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I'm like, well, or, or we got into a trade war with China. There were like lots and lots and lots of tariffs. There were threats to withhold. And we do not have domestic manufacturing of semiconductors. Like we don't have it. Now, to be clear, a lot happens in China. If there's a tinfoil hat, it's more really maybe about China invading Taiwan because Taiwan Semiconductor Manufacturing Company, best name ever. I love a literal name, TSMC. What do they do? Where are they? Just do they make anything? I mean, it's the best. It's just the greatest manufacturing company. Oh, the biggest manufacturing. Yeah.

But it's a manufacturing company.

Literally, we mixed up Taiwan semiconductor manufacturing.

Like, it's so great.

They're manufacturing companies that delivers to you. And then during COVID unrelated to labs or anything, right? We just couldn't get it. If you can't get chips, there is nothing that you can build. There are no cars. There are no computers. There are no phones. There are no watches. There are no appliances. There's nothing. I mean, I actually think the speed with which we moved was the actual internalizing of the national security risk here. Yeah, you can't build a bomb, for God's sake. You need a lot of bombs, turns out.

You need a lot of chips in those bombs.

There's still nothing that we spend more money on than bombs.

I, yeah, I don't know if we manufacture those ourselves. I'd be interested in following those backwards, like, because they probably have all kinds of chips in them. There's one set of chips, a zillion of them. So, you know, we're the, you know, they're like, wait, who makes our bombs? Well, on shore this, that well, and the components in them, right there, who knows what components are used for the equipment around the bomb, you know, the truck that drives the bomb somewhere that the missile silo, you know, the computer monitors and computers that were in the missile silo.

If we find out we're making our missiles in China, that's going to be amazing.

We're making them there. But is it possible that there are components inside of, you know, definitely aspects that come from Taiwan? It's possible. Probably 100%.

Yeah. So like, they all we don't have there are no there are hardly and maybe like micron does some has a foundry in the US.

We didn't say when we were away for these two weeks, we didn't get to talk about the that's why I say I really wanted to talk to you about the lab leak theory with a report that came out that maybe, you know, more people are leaning towards it's a possibility.

We didn't get to like, two out of seven federal agencies, one like moderate and one with low confidence. Yeah, we should definitely run with that, though.

I mean, it does feel like the chances of there being two research facilities in the world that do this, and one of them was where the outbreak just geographically peculiar.

I find it. I think I tweeted something to the effect that it was very interesting that all of a sudden, there was just a ton of like, heavily misrepresent because that report did come out from the DOE. moderate, they said they had moderate confidence in the idea that it could be a lab leak. I think the FBI is still at low confidence and every other federal agency so far. And we don't know what they're going to come up with eventually, but so far is like, nah, wet market. I'm going with Jon Stewart. However, like we might find out more information. It was just weird that there was that and then the massively misrepresented mask thing in the same week. that doesn't it's like, like, I want to get to truth, ground truth. But that doesn't feel like we're going it feels like now we're just going to go all the way in the other direction and then get to ignore the fact that like millions, you know, so many excess people died in the US and didn't have to.

It's, this is going to be a messy one to unpack. It really is super messy to unpack. I just hope we can objectively look at it.

We need a commission. Like we need a COVID commission, like the 9-11 Commission, like the Watergate Commission, like we need a truly bipartisan commission, because people are crazy.

I mean, this seems like something that should be a real focus just because it's going to happen again. Right? Yeah. So Wouldn't it be good to just know?

Not to be like a giant bummer, but it's probably already brewing with like bird flu right now, evidently. It's like in minks and minks have a respiratory system that's like the same as humans. You know what we should do is we should study that.

Hey, here's an idea. We should study that. You know what we should do is we should study not only that, but what it could evolve into. Just so we're prepared for the next version. So we could like literally use science to study where that is going.

Oh, no, no, don't do that. Wait, wait, wait, wait, like we could be prepared for it.

Well, we just, you know, we could just give it like a gain of function, we could like add to the functionality of whatever we find. And then you just do like some, you know, add some functions to it. Like, see if you made it more robust, what would happen?

We do do that. We definitely we do that. We do that. Do it. I have a really good idea. I think that's why we don't talk about Lab League stuff, because we're like, we also have labs. We don't want to talk about Lab League. We have all the labs. We're all doing the same stuff.

Just do it on an island, like Plum Island. You ever hear of it? It's a mile and a half off the coast of Long Island. And that feels close. It's it's Yes. Can you go further? It's a mile and a half. like, I think it was like three blocks to the wet market outside of the Wuhan COVID laboratory. So a mile and a half of water. It's a start, at least. It's a start.

If you're going to do it's better than blocks, better than blocks. I wonder where we're doing it. I wonder where our labs are.

We're at Plum Island. Plum Island Animal Disease Center. That is where it's happening? Yeah, this is a whole, like, if you want to go super tinfoil hat, you can go down the Plum Island tinfoil hat, where this is where they study foreign animal diseases on livestock on an island off of Long Island.

It's kind of like what we were talking about at the beginning of the show. There's stuff that you just want to be cool about, because if you don't, you get into a mutually assured destruction loop. And like, you can bet that whatever China's doing, for sure. And so you don't want to, you know, it's like, you don't want to get too high horsey about stuff. I mean, we probably funded it.

We probably funded it. Yeah. So I mean, I would be fine with just taking ownership of it and moving on. That has that for an idea. Like we all just take ownership of it and do better. But Plum Island, for those people looking to go down like an Area 51 rabbit hole, may I suggest Plum Island? I'm sure there's a Joe Rogan episode with somebody who escaped questions. I love it. Let's go. I used to love that series that Leonard Nimoy used to do, In Search Of. Do you remember In Search Of?

Oh, yeah. In Search Of. I forgot about that show. Leonard, oh, I got to look this up.

So there was a show called In Search Of. They did 144 episodes, it seems, and Leonard Nimoy hosted it.

In search of Bigfoot. Oh, my God. This was like OG conspiracy theory stuff.

Loch Ness Monster, all the classics, all the classics. But to have Leonard Nimoy do the voiceover was just amazing.

This is incredible. I want to go back and like watch all of these. The outer space connection. So great. I'll tell you, man. You could have a really fun afternoon with a weed gummy in that show, Ancient Aliens. Oh, no. That is on the History Channel. Oh, the History Channel has the History of Aliens? The History Channel has a show called Ancient Aliens, and it's always the same wackadoodle guy who's like really tan and has this big mullet and is pointing out how like ancient relics all have the same alien designs. Hmm. Yes, there it is. There it is. Okay. Aliens. It's just, I'm just saying, put the hat on and go crazy. Oh, there probably, there gotta be aliens.

Any crypto craziness as we round third base here? Always seems like, it's like always good to round the show off with the latest in crypto nonsense.

