff in the US So rather than run around the world and try to go to Southeast Asia and find somewhere where you can manufacture really inexpensively, build your manufacturing plant in Ohio, build it in Arizona, build it in a local area in the United States, employ American workers, and you don't have to worry about the tariff. And so if I put a 25% tariff on something coming from Thailand or China or wherever now, that 25% would make it more cost effective to actually just make it here in the United States. And so there's this game getting played in this kind of global, complex economic machine where what he really is trying to do is he's trying to drive American manufacturing, bring back American jobs, he's trying to drive external revenue for the United States to benefit the people here.
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Unknown B
And it really all falls under this banner of, quote, unquote, America first. Now, great plan. It remains to be seen what the risks are. And there's plenty of critics, right? And I think the critics have some validity in some areas, and I think the critics are wrong in other areas. But, but what you ultimately, I think I find solace in is regardless of who the President is, regardless of who anyone voted for the path that we're currently on, we can't stay on. We can't operate with a 36, $37 trillion national debt adding a trillion dollars every 100 days on inflation at 2.9%, home affordability, the worst it's been in 40 years. And a southern border that's porous. Right. Manufacturing jobs that are leaving the US En masse, and an education level. You know, there's a stat, one out of every five Americans can't read above a third grade level.
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Unknown B
Whoa, crazy numbers. One in every five Americans cannot read past a third grade level. So you say to yourself, okay, we gotta fix that stuff, right? And so if we can't stay on the path we're on, the first and most important thing is we gotta do something different. He's at least and him, his administration are gonna do something different. Different. Is it the right plan? I don't know. I don't think anyone knows. Right. It's kind of like it's almost like we're going to run an experiment. There's a lot of data, there's a lot of studies, there's a lot of things that have gone into formulating this experiment or this plan, but we really are not going to know does it work or not until we get three, four, five years from now. But we just know we can't stay on the path that we're on.
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Unknown B
So there's a lot of people who are advocating for this plan is bad. Maybe it is, maybe it isn't. But I know for sure, 100%. There's almost, you know, unified agreement that the path we're on is the bad, you know, wrong path. And so I think that becomes really interesting where you think about this inflation. Because if the tariffs are inflationary, if some of the policies are inflationary, could we have inflation come back? Absolutely. Is it going to happen? I don't know. But if we're already at 2.9%, if the Fed's cutting interest rates by 100 basis points already, and now you have these policies that come in that potentially could be inflationary. If you said to me, hey, we are, you know, in 2026 and sometime between now and 2026, we saw inflation at 4%, 5%, it's possible. Is it probable? Eh, you know, that's a pretty big leap.
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Unknown B
Something would really have to go wrong. But at 2.9, could we go to three and a half? Absolutely. And anytime that you start to creep up again, it hurts the bottom 50% of Americans that just hold cash, but it will enrich the 50% of Americans that have investable assets. And so what I always tell people, kind of going back to the beginning of our conversation, is like, how do you invest? I always say to them, whether you agree with the system or not, whether you think that the structure is fair or not, you, I and them can't change it. Nothing we're going to do. We can yell and scream all we want, we're never going to be able to change it. But what you do control is if inflation is available or higher than it is right now, are you going to benefit from it or are you going to get hurt by it?
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Unknown B
And so if you want to benefit from it, you got to be invested. If you want to be hurt by it, you would sit in all cash. And so it's kind of this idea of like, regardless of how you view the structure of the system and the fairness of it, your personal thing that you can control is, are you invested in the market or not? Doesn't mean you have to go take immense risk. Doesn't mean you have to go buy meme coins or any of this stuff. Right. But it does mean that again, what did I start with? S and P, NASDAQ 100, Bitcoin. Bitcoin. You can make, you know, the s and P500 the bulk of your investment portfolio. You can put a little bit of nasdaq, a little bit of Bitcoin, probably going to do pretty well over the next decade or so.
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Unknown B
Right. But it really comes down to what you're betting on is inflation is not going to zero, it's just going to be above zero. And so these assets are going to continue to Go up. Maybe the rate of change or the appreciation, you know, kind of percentage each year varies. But it is very hard to see a world where those three assets are not much higher 10 years from now because of inflation and many of the issues that the country faces.
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Unknown A
Yeah, when I look at Trump's policies, it seems inevitable that in the short term it is. He's either going to get every concession that he wants in the negotiations, which I doubt, or he will slap tariffs on as an incentive to drive manufacturing back to the US it will create short term inflation in that you're now if, if he can generate revenue off of the tariffs, lower people's income tax, at least in that case, while you will get inflation, it becomes discretionary. If he is wise and makes exemptions for things that are the basics, the essentials that you need, food, shelter, energy, things like that, that. Okay, cool, those aren't going up. Some of the discretionary things are going up. But at least I control my money. I have it. It's not being taken away from me. I think people will be able to handle that.
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Unknown A
I do think though there's going to be, they will have to put a focus on getting some of the regulations out of the way because of somebody living in California. We have these grand projects and we're not able to actually move forward with them because there's so many regulations that stop even the government from running its own project projects that people are going to realize very quickly that back in the day when we were able to live off of the tariffs and only to either not tax, not do a federal income tax at all, or keep that federal income tax in the neighborhood of 1% which would be shocking for people to hear that we did that. But back then we had a really strong, really strong manufacturing base here. We were not a globalized world, so we were making everything here in the US less.
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Unknown A
So if somebody wanted to bring something in here and we tariff the life out of it and it became more expensive or hit parody, you had American made options at that time, which we will not have now, at least for some amount of the future. And so while we spin up the manufacturing base, which I think is going to be measured in the three to seven year range, it's not going to be super fast. This is not World War II where, you know, we turn on a dime and all of a sudden instead of making a bunch of, of Fords with the, the assembly line, we're making battleships and things. We're just not gonna, that you're starting from scratch. This time. So I think there's going to be a little bit more sloth in the system than people are prepared for. But to your point, we have to change something.