Yeah, this is a good one. This is a good one.

How many Thanksgivings have to be hijacked by crypto discussions and your crypto cousin?

I want Thanksgiving reparations from the crypto industry is what I want. For sure. Just please. I want payback. I want my time back.

Just get back those nine hours.

Dapper Labs CEO Roham Garigosloo was reportedly... Dapper Labs, by the way, is the maker of NBA Top Shot, CryptoKitties, and the Flow blockchain. Big names that everybody knows.

They've done really great stuff too, like that NBA Top Shot was very successful.

Yeah, definitely. And in fact, Dapper Labs has raised money from A16Z, KOTU, Bond, which is Mary Meeker, NBA players like Kevin Durant, Klay Thompson, Josh Hart. There's a little note here that says, Go Knicks. Oh, okay. I wonder what that's about, and other athletes.

nine, we've got a nine game winning streak right now, the Knicks are playing better than they have since I was in my 20s. And Patrick Ewing was on the Knicks.

So Josh Hart, no, no, no, he is the guy side notes galore. Anyway, so it appears that obviously, the NFT and the crypto space have been completely hammered over the past year or so. And again, circling all the way back up to the top feelings are coming out in the press now 11 anonymous current and former Dapper Labs employees are speaking out against its CEO.

Oh, yeah, you had me once it was double digits. I'm like, Oh, no, I've been through this.

Oh, That's not good. It's not good. It's not three people. It really is not. Yeah. So, in March 2022, Dapper Labs raised $250 million at a $7.6 billion valuation led by Kotu. At its peak, the NBA Top Shot collection generated $224 million in sales in the month of February 2021. But then, of course, so $224 million in February 2021. those sales fell to $2.8 million last month. Okay, that's total sales, which they get a percentage of.

So if their take rate was the standard 20 or 30% that you see, yeah, or 23% for like a really elite marketplace, like app store, marketplace, right. But let's just give them the benefit of the doubt, say 30%, like a really high one. That means they made a million dollars or so 900k, whatever. Yeah.

And when you look at this, you know, monthly trading volumes declining 95% through 2022. Sure. However, apparently none of that ongoing decline stopped Roham from rolling on private jets, renting mansions at up to $300,000 a month. And just generally living the dream. He would routinely apparently rent these mansions. The private jets had become one of his priciest expenditures. The trips would cost between $60,000 and $100,000 per flight when not renting a mansion. I'm just quoting from the article because it's just a corker. When not renting a mansion, the CEO often booked five-star hotel suites that would sometimes cost as much as $30,000 a night, according to one person familiar with the matter.

Wait, he did this on the company or his own personal?

Oh yeah, he would. This is the most amazing thing. He considered these big ticket expenses integral to his strategy of cozying up to celebrities and so they would be listed as marketing expenses. Oh.

Yep. So, okay, let's pause for a second on this. Marketing. Yeah. There is an instance where if you were at CES, and you rented a suite to invite people by who are buyers of your product, and you'd want that suite to be impressive. Right?

We've all been to those suites at CES where people throw a South by Southwest party right now are massive marketing budgets being like, yeah, Rome. So South by Southwest.

Now, so if it was in fact that you rented a 10,000 or $30,000 suite one night, if 100 people came to it, and these were 100 buyers, and there was some sort of justification, okay, one night in the suite, two nights in the suite to set it up, and it's got a business expense that would be valid marketing. So you know, just so we still man trauma and whatever, still minute, of course, but flying on a private jet. Every time Kevin Durant to a speaking gig to sell things. Okay, if you're flying yourself, no bueno. Not necessary. So you have to look at each one of these independently. This is why as the CEO of a company, they they nail a lot of CEOs on personal expense. This is why you got to make it bulletproof. Right? Like it's not the suite you're staying in. Mm hmm. the marketing department rented it. So I'm just giving a little advice here. And it was approved, and it was thoughtful, and you had the sales that occurred because of it. Right?

I've had this happen.

You track your ROI. Yeah, you track the ROI of it. And it was driven by the marketing department. So if the CEO is doing stuff like this unilaterally, and it's for their room, where they're staying, that's not good. Yeah, if the marketing department did it. So if you were on the board of this company, how you evaluate or for people who are, you know, thinking about doing something like this, just you have to be thoughtful. If you have shareholders, if you own 100% of the company, you do whatever you want. As long as it's within the tax law, and the tax law would be totally fine with you having a party or marketing through a party, but not for your travel expenses if it was personal. And then there's just the optics. So once you have to explain optics, that's when you get yourself in trouble, too.

Yeah, it's To me, this also feels like an interesting case of what happens when you get too much money, which I think we've talked about. There is, let's see, in a statement, Dapper said, quote, the notion that... Oh, so anyway, two things about this. One, a lot of money came flowing into this company. I suspect that there was no small amount of keeping up with the Joneses here, as they kind of say in their statement. They're like, we have and will continue to spend money on high impact events. Our business is rooted in entertainment and sports. You have a CEO with, you know, who has a huge amount of funding and is at some point having up to, you know, $60 million in trading volume in a single month. And it's like, this is what we have to project because this is the pool that we're swimming It does make you I mean, it is an interesting governance question, because it does feel like there were a lot of really, again, very, very well respected investors, presumably on their board. Dapper Lab has five board members and three observers. So Roham Karagozlu himself, maybe a relative But and the observers are Chris Dixon of a 16 z Dan Rose from CO2 and Fred Wilson.

These are legit investors, like the marketing expenses here could be completely justified. Or if he was doing this alone, solo, Yeah, they would be abusive. And he could get fired for it. I think he seems like a smart cat. And I'm going to go with these are expensive things to do. And they have bad optics. But especially if you had to lay off a bunch of people. So those people who got laid off who are trying to dunk on him, I guess, or whatever. Yeah, sure. that doesn't look bad that you spent money on private jets. Yeah, of course. And that private jet equals somebody salary or something got laid off, you can you can kind of make all the jumps here. But if that was for Kevin Durant and Steph Curry, right, to go do a speaking gig and sell those NFTs that sold a quarter billion dollar. Yeah, 250 million worth of quarter billion dollars worth of NFTs, then it was worth it.

Also, it sounds like he was a real jerk internally. Like, it sounds like as things started to decline, I mean, you know, when you look at why 11 people are speaking to the press, it's also that there became this really bullying culture, lots and lots of micromanagement, that he would publicly shame people on Slack or scream at employees during video calls, etc, etc. As the market went down, he became harder to work with, it sounds like.

But just on this thing, what are the 11 employees hoping to get out of this? Is this just a slam piece? Or is it like, are they in a lawsuit? Oh, yeah.

Yeah, they're just going public with it. Just going public.

It's not as it's not as part of a lawsuit, because you know, something unfair happened to them. There's no unfair labor practices here kind of situation.