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Unknown A
And so it'll be very interesting. I, I want to get your take on this. So I think one thing people have to think about when you talk about America first is there are, there are two parts of that and I think they need to be rank ordered. So part number one is you are born here, you're a citizen, and so we want to make sure that you're employed first and foremost. Okay. That would be one interpretation of America first. And the other would be that we want to make sure that America remains number one on the global stage. And so whether it's H1B visas or whatever, we are, are attracting the best and brightest from all over the world to bring here to make sure that we are out innovating everybody else in the world and whether that's in military or whether that's in technology, but we're just out innovating.
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Unknown A
We have the strongest economy in the world. And so we're already peers with China in some ways they are ahead of us economically. And so we really have to be thoughtful about that. Now. To me, America being number one, having the strongest economy is the most important thing. But I know that that's going to set people on edge and they want to make sure that because you're American that you're getting employed first. And I think that that could weaken our standing internationally. And I think having your standing weakened internationally is the more problematic because we are going to be able to do less things to make your life better here in the US Whether social safety net, job opportunities, whatever. And so while I think they are both incredibly important and I do understand why Americans would feel betrayed trade if we're importing a bunch of people from all over the world.
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Unknown A
But remaining number one should be the most important because it will have the biggest impact on everyone's lives. That's my instinct. And I think it takes a very small number of people, relatively speaking, to ensure that we keep the strongest economy. What do you think about that? Yeah.
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Unknown B
You know when you ask yourself what is America? America really is a melting pot of people from all over the world. World. My family. If you go all the way back, somebody came here from Italy, then another person came from Italy, another person came from Italy. Right. If you go and you look at many people, they came here from somewhere else, whether it's them or their families. And so America really became America because We took the best from around the world, whether it was the best risk takers, the smartest people, whatever, and they all came here. Here it was the land of opportunity and people were able to take risk and get rewarded. And the capitalist, you know, kind of democratic system is the greatest system ever erected. The founding fathers were able to be incredibly prescient in their thought process. And this is probably, you know, the thing that has the best shot of continuing to exceed moving forward.
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Unknown B
But in the debate of H1BS or other, you know, kind of immigration, legal immigration, visas, etc. The hard part about it, the reason why it's so controversial, is everyone's right. That's the part that people don't want to talk about. So what do I mean? Everyone's right. There's a cohort of people who say that American citizens should not be hurt and given less opportunity by people who are coming here from elsewhere. True, you're right. Americans should not be at a disadvantage in their own country. Country, okay? Another cohort of people say, hey, I operate business, I need the best people in the world. True, they do. We should find the best people, whether they're American or not. Everyone should have an equal opportunity to go and work there and the employer should be able to hire whoever they want. Then people say, well, the H1B program is abused.
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Unknown B
True, there's definitely abuse in the system. You can go and you can look, you know, there, there's this famous example of one of the big four accounting firms. They're literally using H1BS to financial level account accountants. You're telling me you can't look in America and find an entry level accountant. Why do you need to go elsewhere to do that? Right? And so again, true. Then there's people who say, well, actually what we're doing is we're incentivizing all sorts of other issues where people are basically getting into certain universities simply to get visas, etc. True. Like that's absolutely happening. And so you just go through this debate there, there's, you know, know maybe 20 different perspectives on the debate. Every single person is correct, whether it's a small correct or a very big correct in their viewpoint. And that's why it's controversial is because when you go and you talk to each one of these, you know, kind of perspectives and you hear them out.
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Unknown B
So you're right that that 100% is happening. So what is the solution? Right. If everyone is right, what is the solution? And I think that one of the best examples is that there's got to Be, be a merit based system where the best person wins. With that, we have to educate American citizens. Rather than spend money internationally doing all kinds of stuff, let's invest that here so that our people have the skills and experiences necessary to build our companies here so we can be successful on the national stage or on the international stage. And so what you can say is that the best analogy I've heard about this is kind of like a sports team. Team, right? A good sports team wants to really have a lot of homegrown talent. That should be the bulk of the team. And every once in a while you want to import an overseas player, the Dodgers go and they get a player from Japan, pretty good player, right?
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Unknown B
If you look at Wembley in the NBA, pretty good player, right? And you go and you do this over and over again. But if you have homegrown talent, that should make up the bulk of the the team, then you go and you get specific skills or experience and you bring them in. But then what do you do? You invest in baseball, what do you do? You invest in your farm team. You want to have homegrown talent, you got to put money there, got to give them opportunities, right? You got to go and you got to work, you got to hire coaches, you got to do all this stuff. And so I think that is the hard part about the, the conversation is that no one extreme is correct. If your position is the H1B program is perfect and there's no abuse, you're not correct. If your position is, hey, we should have zero legal immigration, your position is probably not correct either, right?
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Unknown B
And so the truth is that the, the answer is in the middle and the middle is kind of the, the messy part. People don't like the answer of, okay, we should really spend a lot more time, energy and money on helping Americans be better educated, more experienced, etc. 1 in 5Americans aren't literate past the third grade level. We should probably fix that, right? And guess what? The money the government spends, you know, $6 trillion. We got the money, let's fix it. But also, it's true that there are people who come from outside the United States that are just as capable, if not more capable in certain fields that we should go ahead and we should have them go and do it. And so one of the things I always point to is there's a lot of people who say, I buy American made product that's exclusive exclusively.
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Unknown B
Okay, well, there's a lot of products that you use on database on a daily basis that are not made in America because Somebody can make it cheaper or somebody could make it better, right? Are there American products that are great? Yeah, of course. I know a guy in South Carolina. He makes weights like iron cast, you know, like barbell weights made in America. It's like one of the only people supposedly that makes American weights. It's got good business. A lot of people want to buy weights made in America, right? But there's also a lot of people who say, just give me the cheapest one, right? Like, you know, it's all 225 pounds on the bench press. 225 pounds. Like just get the weights on for the cheapest cost. So it's all different preferences for different people. And so I think that when you look at this, you have to say to yourself, okay, is it true that immigrants have come here and created a lot of value?