We have no lawsuit. Like maybe yet. I don't know. Right. Who knows? Maybe people are contemplating right now. It's just it's, it's just just it is a slam piece in the block potentially related to who knows layoffs most likely there's a there's kind of a lot of again we're have we have a whole story arc here starting at the top and ending here like we can enter a lot of slam pieces about media layoffs right now, like we can just anticipate that there's going to be a lot of this because there's a lot of disgruntlement.

Yeah, when you're reading these things, I think, always asking what the press is going to cover interesting stories, especially if people there's conflict, right? Conflict equals drama conflict, sometimes there's something important. And if somebody was spending a sugar ton of money, that's also notable. You have to look at it and say, are these anonymous? And are, is there a point to this? Are they trying to get them fired? Is there a lawsuit in this case? I guess they just got a bunch of people who were laid off to talk about it.

It said current, they are anonymous, but it was 11 current and former employees, including both staffers who left of their own volition and those who did not.

Got it. I would like to see that number broken down.

Yeah. So that is exactly what Nick predicted that you would say.

Well, I mean, is it one person who still works there and like 10 who got laid out, you know, yeah, it's just one of the problem with any, I am so I feel like we've gotten into a dysfunctional usage of unnamed sources now, where I think like the unnamed sources kind of understand they get to be unnamed. So they have this in their back pocket as like, Well, if I'm mistreated, at least I can be an unnamed source in a story and get my revenge. And if the person was fired for cause, or if they left on their own volition, or if they're still there, all that matters. And then what the motivation is here. You know, sometimes this could come from an investor who's not happy, could come from a competing company.

I mean, I think it's a, it is an interesting question of what recourse if any people have when they work for a private company, and they feel that governance is failing. Like, so a generous interpretation of the people who are being quoted here is that they were like, this is terrible, and people need to know about it. And we came here for equity, and that equity is going to be wiped out by this banana spending. And we feel like, you know, the investors don't know what's happening. And we're trying to raise the alarm.

Yeah, if they were leaking that he was burning the money, stupidly, I could understand that.

Yeah, well, that is what they leaked. I mean, they also said that he was a jerk, but they weren't. But primarily, this was about the spending habits, the story at least.

know, in on boards of companies at this level, they present a plan, the plan, just so people understand if it's compensation, there's a compensation committee, the compensation committee looks at everybody's compensation. So there's like a safeguard there. When it comes to T and E travel and entertainment, or marketing expenses, the board would rarely double click on that. they would not say, Oh, tell us what I see we have $3 million in marketing spend this year. Can you break that down for us? Right? They would just look at Okay, what is the marketing as a percentage of revenue? Okay, we had 300 million in revenue, we spent 30 million on marketing. Great. 10%. That seems in line. We'll trust you to spend it however you want. Now, in this case, if that 30 million was spent on a lot of private jets and parties, and that worked for the company, that's all the board is going to look at just so people are aware of like, yeah, what happens is really important insight.

Exactly. Yeah.

Now they might, if they start a report, like to say what's up, and then they say, Okay, we spent 30 million on marketing, 6 million on parties, 24 million on cost per click ads, and they'd say, Okay, so 20% of marketing was on events, and 80% was on cost per click trackable advertising. Okay, that seems reasonable. know, so who knows, we don't have enough information, but just so you know, the boards here are going to look at top line level items, they're not looking at people's expenses, you have to have a certain amount of trust with the management team. And if they want to go spend a sugar ton of money on, you know, expensive dinners, as long as on a percentage basis, it falls in line, that's okay.

There was a there was a note saying to that they have a strong Well, the CEO told investors in which in a document obtained by the block, which announced that Dapper was laying 20% of its employees off the CEO told investors that he aimed to improve efficiency and that the company is in a quote, strong cash position with no outstanding debt. Again, that's the top that to that top line point. Exactly. Yeah.

So this is like, so what this speaks to Molly is like, what you're seeing internally could seem wasteful and crazy. Right? What VCC is big picture. So you're looking at the micro and saying, I can't believe that we're spending this much money on catering lunch or this event or ferrying this celebrity around on a private jet or whatever. And the board is just like, you know what, Yolo, if the top line revenue is growing, the valuation is growing. And this is a percentage of revenue. It's when it gets off that people start going, huh, wait a second.

I mean, you can see why someone would be asking these questions now, when trading volume has declined 95% in a year.

When I have other shareholders in my company, I am just unbelievably cautious, maybe even to the point of paranoid about expenses. When you own your own company, which I do when the case of launch and this means startups, I don't have shareholders in those companies. Yeah, I can buy myself a business class ticket or, you know, entertain at a Warriors game or buy an expensive dinner. I don't have anybody to answer to. But when I do anything at inside, as an example, I when I have shareholders in that company, man, I am not flying business class, I am, I would actually literally pay as a CEO, the difference between economy plus in business, myself, And I've done that kind of stuff many times. So my advice to founders is, when it comes to your personal travel expenses, the real flex is to use miles and stay at the W and, you know, to because you set an example for everybody in the company. And once some people in the company see you find first class and staying at expensive hotels are like, Oh, wait a second. You know, We have shareholders and then this kind of stuff happens. So be paranoid.

And then finally, I think the other really, really interesting part about this is this lawsuit, primarily because you have a judge here. So Dapper Labs motioned to have this lawsuit dismissed, the one in which they're being sued over whether they sold these top shot NFTs as unregistered securities. The judge, Victor Marrero of the Southern District of New York, denied the request and then published. Oh, this is SDNY? Mm hmm. And this, I think that this particular, the piece of writing here in denying this request, sets the conversation about liability, I think, in a whole new direction. And it's fascinating. It's a 64 page opinion that went through the four part Howey test and how it relates to Dapper Labs. The Howey test, of course, determines that something is a security when it meets four conditions. First, an investment of money. Second, in a common enterprise. Third, with the expectation of profit, and fourth, to be derived from the efforts of others. The judge did not say outright that these NFTs were securities, but he did say they fulfilled three of the four parts. That's what I did the first three to me makes sense. Right. And that what's also very interesting is that it might be a security because of this fundamental reason. And I think this is fascinating, because Dapper Labs owns and operates the flow blockchain, the private blockchain where NBA Top Shots are traded. And since that blockchain's success is tied to the success of Dapper Labs itself, that's why it might be a security. The judge noted that if NBA Top Shots were traded on a public blockchain, like Bitcoin, that then maybe they wouldn't be. And I think that is such a nuanced, crucial reading going forward. This judge really gets it.

this how we test, you know, is for securities, typically not collectibles. And so the collectibles industry is always like, oh, just training, you know, baseball cards. Literally, that's what top shot is. It's the digital version of baseball cards and baseball cards go up in value, people buy them as an investment, right? Yeah. So it is an investment of money. It is a common enterprise. People do have the expectation of profit. And then this last one to be derived from the efforts of others. Okay, well, when it's a company like Google, yeah, people are working at Google, and you're collecting the profits of others here. After the card is minted, using the baseball card analogy after the baseball card is minted, is very little effort in a baseball card or a comic for the efforts of others, you might be able to argue like, I don't know if they if Marvel really invests in Iron Man a whole bunch, maybe that would make it, you know, more valuable, I guess. So when they do, what do they call it when an NFT like the Bored Apes mutates, or they do a drop, right? They add to the value of the NFT, you know, when they do that, they'll like mutate the NFT, and they'll give you like a free NFT as part of it. When they do those kind of things, that feels like driving from the effort of others. So that that also could be a rub here is that if you do the thing that people find valuable about NFTs, which is those mutations and stuff, that would be one. Well, and also the maintaining of the blockchain, the effort to maintain it, right?

I mean, that's one of the I think the three things and exactly. And then the fact that it'd be like if you sold baseball cards, but then you also like the, you know, the analog version or something, if you sold baseball cards, but then the only place that you could ever sell or resell or buy those cards was at your own auction that you ran. Right. That's different from like, I just sell a top shot. You know, I could sell a baseball card out in the world and like buy it on eBay, sell it on eBay, sell it anywhere, sell it privately. But if all of the then, and then that auction house, the privately owned one takes a cut every time you do something, then the only reason for those cards to have value is to enrich my private blockchain. And therefore you have potentially a security. It's just a really like, good job, the judge, people are catching on. We talked about with the crypto roundtable a couple weeks ago, how, like, it seemed like Gary Gensler, it seems like the scalpels are coming out. Like regulators and judges and legal system is starting to figure out how to scalpel out the parts that are no good.

Yeah. It's nuanced. It's certainly nuanced. And I, nobody thinks that Dapper Labs is a bad actor. In fact, quite the opposite. They seem to be doing things in a thoughtful way.

I would, I would argue that 11 former and current employees think that they might be a bad actor. And this judge, sure. In fact, they might be a bad actor. I'm just gonna say, it's not no one. It's not zero.

How many employees they have like 3000 employees at that place, I bet. Probably over 1000 at the peak 600. So 11 of 600 statistically valid, I guess 1% 2% that's valid. So that is a real number. It's not to that's why when I say it gets a double digits might have a pattern going on here.

Yeah, it's just, but there's no lawsuits.

So there's no crime going on here. He made people feel bad. He was a jerk.

And he spent money on well, there, there is there's not a lawsuit from the employees. There's the first story. Back to the block story. The second one.

Yeah, he's in trouble.

Yeah. Anyway, it's like, listen, when the market goes down, this is These are the things that will happen. This is the kind of like, knives come out, knives out. The knives, yeah, exactly.

Oh yeah, that's the glass onion, knives out. Knives come out. Who knows what the truth is here? Like, it's probably... a little bit of a little bit of truth in each side for former employees who were close to the CEO said even as the bear market set in Gary goes, Lou appeared to be more concerned with generating hype by celebrity partnerships than he did building new products, running developers, utilize dappers blockchain. So that's a strategy. Yeah, question more to come.

I'm sure I'm certain that this is not the last knives out story that you will hear.

I would be very careful with that.

Southern District of New York. That is, I would look out for that. And I definitely no joke. I'm mentally bookmarking this public versus private blockchain conversation for the next time Sonny and Benny run because I think that's a really interesting wrinkle.

I think they Yeah, just need to make it. They should make it public. Yeah, they has a tough one. I wonder what their thinking is there of why it needs to be Oh, probably because they need to have controls. So here's where this is where it gets dicey. If you want more controls to have more consumer protection, right? Then you're doing securities law. If you give less controls to not break the securities law, then the public has no recourse. Like when somebody loses their Bitcoin wallet, right? So right.

This is the or something just won't be as valuable. You can make it more valuable by minting it on your own blockchain and controlling every aspect of it. Yeah. Okay. Sort of security. Yeah.

My understanding, though, is you could sell them on other blockchains.

I'm sure you could sell them on other blockchains. I would just imagine that the the flow is controlled by them.

Yes. I mean, if we're having a hard time thinking about what the right thing to do here is, like, I could see the SEC and Southern District also being like, huh.

I think it's just like we're going to don't you feel like what's really going to happen is we're just moving to a universe where NFTs have to have utility. They cannot just exist to trade and be a collectible because that's always going to become some that's some sort of a. it's to make money, like fundamentally, it's it's an investment with an expectation of profit in a common enterprise, it would, you know, you know, like the, you just keep coming back to that every time, like, maybe your NFT should just be a concert ticket.

And then we can avoid all that super like what happens in art, you know, it's long been known that some people use art as a way to, you know, collecting of art is seems to be a very seems like the IRS, and people who buy art are well aware of the nuances in buying and selling art and taxes, and the gains on them and inheritances, or it seems, I don't wanna say a loophole.

But a loophole. Well, it's not a common enterprise. There are lots and lots of artists, right? Like, I guess maybe that's the difference. Yeah, and it's just hard test, I guess.

Yeah. And then there is the value in of owning it. So I own this thing, because I love it. It has nothing to do with taxes or money or donations. So I bought this for 30 million. And I got a donation for 30 million when I donated to MoMA. And right, you know, whatever.

Sure, just like any asset, any asset of value can and will be arbitraged and exploited. And then the question and the question is, at what point do you hit all four ticks and then you're doing it to make money, right? You could argue that all the behavior you described about art is as a result of art being an underlying asset that has value, but it was not necessarily created to be an investment with an expectation of profit. It was art. But if an NFT was created specifically to be an investment vehicle with an expectation of profit that would then flow back to the flow of blockchain, and on and on and on. Yeah, it's, you know, it's tricky.

Well, then the people buying the art from a free port, you remember that whole thing? So you have to pay taxes on it. Yeah, I mean, then there's like the donations of it. I just every time I talk to a rich person about art, as a real head starts spinning, because they're doing so many different moves with their art, that I'm like, this can't be illegal. What's going on? What is why exactly is all this effort going into art? feels like more effort than the art is worth. Like, I mean, and then there's the wash trading. Well, the wash trading that occurred in NFTs is definitely a real thing. Like when people were flipping them and then you come in and you're the 18th buyer of this, but in fact, you're the first buyer of it. There's 17 people who came before you were just running it up to create a

Washer they were also you they were your 17 wallet. Sure. Yeah, you know exactly you armed it up yourself And now you're trying to find somebody to buy it half the price that you Pushed it up to if there's money to be made people are gonna figure out how to make that money I mean at the end of the day like that's Never not been true

The utility of NFTs is the key here. If they have some utility, that would be good. More utility would be good. Yeah, we'll see. All right, everybody. Thanks for tuning in. We're back. Oh, and hey, the climate shows back. Tell everybody what's happening tomorrow.