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Unknown B
Elon Musk, great example. Jeff Bezos, American born Jeff Bezos's parent, not born in America. And so you don't just get the individuals, but then you get the parents, the grandparents, the great grandparents, the great great grandparents, etc. And what you realize is ultimately the debate really comes down to do you prefer nationalism or do you prefer excellence? And rarely can you get both. Because the greatest nations throughout history have always sought the best technology, regardless of where it came from, the best people wherever it came from, the best ideas wherever they came from, the, you know, best capital sources, regardless of where it came from. And so the same thing here is the most patriotic thing you can do do is to make sure you, your family, your children and those around you are as best possibly suited to succeed in America. But then you should also hope that we're able to build an all star team of people from outside the United States who come here.
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Unknown B
Let's get them going too. Right? And so it's very much this like team effort. But people specifically on the Internet like to debate back and forth worth on these like black and white scenarios. Should there be legal immigration or should we have no immigrants? The answer is that it's just, it's too simple of a, you know, kind of choice. Instead, why don't we take the people that we have, do as best of a job as we possibly can to educate them, make sure that they have equal opportunity. Like going back to your point about American citizens, I think where people get really upset is that they say, wait a second, I'm being penalized for being an American in my own country. Country that doesn't feel right. Level the playing field, give everyone an equal opportunity. Let the best man or woman win. Sometimes it's going to be somebody who comes from somewhere else. That's okay.
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Unknown A
Yeah. This is going to be a raging debate because, yes, I agree with you, we have to fix the education pro problem, but it's going to take a long time for that to turn out a crop of people. That's why I think we have to rank order this stuff. Yeah. So you've been getting more into politics and we've sort of subtly moved from finance to politics and back again. The two are very connected. What originally got you into beginning to think more politically and commentate on it?
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Unknown B
I think that there's a lot of folks in tech and finance who were disinterested in politics, but politics became interested in them. And so it's really the political arena that's pulled a lot of people in. Bitcoin and crypto is a great example where I think most people said, hey, let us do our thing, right? We see an opportunity, we're deploying capital, we're holding an asset, we're building companies, et cetera, just let us do our thing. And the political arena kind of came for the industry. And so there's a lot of people who said, oh man, I got to pay attention to this. I don't know if Mark Zuckerberg or Jeff Bezos really cared about politics until the political arena kind of came for them. I don't think Elon Musk probably cared about politics until the political arena came and knocked on his door and said, you know, we're coming for you.
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Unknown B
And so I think that it's less about these people are getting interested in politics. It's more of they have identified politics as a crucial component of their business now because the politic kind of apparatus came for them, them. And so when you look at it from that perspective, you're right, they are intertwined. And if you look at bitcoin as maybe the purest example, bitcoin success and failure on a day to day, week to week, month to month basis very intertwined with banks, regulation, politics, et cetera. Now, over the long run, bitcoin probably succeeds regardless. We've seen in certain countries where the government's banned bitcoin and adoption goes up. So, you know, doesn't mean that politics can kill some of this stuff, but it definitely means that it's a smoother road if you participate rather than ignore it. And what's interesting, I think, from my perspective is I don't really care too much for the actual politics themselves.
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Unknown B
I'm an independent registered you know, I frankly look at each topic, and there's topics where I'll say, I think a Democrat's right, I think a Republican's right. And a lot of times it's not because they're a Democrat or Republican, it's just because who they are are right. We've seen a lot of people switch kind of parties in the last couple of years where they said, hey, you know, I was a Democrat. Now I feel like I'm more aligned with the Republicans and vice versa. And so I think that this stuff is less black and white. It's become much more fluid. And so what we're really watching play out here is people are trying to understand, how do I think independently, how do I think critically? That's what I try to do. I try to say to myself, what are the topics? Topic. What are the different arguments?
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Unknown B
Who do I agree with? And sometimes I'm surprised. You know, I've had people come on our podcast, and my favorite is people who lean really hard one way, and I'll always ask them to say something nice about the other side and something they agree with. And I don't know, 50% of people can do it. 50%. Their brain's, like, broken. Like, there's literally nothing I agree with the Republicans on, or there's nothing I agree with the Democrats on. You're like, there's nothing. You know, let's start with, do you think that everyone should be safe? Oh, yeah, I agree with that. Okay, all right. Like, at least we got some common ground, right? And so, like, you know, you just kind of have to understand that being able to think critically in today's day and age is really important. And the last thing that I would say is I have a lot of friends who've gone to work in this administration.
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Unknown B
Administration. They, frankly, are both Republicans and Democrats. Most of them were not political before. One of my really, really good friends I've known for a long time recently called me and out of the blue, said, hey, I put my name in the hat for this position. I think I'm going to get it. I looked up the position. That's a big boy job. Would have never thought that this guy would even be ever interested in politics. But he's like, I'm not interested in the politics. I'm interested in going into, in working on this problem. It's a hard problem. And so if you then go and you look, one of the beauties that Elon Musk in particular has really perfected is he's able to identify problems in society and explain to people how important it is that they get solved. And he's able to attract talent to come and work there because it becomes a high status job.
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Unknown B
So we want to go in and build a civilization on Mars. Wow. If you want to do that, come work at SpaceX. SpaceX immediately. High status job. You tell somebody you worked at SpaceX immediately, hey, you get credit for working at SpaceX. Working in the government was about the low status job you could get, you know, outside of maybe being the president or somebody. But all of a sudden, Elon and a bunch of these people from Silicon Valley, they have now made it another high status job. They said, hey, we're looking for the smartest people in the world to come work on this. If you can pass our filter and you can come here, work here for a year, three years, four years, whatever, this is going to be a high status thing to put on your resume. Immediately the quality of talent goes up.
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Unknown A
Is that what caused this rapid turnaround? Because all of a sudden you've got some of the most successful people in the world wanting to participate in government? Is it just that Trump is like, all right, this is a return to merit it and I've got the best and the brightest here and they're naturally going to try to get the best and the brightest. And by dint of association, people are now flooding in. Is, is that the whole game or is there something else going on?