Yep. First edition of the Tuesday climate show. We're gonna break down some climate news. And then I'm focusing at least in the beginning here on some climate unicorns. So I'm talking to Arcadia. one of the first climate unicorns with Climate Founder. They're doing community solar and all this kind of, speaking of arbitrage, all this kind of energy arbitrage that's just making tons of money. Then on Wednesday, another amazing angel interview. It's just like a boom, boom, boom kind of week.

All right, everybody, we will see you tomorrow.

Bye bye.

Bye bye.

It has been. It has been a while. Well, I'm super pumped to join you today for the news, because this first story I'm really interested in. When you sent it in to our group chat, immediately I was like, we have to cover this one first. So Apple's delayed the approval of an update to chat GPT powered email apps on its app store over concerns that it could generate an inappropriate feed of content for children.

Dun dun dun.

I know a big question here. Should chat GPT powered apps be limited to those 17 and up, even if they aren't using search?

Because that's what Apple said, right? So they blocked this update. It's the an app called blue mail. And they wanted to integrate the chat GPT technology from open AI to automate writing emails. And then Apple said, you need to set your app permissions to 17 and up. Because from what we've seen of Bing or chat GPT, there's a chance that this could generate inappropriate material is how I understand it.

Exactly. And Bing is already up on the App Store too. So we see them and they actually do have that function that says people should only be 17 or up when using this. And the reason they have that is because it is a search tool. So your kids can look up something inappropriate. But this app is just for mail. It's not necessarily something where kids are going to be searching on it.

Apparently, Apple wanted BlueMail to either set move up its age restriction to 17 or include content filtering. And I mean, you know, just because it's generating email, if it's a sort of a similar thing as a chat GPT, like a prompt, you know, Katie bar the door, you could totally put in your email prompts. That's like, write me a, you know, death threat with bomb making materials. Like there's, if there is no content restriction, there's certainly the option to do that. But I feel like this is interesting for a couple of reasons, not least of which the most of which in fact is, is Apple's gatekeeper role here, right? It's like, okay, parents just came in to the AI world. And sometimes you want Apple to exercise its gatekeeping authority. And sometimes you don't. And I wonder if this which one this is.

Yeah. And moving forward, then do you think that all apps using generative AI should have a restriction to make them 17 or older, even if that might make it a little bit harder for their app to grow?

I mean, I think this is gonna be a fascinating conversation. And I find it, which is a dodge, I know, to the question. But it gets to this kind of fundamental question of how these things are operating and operated. There was a really interesting piece in The Atlantic that was about this woman who I think in 2020 wrote a whole long piece about the dangers of making AI sound like people. Like remember, you might not, but when, when Google, I say that because like, I'm old, but when Google unveiled, this is somewhat recent, the bot that has the ability to call out and make a restaurant reservation for you, there was a huge freak out about the fact that this chat bot, literal, interactive thing that would talk to people, wasn't identifying itself as not human. And there was a big moral debate about like, why are we designing things and designing AI to imitate humans? And we clearly have. And that's why you get these sort of hallucinatory responses potentially from, you know, Bing or, um, chat GPT when you want it to write a play about something horrible. On the other hand, there's the argument that we've heard about, like, if you restrict its content, are you censoring it? Is it, you know, or are you, are you imposing your values? And Apple has imposed its values on us for years. Apple is super freaking prudish. Like it's, you know, they have always wanted to create this kind of sanitized playground on the app store and on, uh, in the Apple universe where there's like no sex and no violence. And there is really, and there's always been a question about like, is that you're right? Apple, like, just let me have what I want to have.

Yeah. And it's funny that you mentioned how everybody was kind of like up in arms when they let people use Google to order from restaurants, because one of my roommates, it feels like you can't scroll through their TikTok page without hearing a generative AI Um, like bought over a video game that sounds like a president. So a lot of them are a Barack Obama. This is such a thing. And I swear. Yeah. So there's like a lot of people that will use generative AI to like sound like Barack Obama or, um, other people that are politicians. Barack Obama tends to be the one that comes up most for him. Um, and He's like, oh, these are so funny, like starting off, but it really does. Like when you start thinking about it, I guess it's like a little bit more critically. Um, obviously Apple's thinking a lot more long-term here. It starts off as something that is just like an email app or just a funny video online. It's like how much further can, can it dive, um, dive into, I guess, like another question I have for you is how much of a headwind do you think that Apple's guards, I guess, around AI, how much of a headwind could this be for the industry?

Yep. I mean, it's a big deal, right? Like, I think that it was kind of a slow burn for me this story. Like at first I was like, oh, okay. And then I'm like, wait a second. This is a huge deal because it is Apple at a time when there's all the scrutiny on these on tech companies and Apple and its app store still just basically saying like, no, we think this is dangerous. And And that immediately puts the question of whether this is dangerous at the forefront and into everybody's minds. And all of a sudden, you cannot sidestep this question of the content. Everything is content moderation. I've been saying this for years, right? And so is AI. And You can't now sidestep the conversation about what should it deliver and how, and how should it be implemented in ways that can safeguard society for God's sake. Like I saw some stupid story going around today about how like Sam Altman, who is simultaneously going to make billions off of this and is quite certain that it's going to kill us all. Was like telling people like, oh, yeah, I have a whole like bunker situation and like land and big sir that I can fly to and I have like a bunch of guns and and somebody was like, what are you gonna do? And it was like in case AI comes to try to destroy us and it was like Okay, what are you gonna shoot? like your internet cable like

It's just this, it's like, what are we supposed to be hiding from?

Like we need to know. Right. And also if you're designing this thing and you think isn't it kill people, maybe design it differently. Like you're in charge. This is not, there's not open AI, like AI bots were not born sprung full fledged from the forehead of Zeus with like eternal rights to not ever be censored. Like make it safe. But we, but now we're going to have this like bizarre, huge conversation about what safe means. And like, who even knows? But anyway, all that is to say, I think Apple putting their thumb on the scale here and saying, we think this is a really harmful, potentially harmful interaction for people is a huge deal and a big headwind.

And Bluemail does have some restrictions and content filtering around it. I guess the content filtering in place is just not good enough, like for Apple's standards. Do you think Apple should be the one to create this standard? Or do you think like AI companies can be like, okay, listen, we tried to put guardrails up. This is as good as it's gonna get. And then they should be allowed on the platform.