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Unknown B
I think there's probably three things that are going on. I do think there's a lot of people who frankly said, hey, I'm just fed up, right, with whatever, whatever their issue is. Some people, there's, you know, a homeless problem in my city. There's a crime issue issue. The inflation's too high, you know, housing is unaffordable, the border is open, you know, whatever the thing is. And for each person, I think it's a little bit different, you know, kind of what their red pill moment is or their topic. But eventually they just said, hey, look, you know, I want to be part of the solution. I'm tired of complaining, I want to compete, I want to go solve the problem. So I think that that's some version. I think that Elon Bezos and other people's kind of participation, really, there's a lot of people who look up to that, them and are inspired by them.
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Unknown B
And they said, hey, well, if they can do it, I'm going to go do it. You know, if Elon can go and give away money and go door to door I can go spend a year working in the government in a certain job, right? And so there, there's kind of that high status component of the job, and then the third thing, and, and this is probably the most controversial one. But I've talked to a lot of friends, frankly, that are Democrats, and they've met Trump and they come back and they're like, I hated that guy. I actually kind of like him now. He's cool. He, you know, he's charming. He's this whatever in private, blown away. Like, people who. You're like, there is no way in hell they're going to go meet Donald Trump and walk away and be like, I like that guy. Right?
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Unknown B
They would, they would literally be outside, you know, picketing, more likely than they would walking away saying that. And they come back and they're like, dude, I hate to say this, like, you're never going to believe it, but I kind of like him. He's charming. And so if you think about that, you know, if you think of quote, unquote, leadership, like, what do leaders do? What is the definition of leadership? It's to get people to do things they otherwise wouldn't do without you. Right. And so, in a crazy way, one of the most unpredictable presidents that we've had is actually able to inspire a bunch of people who want to go work for them. Now, the question that I would pose, which we don't have the answer to yet, yet in the first administration, there's a lot of those people, a lot of them didn't make it.
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Unknown B
His argument is, hey, I kind of, you know, really embraced the, like, political machine. I put a lot of people in positions that were suggested to me by the political machine, and I'm not making that mistake twice. Is that true? Is it not? I. I don't know. You go and you talk to some of them. Right. You know, I'm friends with Anthony Scaramucci.
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Unknown A
Literally, who I was thinking of. Yeah, yeah.
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Unknown B
He's not super excited, right?
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Unknown A
That's a gentle way of putting it.
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Unknown B
Yeah. But, like, you know, there's plenty of these people, right, that, that all kind of, you know, come together. And so you look at it and I always say that whenever I hear someone be passionate about something for it or against it, I always think to myself, there's probably some portion of what they're saying is true or some portion of it is if you think somebody is smart and they make good decisions and they're able to kind of evaluate situations, maybe they're exaggerating, maybe they're this or whatever, right? But, like, nobody is 100 good, nobody's 100 bad. And so the question is just like, what are the things you care about? And it is 100% possible to look at every single president in American history and say, what's the best thing they did and what was the most atrocious worst thing they did? And you'll come up with something, right?
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Unknown B
And so when you look at it from that perspective, I think that that is a much better way to evaluate this stuff is not, you know, Biden is good or bad or Trump is good or bad. Instead it is, hey, on these different topics, how would you grade them? Do they get an F? They get an A, they get a B. How do you think about it? And the truth really comes down to, like, most presidents are probably more of a net positive than they are a net negative. But every president has contributed some damage, whether it is on spending, crime, you know, whatever. The thing is, is. And so going into the Trump presidency, is he going to do everything 100% right? Of course not. It's impossible. Right? I mean, just think, he sat there yesterday and, and he signed how many executive orders?
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Unknown B
There's no way that you can get every single thing right. You're talking about like 200 things. And we're talking about, like, geopolitics, we're talking about the World Health Organization. We're like all this crazy stuff, right? And so you almost have to go into it and say to yourself, okay, okay, for me individually, I'm going to evaluate the performance of the president or my governor or my city mayor. What are the things that I care about? I get to pick two or three of them if they're good on these things. Most other things, if they're just, okay, I'm good with that. And I think that's where you see a lot of these people who hardcore Democrats, right, that are saying, hey, I'm going to go and I'm going to work on this is because they're kind of saying to themselves, look, if I can have an impact, maybe.
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Unknown B
Actually, I think that the administration is going to be in trouble. Maybe I participating can help pull it closer to the vision that I have. And that is the beauty of democracy, right, is that everyone gets to participate in some form or fashion. And so I just think that politics is, like, very polarizing. But what we now have seen is politics, tech and finance are all media, and there's a lot of things to work out. But in my years of, you know, kind of participating in markets and building businesses. You can't work those things out if people aren't sitting at the table. And it feels like now we got everyone sitting at the table and they still disagree on a lot of stuff, but like, I don't think Mark Zuckerberg and Donald Trump were going to talk five years ago, at least now it seems like they're cordial schedule and they got some work to do.
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Unknown B
Right. And so I think that I kind of put my optimistic view on and I say, all right, we got everyone at the table for the most part, let's go figure this stuff out. And man, are we lucky that it's not just government officials doing it. We got some business people, we got some non profit people, we got some finance people. Right. We got the politician people. Get them all at the table. Let's go, let's all work together and try to figure this out. It's probably a better situation than not.
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Unknown A
What do you think about the people that look at this and go, yo, you've got like a handful of the richest people in the world effectively sitting right next to him at the inauguration, working in different parts, either advising or what have you, that this is oligarchy writ large.
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Unknown B
Yeah. I mean, look, if you go back 50 years, guess who was sitting next to the President? The people who owned all of the industrial manufacturing businesses. The people who owned the big corporations. Right. It was the same thing, it's just different types of companies. And so I think that's one is just like these people are the different people, right? They're new people. The second thing is every single one of those individuals you probably could put on a list of who's created the most value for society and they'd be up there at the top of the list. So it's a sign that capitalism is working in that if you create the most value, you should get the most economic reward. And so the richest people for the most part actually are the ones who created the most value.
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Unknown A
That is, they have the most say. Because that's how people are going to push back and say, sure, let them capture the economic value, that's fine. But I don't want them in there telling them how to run the government. They're just going to swing it all towards them.