I just think this is going to be a huge firestorm. Absolutely. Right. And it's just going to lead to more and more questions about whether Apple is a monopoly, whether they should have this gatekeeper power. The truth is that. The truth is that we're like, in some ways, have always been thinking about this wrong, like not everything, first of all, has to be an app. Like if Apple doesn't allow an app on the app store. That seems fine. You could just go to like a mobile website. Like, I don't understand why everybody's just like, this is the only framework in which we can ever operate is the app store. Just whatever happened to the mobile web, like create a cool mobile web interface for whatever it is you want to do. And then nobody has to go through the app store and they can't gatekeep you. So I sort of feel like. I would really like the brightest minds in the entire world to be a little more creative about how they deliver their products to us than to sit there and go, like, the App Store won't let me have it.

Yeah, I'm blanking, but there was a really cool program that Fresh used on the launch team that can create any, like, web page and make it look like an app. I don't remember what he used, but I believe it was used for, like, our app for the All-In Summit, which was really cool. Yeah. you're right, like moving forward, people are, I feel like are going to try to find loopholes. And I think that would be one of them. So if you're somebody that can't be on the app store, would be cool. Um, I guess we're gonna have to find that post show, uh, the platform that he used, but it does seem like exactly like the web is an open platform.

The app store is not, it doesn't seem that hard to me for people to just like work around it. But if they're going to just sit there and accept that this is a huge headwind, because this is the only way you can ever deliver new technology, well, then I guess you're just not. I guess you're not that great.

Because isn't that kind of crazy? Because you can really see, like I said before, there are people saying some pretty heinous stuff, like as politicians, sometimes playing Minecraft. So when you're looking at the screen, it does look like something that is age appropriate, but it's definitely super not great for your kid to be listening to.

approach being listed on the app store? I don't know, actually, does it have a 17 and up? I don't think it has an age restriction, right?

There's like a screen time that you can do, but I always end up bypassing it. And I also saw an article that if you're under the age of 13, even it goes one step higher, where like the parents have to input the code. And I think that's a really smart decision as well. So if you're under 18, you can kind of be like, OK, yeah, this is like not great. You can use some of your like decision making skills at that point and make your own adult decision. Be like, OK, yeah, like I probably spent too much time on this today. But if you're under 13, your parent can get the code. So.

Right. But it is a little like, I mean, YouTube is on the app store, right? Like it is a little absurd, these sort of these sort of choices like that seem kind of random. But I do think that what it really is about is Apple putting a flag in the sand and saying, we're not, we're not going to let this technology just be released roughshod when, as we have pointed out in this show, it's pretty much an alpha. Like it is not necessarily ready for human consumption. And maybe this is really Apple being like, uh, don't think you're just gonna flood the app store with things that can, you know, create horrible interactions or give inaccurate information or just be like generally unsafe or destructive. TikTok, by the way, side note, just introducing a quick headline, as TikTok tries to make itself more safe, it apparently is setting new automatic one hour screen time limits for teenagers. For anybody under the age of 18. Which actually I think they should set that for everyone. Like, I need it.

And we've seen, like, it's interesting how TikTok kind of already had these functions if you use the app over in China. And it's also crazy to think that this isn't something already on Instagram after all that stuff came out about how horrible Instagram is to especially like young girls' mental health. You'd think that this would be something where I'm talking about the feature where the parent has those controls with the mom. for like a certain amount of time. I feel like that should have been like, this feels late, like this feels like something that might have already been, we should have already had this. But yeah, that's what I'm talking.

Yep. Which is the, that exists with built into iOS. I know. Cause my son used to complain about it for years. Um, but it is, it's very interesting to see TikTok do that, to try to make itself a more, a safer product. Like this is the, this is the conversation. And I bring up the TikTok thing because that's the conversation that's happening right now around technology is like, is it safe? Is it harmful? How damaging is it? And who, and who is in charge, you know, and Apple again, stepping in to be the, like the dad here. Who controls the passcode is a failure of all kinds of other governance from, you know, regulation to just companies releasing things when they're ready.

It would be interesting, like I feel like I'm so not in the world of creating apps, but I feel like now there's a lot of people maybe that are creating apps in the generative AI space or the AI space in general, where they have to create an app that is suitable for the app store and Apple in mind before even launching. So there's like this whole thing where there's like zero limits as a founder creating anything, right? But the limit for a lot of these people is becoming the app store. And it's kind of sad, I think, on that point where it's like you're almost stifling the potential of the technology. But at the same time, who's going to give it the safety limits? If it was an Apple, who is it going to be?

I mean, that's what I'm saying. Like, it, if we're to the point where Apple has to be like, this could be damaging. And, and frankly, that puts Apple in the position, if you really like the slippery slope, from the Apple perspective is that if nobody else, for one thing, cares about our health and safety, right? They're just out here like, ah, we'll make billions on open AI and chat GPT, but like, we don't care if it kills us all, we got our guns in our bunker. Or we don't care that Instagram is causing like massive rates of depression and suicidal thoughts among young women in particular and teenage girls. Or we don't care about this and that. Then Apple starts to become the de facto dad or mom for all of it, where they can just be like, No, this isn't good for you, but that's not a healthy ecosystem either. They shouldn't have that much control. It's just a hot mess.

Yeah. So Salesforce shares jumped as much as 16% on Thursday after the company beat expectations and provided strong guidance for its next fiscal year. So basically, Salesforce is juicing its stock price with the same strategy that Meta just used. And it seems like Benioff is listening super closely to his new activist investors. And we can get to the strategy in a minute. But first, let's go over some of these highlights from the Salesforce Q4 earnings.

Well, speaking of a changing environment. Let's talk about Salesforce.

Right. And this is, like I said at the top, this is really following that same strategy that Meta did, which is when your stock collapses, and Salesforce shares dropped about 60% from its COVID peak, which was back in November 2021, to its bottom in December 2022, And the strategy of Meta, number one, is cut spend. Number two, lower expectations. And number three is increased share buybacks. And for Salesforce, that cutting of spend really did come with, unfortunately, that 10% cut of staff that you mentioned that happened back in January. And lowering expectations, It did beat across the board in Q4. And then for increasing share buybacks, it just announced it was increasing its buybacks program to $20 billion. And the results, shares are up 11%.

So let's see, Q4 revenue was up, was $8.4 billion. That was up 14% year over year. They beat on revenue and we'll get to that in a minute because they had lowered some expectations, but they did end up $400 million over their expectations. Q4 operating cashflow was $7.1 billion. That's up 19% year over year. Q4 net loss And this is somewhat worth pointing out, was $98 million, but for a company of Salesforce's size, that's like effectively break-even. They reported, I know. And those losses did quadruple quarter over quarter. And yet, you know, when you're talking about a hundred million dollars in your Salesforce, like in Q4 revenue was $8.4 billion. It's kind of nothing. They did report $828 million in restructuring costs due to layoffs in Q4, which is a lot of money. They did that 8,000 employee riff in January, which is a lot of people. And then in Q4, and this is what's really a big deal, Salesforce bought back $2.3 billion worth of its own stock for shareholders and announced that it was increasing its share buyback program to $20 billion going forward. Any of this starting to sound familiar?