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Unknown B
So it goes back to, okay, who are the most effective people? Who are the people who, quote unquote, are the smartest? And smartest isn't like IQ test. Right. But smartest is like, can you take ideas, can you implement them? He just all this stuff. Well, the people who won in the free market have a natural proclivity to be, quote, unquote, the best. Like the market has determined that Jeff Bezos is really good at allocating capital, you know, doing complex decision making, thinking long term, doing all stuff. That's how you build Amazon, right? Elon Musk has been able to prove in the free market with merit that he's got really interesting ideas that he can grow, that he can scale, that he can, you know, change the world, et cetera. And so on the positive side, those are the people that you want trying to help you solve problems, problems 100%.
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Unknown B
On the negative side, those are exactly the people that you don't want steering things in their favor, right? And so again, it goes back to like the world isn't just black and white. It's like you get the good with the bad, right? And it's not a Republican or Democrat thing. Like Biden obviously had tons of people around them that were super successful that were probably trying to steer stuff in their direction. And so I think that the best thing for the country is our smartest, most effective people are trying to help solve our biggest problems. But also the beauty of a democracy is there's supposed to be transparency. And we should have people who are standing there scrutinizing it and saying, hey, they're doing this. That's actually, you know, helping them. They shouldn't do that. And that's how the system kind of course corrects. So it's not, hey, just because there's a risk of somebody steering something in their favor, we shouldn't have our smartest, most competent people working on something.
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Unknown B
Instead, use sunlight as the best distance infecting, have our smartest people work on the problems, but just have the ability to have transparency so that external people, that's what part of the media's job is. It's also the beauty of kind of the individual, you know, becoming a kind of their own media. Have these people critique them. The critics are actually a really important part of the system because they help make sure that we don't sway in any one direction. And so in that scenario, what do we get? We get our best people working on the biggest problems. We get, get tons of transparency so everyone knows what's going on and feels confident that people aren't doing things to their benefit. And then the third thing is that the journalist, etc are able to keep the people informed. It's like a win, win, win.
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Unknown A
Given though that Elon controls X, you've got Bezos, owns the Washington Post You've got Zuckerberg controlling arguably the largest media company in the world. Should people be paranoid that not only do they control the money or have enough money that they can really sway politics, but that they also happen to control so much of the media?
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Unknown B
It's a perfect example. Transparency would solve a lot of it, right? Have them public. What are the algorithms? Show the people just open them and. And there's competitive secrets and, you know, all this stuff and everything. But explain to people, let them see what is being downranked, what is being removed, right? Imagine a feed where any journalist could go and they could see all the things that Twitter or Facebook or anybody else is deleting. How much confidence would that restore in these platforms where people would say, hey, we now get insight into what's happening again, how do you do it? Like, I'm not smart enough to figure out all those details, but I think that so much of the distrust with the mainstream media, with social media, with other things, really comes down to the fact that there's not transparency. And so Facebook is a black box, right?
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Unknown B
And so you say to yourself, when the, you know, Hunter Biden laptop story got suppressed, at first, you don't know, is it because it got like, reported a bunch by bots or something, or is it that they're actively doing this? Only when people find out they're actively doing it, people are like, hey, what the hell, right? And distrust, you know, explodes higher. And so I think that it's not. There'll be no perfect system, but I do think that there's an element of transparency that can be introduced that again, at least you're never going to get to the point where there's blind trust. We don't want blind trust. What we want is kind of cautious optimism, right? We want people, like, a journalist's job is to be skeptical, skeptical, go and figure out what's happening. And if they're doing bad stuff, tell us, right? Like, we should celebrate the journalists that go and find stuff that is actually bad stuff.
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Unknown B
We shouldn't celebrate the journalists that manufacture things just for the clicks, right? That ends up being kind of twisted facts. But I think that's really, again, it goes back to, like, the world's not black and white, it's gray. And so adding that transparency would be really important. One of the things that's really interesting to me, me that I like that Trump does is when he was signing the executive orders, he sat for like 90 minutes and he fielded all these questions. And frankly, my observation was like, the guy Likes it. He's like, holding court. You know, like, you ever, like, go and talk to a grandpa and he's like, sitting at his favorite bar and he's got all his friends around, he's, like, holding court. That's kind of what Trump was doing. But it's like, man, you want to know what this guy really thinks?
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Unknown B
It's completely unscripted, and people are asking him questions, and guess what? He said a couple things. And of course, the media is like, hey, what the hell? Like, that's not court cool, but that's what their job is to do. It's like, get understand what is he doing? What is he. What is he trying to do? Right? And so if we had to choose, would we rather a situation where the President doesn't talk to the media, or we'd rather a situation where the President sits and holds court and, you know, for 90 minutes, just answers random questions? You could say, hey, he's lying, or he's not, or, you know, whatever. But, like, we'd much rather, obviously, the president, who is more forthcoming and kind of transparent with his thoughts, than anything else. And so I think the same thing is true of social media media right now.
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Unknown B
It's just a black box, and there's been attempts to build, you know, decentralized versions and kind of all this stuff. But I think the way you really establish trust is you just keep giving people information. And maybe a theme through this entire conversation is we live in a society where there are certain companies, organizations, institutions, and people who feel like they are smarter, better have the moral high ground on the masses. Let's not give them information, let's not let them talk. Let's not let them transact how they want to transact. Right. That is a key theme in society, but that's a losing strategy. I think the better thing is where is their excitement? Where is their trust? Where is their productivity happening? It's when people say, I actually think the masses are smart. Give them all the information, let them talk, let them transact, let them do what they want to do do.
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Unknown B
Let's empower them rather than stifle them. And so whether it's social media, whether it's the president, politicians, whatever, like that, that is the, you know, kind of bifurcation of approaches. And so hopefully, we get the transparency and empowerment more so than we get, you know, kind of backroom deals and, you know, all the nonsense that, you know, the critics are. Are worried about.
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Unknown A
Fingers crossed. We'll see. People have referred to Trump as the first, first Bitcoin president. One, what do people mean by that? And two, assuming that that is true, what would you want to see him do that would allow bitcoin to flourish?
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Unknown B
The first bitcoin president I think originally started as, hey, he's the first president to openly say I'm going to support bitcoin, I'm going to protect bitcoin, I'm going to protect your right to hold bitcoin and self custody, all these things. So he kind of was like the first president to, to openly, positively embrace bitcoin. Fast forward to today. It still means that, but it also means that the guy's got majority of his net worth right now in crypto, right? You know, between bitcoin and all the other assets. It's something, you know, it's like, I don't know, like 80% of his net worth now is in the industry. So you could also say like, hey, you know, the first bitcoin or first crypto president is just like he's the first one to have majority of his wealth in the industry country. But I think that's kind of the last, you know, couple of days or weeks more so than what it originally started out, which is like he embraces it.
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Unknown B
And you know, in terms of what he can do, I think there's three major things that he should do, right? Will he do them? I'm not sure. The first thing is I think that he should repeal something called SAB121. It's a very kind of technical legislative thing. But essentially what it would do is it would drastically reduce the friction for banks to hold bitcoin and other crypto assets. So right now you can hold the assets in self custody, you can hold them at Coinbase or you can buy the etf. Banks generally are pretty trusted, you know, institutions with high security and all this kind of stuff. And if you allow them to hold the assets, it probably would create a safe custodian kind of relationship for a lot of people. But also then those banks can offer tons of financial services. They can lend against those assets.
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Unknown B
They can, you know, use it on a personal financial statement to get a mortgage, like all those types of things. So I think that would be a really big boom. And the banks have recently the bank of America CEO came out, said, hey, I want to do this. So the banks want to do it, the people want to do it. It's just kind of this regulatory situation. The Congress and Senate actually approved this to happen and Biden vetoed it. And so it was kind of like One person really kind of, you know, came in and stomped it at the end. And so I think Trump should repeal that and allow banks to do that. The second thing is we should establish a strategic Bitcoin reserve. Reserve, which simply means that we should hold the 200,000 bitcoin that are currently on the government's balance sheet, don't sell them, and we should start to acquire more Bitcoin.
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Unknown B
How much we acquire and how quickly somebody smarter than me will figure that out. But I do think that if bitcoin is a great reserve asset for individuals, if it's a great reserve asset for financial institutions and corporations, it will be a great asset for countries as well. And we know other countries are stockpiling bitcoin, and so we should also be a leader there, and we should be doing it as well. And then the third thing, and probably one of the things that would be most complex but, but most important, is we should change the tax treatment for using bitcoin to buy goods and services. So right now, if I go and I sell stock, I obviously pay capital gains tax, but I can't use that stock to go buy dinner, right? I got to go from stock to dollars, dollars to dinner. With bitcoin, I could, in certain restaurants, buy dinner, as an example, but when I do that, I pay for the meal, I tip the waiter or waitress, I pay the sales tax, and then I also pay capital gains tax when I spend the bitcoin.
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Unknown B
And so what we'd have to do is create a way where you can spend your bitcoin for goods and services. You do not pay the capital gains tax, but you also still need to tax people who are just trading bitcoin. So basically, if you're selling bitcoin for dollars, then you get hit with capital gains. If you are buying a good or service with bitcoin, then you don't pay the capital gains. And I think that would be a big kind of tailwind for bitcoin as well. So, three things. I don't know if he'll do them, but I think all three of those would have a significant impact on kind of continuing the adoption of Bitcoin and obviously creating more value.
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Unknown A
If we created a strategic reserve, that would essentially be investing in bitcoin with the expectation that it goes up. Does the US Invest in the stock market and anything else, or would that be a break with tremendous tradition?
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Unknown B
Well, the US has gold, you know, as maybe the. The closest proxy in the central bank reserves. It's probably one of the most popular, you know, Central bank reserve assets in the world, different nation states all hoard gold. And so I think that there's no reason why the US couldn't do it with bitcoin. Right? Bitcoin is kind of gold with wings, you know, digital sound money. And I think that's kind of the easiest argument. The US also has a lot of real estate, has a lot of land. It does buy, obviously via the Federal Reserve, which isn't so federal, but you know, Federal Reserve obviously buys a lot of debt and things like that. And so it really depends on kind of where you look. There's even things like there's this new office that was created and I recently met some of the guys there called the Office of Strategic Capital.
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Unknown B
Basically the government is making strategic loans to certain types of businesses that do business or could help the government. Government. And so, you know, like the government's like in the lending business. And so we definitely are buying various types of debt or you know, kind of commodity based assets. And so I think bitcoin kind of fits right in there. And you know, to your point, are they buying it because the price is going to go up? It's probably part of it, but I also think they're buying it because it's sound money. And even if the price just stayed flat, the dollar is going to continue to be devalued. And therefore, you know, the US dollar price would kind of move more so the dollar falling rather than bitcoin becoming, you know, quote unquote, more valuable to the individual holder.
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Unknown A
Now one thing I've heard you say that I thought was a little crazy is to print money and buy bitcoin. And I'm like, hold on a second. Printing money is bad. While good for the price of bitcoin, I hate it for the price of the dollar. Would you still like to see the government do that?
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Unknown B
Well, my point was, you know, if we're increasing the debt by a trillion dollars every hundred days, if we printed $250 billion, we wouldn't even notice. It'd be a rounding error. And if we could then do that to buy a substantial percentage of the bitcoin network and it depends on where the price is, et cetera. But we're not talking about buying 1%. We're talking about buying a very substantial part of the network with that $250 billion. Call it, you know, 10 to 15% depending on the market cap. Cap. All of a sudden you say to yourself, is it worth it? Probably over the long run. Now the question is, would I Rather not print the money, of course. So could we find $250 billion of savings somewhere in the budget and then use that money? That would be better. Could we actually get to a surplus and use the surplus amount to buy the bitcoin?
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Unknown B
Bitcoin, that would be even better. Right. So it more. So I was using the, like, go print 250 billion and buy the bitcoin for illustrative purposes in terms of, hey, we should go do this, like, with size and kind of intention. Now, one of the most interesting things is everyone was really disappointed in the kind of bitcoin world that on day one, there was no executive order to establish the strategic bitcoin reserve. But if you're a country, wouldn't you want to buy the bitcoin and then tell everyone you bought it, rather than tell everyone you're going to buy it? The price goes up and then you start buying. And so maybe that's definitely true.