And where do you see, I guess, going all the way to just Salesforce? Do you have any predictions for maybe over the next quarter, the next two quarters, as they start playing this game with Wall Street?

Yep, they're playing the game. Yeah, here is I mean, really, right? Like, it's, it's like the Scotty from Star Trek game, like, oh, I just, you know, I under promise and I over deliver. And also I make investors happy. So here's a direct quote from Mark Benioff on Salesforce's earnings call. we immediately put into place an accelerated transformation plan in four areas. One, short term and long term restructuring of the company to improving profitability and productivity. Three, prioritizing our core innovations, continuing to do what we do without getting distracted. Little translation there. And then for this is really the key, a deeper and even stronger relationship with our shareholders. You And what I think is really happening, I mean, this is this is to me, exactly like the meta strategy, like you mentioned, which is, you know, just play Wall Street like a fiddle, just get that fiddle out, and start, start playing. Because I think for a long time, the tech industry could afford to ignore Wall Street. They did not have activist investors coming for them. Salesforce had activist investors trying to take stakes, right? Meta didn't have that. They had Brad Gerstner writing that open letter, which was a big deal. But Salesforce literally had active investors snipping around. When Janna Partners comes and starts leaking dish about your internal stuff to the media and calling for that kind of change and forcing it from the inside, you got to play the game. And I think for a long time, big tech didn't have to, they could just deliver for shareholders, they were the untouchable category of investment. And all of a sudden, now, they have to change. And they, and they are like, you see which companies are like, turn on a dime, start playing. See, also, by the way, I think that this trend will start to extend to regulation. Also, like a lot of tech companies were very, very slow to get policy teams, public policy teams, if they had them at all, and policy teams that could interface with Washington or do lobbying. So you're seeing like, gradually, the lobbying spend from big tech just go up. And I mean, talk about a hockey stick up into the right. And they're not going they they have had the luxury of ignoring investors. with their preferred shares and founder control and the luxury of ignoring regulators. And I think that those days may be changing, at least in the short term.

Yeah. So next quarter, we're gonna have to follow back up and check out how that is because you're right right now. It's like break even like you said, so definitely a metric to be watching out for.

I mean, I do think, you know, it's interesting. Benioff talked about profitability specifically from the earnings call and said profitability is truly our number one strategy. And that's my number one strategy. That's what I've been focused on with the management team. That's the number one thing we talked about at the start of every meeting. A key part of what we're doing is making sure that every executive in this company knows that profitability is our highest priority, right? Like Zuckerberg talks about efficiency. Benioff is talking about profitability. I mean, for years, this has been a company that just seems to print money without even breaking a sweat. So I would imagine that what we're hearing Benioff say is, okay, we're just going to stay focused on. I think that it's like a little bit of jargon to say, prioritizing our core innovations. It is kind of meaningless sounding, but it also speaks to a focus on like When things are going well and companies are trying to figure out how to grow, they start this octopus strategy of acquisitions, let's say, right? Like you buy Slack and you start to experiment with different parts of the business or different spinoffs or this or that or whatever. And when, you know, the ish hits the fan, you have to sort of come back to the core business. I've worked at a lot of places where I was like, right outside of the core. And, and that's like a fun and innovative place to play at a company. But it's not core. It's not core. Exactly. When things get really serious, you actually want to be core. Yeah. And so I do think that there's actually some real strategy contained in that statement. I still don't. I know they had a bunch of restructuring costs. I am going to be keeping my eye on, you know, you might think it's a drop in the bucket now, but quadrupling losses, quarter over quarter net loss. Like I'm just going to be watching that. I'm just going to still gonna put that out there a little my internal Jana partners is like, let's just keep an eye on that.

Absolutely. I'm a huge fan. My favorite ramen place in New York. Actually, not my favorite. My favorite one is called Lemongrass. It's also in New York. But there's one called Ivan Ramen that I used to live near. I don't live there anymore. But I used to live near one. They made a whole Netflix documentary about it. So I'm very passionate about ramen. And today's startup is Immy. It's a plant-based ramen company. It raised $10 million in a Series A from people like celebrity investors, including Usher. So we have to talk about it.

Yep. Let's talk about ramen for our startup of the day.

I graduated college like three years ago, so I feel like I'm still too close to the bagged ramen era, so it always feels like it's going. But for me, it's always it.

I'm like, this is crazy. Fascinated by this. I know the bubble is not over, people. The bubble is not over. Ten million dollars for ramen. The ramen. Actually, the ramen bubble will definitely never burst. And ramen is like having a moment. Ramen is back. Like ramen hack. It's a thing. Not to shout out to the other podcasts. It's never been gone.

You put an egg in it, and you're like, whoa. In top ramen. We're not talking about fancy ramen. We're talking about this is a bagged ramen brand that is plant-based, which is really cool.

But now there's ramen hacks everywhere on TikTok. All the ramen hacks have been huge.

That is insane. I don't know if anybody else has like ever done this, but I remember growing up, my brother was obsessed with top ramen that was dry and he would like crush it up and put it in a plastic bag. And it was like nuts. Like this kid, my brother eats dry bagged ramen. I, to this day. I don't know if that's a thing, but he is like one of those people that has like a Top Ramen sweatshirt, like is very brand loyal to Top Ramen, like incredibly. So I'm interested in, first off, I want to know who is at TechCrunch, like crunching, no pun intended, these numbers about the instant noodle sector, like good job. Love it. But I am excited to see more plant-based options being added. This is kind of fun because my brother's favorite is chicken.

It's a global instant noodle product. Yeah. So according to TechCrunch, This is so amazing. The market value of the global instant noodle sector in 2020 was nearly $46 billion and is projected to be about 66 billion by the end of 2027. So the ME company. Its latest funding round brings its total investment to $15 million and its flavors include spicy, beef, I'm doing air quotes because plant-based, black garlic, chicken, and Tom Yum shrimp. But the funding is going to let them create nine more flavors they have launched in retailers including Whole Foods, Wegmans, and the Fresh Market. Emi grew six times year over year in revenue and sold out seven times since 2021.

It's called the Oriental. Definitely not the best. Also, it's called bad.

Yeah, and I do like that they're starting to be that kind of because because the veggie top ramen is disgusting.

I hear the chicken one is just like the way to go. But for this one, right now we are looking at a, I inserted in our show notes, an image so we can kind of see the packaging. And it looks like the spicy beef one is actually like one of the top flavors over it. I mean, so if you have ever tried this or have ever tried dry ramen, Go over, let me know at at underscore Rachel Braun. I'm interested, I want to know. Or send us an email at producers at the speaking startups.