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Unknown A
I have an instinct that Trump isn't going to do that. I think he's going to be very slow to move on that because I think there are going to be enough people that are freaked out by the idea of us buying a highly volatile asset that that one feels more like a bit of a political hot potato. NATO. We'll see. He certainly signaled, obviously, positive things, but my gut is, the first two things you talked about, you probably got a pretty high chance of him doing the strategic bitcoin reserve. I don't know. I'm a little more skeptical. We'll see.
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Unknown B
Yeah. And look, I think that the, probably the most likely common ground between the skeptics and the enthusiast is we have 200,000 bitcoin in the US government's control today. Just say, hey, we're not going to sell that. Right. So we're not going to buy more. Right. But, like, we're also going to commit to not selling again. That kind of feels like probably both sides are a little disappointed. You know, the skeptics are like, hey, why do we have to hold this? And the enthusiasts are like, why aren't we buying more? And as you probably know, you know, the best negotiations are where everyone feels like they left a little on the table.
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Unknown A
He's already making those noises. Right. Like he said, ah, we're not going to sell it. I mean, in this typical Trump way where it doesn't feel exactly firm, but. But I think he's indicated strategic ambiguity.
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Unknown B
I think is what they call it sometimes, right?
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Unknown A
Yeah, yeah. Certainly when it's aimed at China, no doubt. So you wrote a book, Give us your hardest hitting. What is like, if you were going to say, this is the way to live an extraordinary life, what is that most important thing that people could do?
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Unknown B
Well, I think the first thing is everyone has a different version of what their extraordinary life is, right? So what I want my extraordinary life to be is very different than yours versus versus anyone who's listening to this. And so understanding what is the life you want to live and being intentional about that is, is pretty important. And it doesn't mean like, hey, what job am I going to get? But like, what are the things that are important to you? How do you spend your time? Right? Do you spend your time going out and you like to go to a lot of business dinners and, you know, meeting a lot of interesting people? Do you like to spend your time sitting at home hanging out with your wife and kids? Right. You know, all these different components. But designing your life in terms of kind of your aspirational life puts you on a path to accomplishing that extraordinary life.
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Unknown B
And then when I wrote the book, I wrote 65 letters to my kids. And it's kind of all these different life lessons that I've picked up over the years. And it's everything from health and wealth to work relationships, to running a business, to how I think about happiness, etc. And the major theme throughout the entire book is that you have agency. We live in a world where every single thing around us tells us the world happens to you. Just sit down, shut up and let the world happen. And you have to take what the world gives you. But the most successful people I know, the happiest people I know, the people who feel like they've lived kind of the most fulfilling, extraordinary life, they're the people who say, no, I have agency and I am actually going to act on the world. And so if I want something, I go and I get it.
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Unknown B
If I want to accomplish something, I set a plan, I go and I execute. If I want to feel better, health wise, I put together a plan and I go and I do it. And so when I sat down and I started writing these letters to my kids, my wife and I had basically decided on two things. If we can only teach our kids two things, what is the thing that we wanted to teach them? The first thing was we wanted to teach them to be good decision makers. It is a very specific skill, but it's applicable to everything in your life. Should I go to that party or should I not? Should I take that job or should I not? Should I make that investment or should I not? Should I hang out with this person? Should I not? Right? Should I do drugs?
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Unknown B
Should I not? You teach them to be a good decision maker maker. It applies to every aspect of their life and something. How do you teach better at over time? I think a big part of it, frankly, is you got to expose them to a lot of decisions and then you got to talk through it, right? It's no different than trying to help a, you know, an employee at a company get better at decision making. You got to put them in this, in scenarios and say, okay, here's the scenario. Here's your two choices. What do you think? Why'd you choose that? Oh, well, here's how I would think about it, right? And you just constantly are trying to get better, but there's no finish, finish line. You're. You never get to the point where, like, I'm a great decision maker. You're always like, I can be better at it.
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Unknown B
And so it's kind of, again, this aspirational thing. But that was one thing we really want to teach our kids was be good decision makers. You do that by exposing them to a lot. The second thing is we want to teach them that you have agency. You know, kind of the Internet, you know, meme is like, you can just go and do things. And so if somebody is a good decision maker and then they know they have agency. Every outcome in your life is ultimately determined, determined by the actions you take. And so if you think about J.D. vance, the reason why I think that story is so inspiring is because he basically was dealt the worst hand. If you were to concoct, you know, hey, okay, well, you think that everyone's life is all based on the decisions they make. Well, what about the guy who's born to a drug addict single mom in West Virginia who's no connections, no education, no money, etc.
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Unknown B
It's like the guy just became the Vice President, United States, right? And most of the things that he did were decisions that he made. He chose to go into the Marines. He chose to apply to college. He chose to apply to Yale. He chose to study. He chose, you know, and you just go through these things now. Everybody has help along the way. Rip A part of that is he met, for example, Peter Thiel when he was at Yale. Peter Thiel seems to have been a pretty big part of his story. And so again, he went to the dinner, right? Like, all these actions are really important. And so imagine if you started off in a position in life that Wasn't born to a single mother who's a drug addict in West Virginia with no money, no education, no resources, no connections. You already have a leg up on J.D.
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Unknown B
vance, and he became vice president. Imagine what you can do, right? And I think that that agency is really important. And so pretty much every letter in the book is reinforcing that across a couple of different ways. And one of my favorites is this idea of luck is not real.
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Unknown A
I'm going to ask you how much pushback you get on this idea.
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Unknown B
Probably the most controversial letter in the book, but really my message in it is, let's say that, you know, you, Tom and I, we walk across the street and we get hit by a bus and we both lose our right leg. And our friends come to visit us in the hospital and they say, oh, my God, Tom, you lost your leg today. What happened? You say, man, I was so unlucky. I was walking across the street, this bus hit me. Now I lost my leg. I'm such an idiot. Idiot. But then they walk over to my bed and they say, hey, what happened today? I say, man, I am so lucky. I was walking across, I got hit by the bus and I'm still alive. You know anyone who got hit by a bus and lived, how lucky am I? Two people, same scenario, same outcome, two completely different views on luck.
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Unknown B
And so when you realize luck is actually a psychological concept, there's academic studies that show that you can make yourself luckier by simply thinking your life lucky. It is all about perspective in life. That means that luck is not a real thing. It's all about how you think about the things that happen in your life. And once you begin to understand that luck is not real, it is all about your perspective. And you are in control of your perspective. It goes back to, you have agency. Whenever you think you're unlucky, you should say to yourself, what is the good thing that comes out of this? And in another chapter in the book, I talk about this idea of good. Good. Jocko Wilnick, who is a very well decorated and well respected Navy SEAL commander, he, you know, said one time that he had guys on his team who'd come to him, whatever, they had bad news, and say, hey man, we got bad news.
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Unknown B
But I already know what you're going to say. He said, what are you going to say? So you're going to say, good. And his point was, you know, training gets canceled today. Good. We got more time to clean our equipment. You didn't get the job that you wanted. Good. You got More time to get better so you can get a promotion in the current job you got, you know, you didn't get the grade you wanted. Good. It's a reminder that you got to work harder, right? You just go through this and. And it's looking at the light, at life through a specific lens that is much more positive and optimistic than looking at life through the lens of the world is happening to me. I have no control. I have no agency, and, you know, everything is screwed. And so again, you go back to this idea of, you want to write letters to your kids.
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Unknown B
What do you want them to learn? You want to be good decision makers, and you want them to learn that they have agency. Put 65 letters down, put it in a book, and, you know, hopefully learn from it.
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Unknown A
Now, even the luck one seems like a very positive, empowering idea. Why is it controversial? What. What does that trigger in people?
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Unknown B
I think that people fall into two categories. There's definitely people who just. They're intellectually lazy. Like, they just don't think about anything. And it's, like, much easier just to blame luck. I'm an unlucky person. Something happened, you know, it's not my fault. I don't want to take personal responsibility. And so luck kind of becomes like the boogeyman. And usually that's when it's a negative thing, right? But then there's a lot of very successful people who they actually want to downplay their success. And so you'll go talk to, like, a multi billionaire, and they'll be, I just got lucky. Nobody gets lucky and becomes a multi billionaire, right? Like, obviously they did things, they knew things, they acted, et cetera. And so luck in both the negative and positive sense is really used as a crutch. The people who think that they're, quote, unquote, unlucky, they use it because they want to take personal responsibility for the situation.
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Unknown B
The people who are successful, they use it as a crutch because they're embarrassed that they were successful. They want to downplay what they did, and they want to more so, you know, kind of claim a moral high ground and say, oh, I was just lucky. You know, if I ran the experiment 10 times, you know, this only happens once. I just, you know, lucky, not. Not my fault. And so I think that luck, when you remove it both from the positive and negative sense, it gets back to the same thing. Your decisions, your actions determine your outcome, regardless of the details of where you start. J.D. vance becomes Vice president. You can go through history, you know, Elon Musk born to an abusive father in South Africa, right. And you just look at this over and over and over again and you say to yourself, why is it that so many highly successful people actually started out with really bad childhoods?
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Unknown B
Jeff Bezos, I think he grew up in a single mother household at first, and then his mother remarried. And you look at it over and over and over again. You say to yourself, maybe actually a big piece of it is you've got to forge yourself in the fire, got to make the right decisions, right? Actions, and your outcome is then determined by those decisions. And action, actions. It's fascinating, right? I don't have all the answers I'm figuring out alongside everybody else. But when you start thinking about why is this controversial? It's because it basically strips away a crutch from people and it makes them look in the mirror and accept the fact that the outcomes that I get in my life are solely dependent on what decisions I make. Some people are happy with the decisions they made, some people aren't. But the beauty is it's never over.
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Unknown B
There's people who, you know, turn their life around at 40, 50, 60 years old, old after years of drugs and alcohol and, you know, crime and all these crazy stuff, it's okay. One of my favorite stories is Mark Wahlberg. People forget Mark Wahlberg actually got arrested when he was a teenager. Pretty bad incident. He, you know, beat a man in the street. Probably not proud of it, but then he went, he became a rap star. Marky Mark. Today he's pretty successful businessman, obviously well paid actor, you know, highly, highly, highly successful. Successful. Doesn't matter what you did in the past. It's all about moving forward. And so again, goes back to at any point you can choose, hey, I'm going to make the decisions that put me on the right path. And I think that, you know, from people I've heard so far from the book, you know, the book's been able to get them to think differently about some of the things that are done.
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Unknown A
I love it. All right, well, if people want to stay on a good path, where can they follow you?
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Unknown B
Just go to Twitter. A Pompliano at Apompliano is probably the best spot. And then I write a daily email mail to investors about 260, 000 investors on there. Just my thoughts on financial assets, markets, etc, and you just go to pomp letter.com just p o m p letter.com I love it.
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Unknown A
All right, everybody, if you have not already, be sure to subscribe. And until next time, my friends, be legendary. Take care. Peace. Here is the brutal truth about scaling. Most entrepreneurs don't outright fail. They plateau. And if you're stuck right now, you know how true that is. It could be that your revenue flatlines every time you step away. Or maybe you're trapped in a commodity market that's racing to the bottom. Or maybe you're one of the lucky people who is navigating a very complex partner dynamic that turns every decision into a battle. These problems, and a whole lot more can seem impossible until you break them all down into first principles. My partners and I use this thinking to grow Quest nutrition attrition by 57,000% in our first three years alone and scaled to a billion dollar exit. And now I'm teaching this framework to a select group of entrepreneurs who are ready to scale.
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Unknown A
Now, I want to be clear. This is not for everybody. Because I'm looking to work with serious entrepreneurs that already have an established business and a proven track record of execution. If that's you, and you want to learn how to break through your biggest business bottlenecks using first principles thinking, be sure to apply. Now, just go to impacttheory.com scale or click the link in the show notes. Again, that's impacttheory.comscale if you like this conversation, check out this episode to learn more. How is it that all the economic reports make it seem like the economy is red hot and yet people feel like they're in a recession? What's going on? Well, all those metrics are baked. You know, they reverse engineer all of them. We've talked about the inflation metric before.