It's not great. I know. And it tastes like butt. It's awful. It's terrible.

Like a crouton? Like how a crouton works?

I mean, crumbled up dry ramen is a staple topping for salads in the Midwest. Really? No way. Yeah. Oh, absolutely.

No, she used these like lo mein noodles that were like crunchy.

Use it like a crouton. Yeah, exactly. You put that on your, and I can't believe the O word, like chicken salad. But there's like a whole salad that you can make in the Midwest that's like got oranges and chicken and peanuts and cabbage. And then you put the crumbled up ramen.

Oh no, now you're pushing it. I think TikTok's going to go absolutely insane with Emmy. I will definitely be trying. It says it's sold at Whole Foods. I, now because my packages get stolen all the time and I can pick up my Amazon packages from Whole Foods, have been going there more. So I will be on the lookout and I will be reporting back and sharing my thoughts on this.

Instead it came in a container. Or you can do crumbled up ramen. And there are a million even like way worse salads, quote unquote salads. Like there's just I think I've seen people do it in like jello salads and stuff.

Have you tried their packaged noodles? They're like, they're a version of Top Ramen.

I want to try it. And also it's important to note here, I think that as we talk about ramen innovations, we have to talk about, I think it's Momofuku is doing noodles that are like protein heavy, like lower carb.

It's so disappointing. It was so disappointing. Don't, don't try them.

I haven't tried them. I want to, but they're really expensive.

Momofuku is great. I've been to the, I've been to one, I think it's in Toronto. And then I tried like the instant ramen packets from them. I don't know. It's not if it's if it's not under like a dollar or two package and scan a little. I don't know about that one.

I like regular old ramen with an egg in it.

It is. You spoke to Dylan McDonald, right, of the founder and CEO of Foodini.

Congratulations to me on the race. This is actually to a perfect segue to today's series a startup and series a interview, which is all

Yeah. Excited for them to come to the States.

Mm-hmm. Foodini. Get it? F-O-O-D-I-N-I, like magic, like Houdini. I love this. We spend a long time at the top of this interview talking about that good name. Foodini connects people with dietary needs to suitable restaurants and menu items so they can, you know, go out to eat without stressing. He was diagnosed with celiac disease, which means he's profoundly gluten intolerant, like it can make you, celiac is terrible. I know people who have it. And the constant story is the years and years of suffering before they figure out that they cannot ingest or digest gluten. That inspired his founder journey, had a background as a lawyer, and used that to become a better founder and be really careful with this idea of telling people, you know, that they're giving them offers with Safer Food. They have dieticians on staff. It's a really interesting idea with, as it turns out, a huge, huge potential audience.

I talked to one of the coolest people ever, my friend Michael Tan. He is an author, which is really cool. I've never had an author on my segment before. And his book is called The Death of Uncertainty. The first time I read it was back in Miami Hack Week, which I also did an episode on where I talked to my friend Eric Button about a year ago. And almost a year later, Michael Tan is on. And The Death of Uncertainty is a book about basically this world that is dictated by an AI algorithm that can tell people how to make the best decisions for their lives. So everybody has these perfect lives, except for one person who realizes, you know, there's a suboptimal way of life and to understand the highs of life, you have to understand the lows. Overall, great book. We didn't just talk about his book, though. We discussed his thoughts on AI. Predictions about AI, how he was pretty early to the trend, early enough where he could write a full book about it. The predictions about the future of AI, like I said before, especially within, I feel like, this weird generative space is something that he was really interested in. And overall, great discussion. Fascinating.

All right. And then we're not done yet. We're not done yet today. We have OK Boomer. Who did you talk to today?

I don't really read a lot of sci-fi, to be honest with you, so I thought it was really great. But I would love to hear other people's thoughts who read maybe a lot of sci-fi books. I think it's a genre that I'd like to dive a little bit deeper into now, especially with AI, I guess, getting bigger. But this was my first sci-fi book I ever read.

This is probably one of my favorite ones. It's a novel.

Thank you, Michael Tan, for joining me today on OK Boomer. I met you in a really cool way. But before we get into that, Michael is the first person I've had at OK Boomer, I think, that has ever written a book, which I think is insane. I met Michael when we were in Miami for Miami Hack Week. I was actually at at a hacker house that was made by another former OK Boomer guest named Eric Button. So shout out to Eric Button at an event created by Jadon of Miami Hack Week, who again, another person that has come on the pod. So Miami, I have a lot of hope for, I guess, as a city. So thank you so much again for coming on. Super excited to break down your thoughts about AI, which is the topic that really encompasses your whole book.

I know. I'm so late to the game. I have a million book lists for you. I'm so excited. Welcome, Rachel. Your life is about to change completely. All right, let's listen to this interview.

Thank you, Rachel. It was a pleasure.

OK, everybody, that is it. Thank you for joining me, Rachel. It's always fun to talk news with producer Rachel. We'll be back Monday with a lot more This Week in Startups. Email your thoughts and your story ideas to producers at thisweekinstartups.com. and have a great weekend.

Maybe a spin-off show. Yes. We'll just make all the decisions while Jason's skiing. Vinny Lingam and Sunny Mandra. Welcome back to break down what's been happening in the crypto world. I want to start, thank you as always for sending us an amazing selection of stories to work with. Although I would like to start with Twitter because at the end of last year, I think I pinged the two of you and was like, what, what do we think is going to happen? next year in crypto writ large. And a big part of the conversation about what was going to give new breathe new light kind of into web three or crypto or payments was whatever happens at Twitter with payments. And then now this week, we found out that Twitter has laid off the executive who was working on that payments integration. And I want to know what the two of you are making of that.

I think it's because everything moves so quickly that, you know, we have to consider maybe making this more frequent.

Yeah, I wasn't trying to trick you guys into talking about Twitter, to be clear, like, I really want to know what you think about Dogecoin and payments. So we'll come back to that. But I can tell you that purely anecdotally, I feel the same way. I have gotten back double digit hours in my life per week. Because I'm just not, I'm never there.

Look, I think I think we're going to see something with crypto and Twitter. I think there's some natural intersections, uh, everything from tipping to, uh, you know, creator payments to, um, like the NFT stuff. I do think, um, you know, if, if you were to kind of sit back and, and this is probably a good transition to you, Molly, but if you were to sit back and look at all the things Twitter has to work on right now, payments probably, and crypto is just not top of the list, right? They, They've had to really deal with all the advertising fall off, right? And they've had to deal with all the changes that they've made. There's some core product features, like with the algorithms, right? There's been a lot of news around that, like even, you know, one day Elon made his Twitter private to see how it affected the algorithm and came back to being public. And so he unblocked a bunch of people around the algorithms to see how that was impacting the algorithm. So what I think is, there's probably just a need to focus on the core product. And you know, if you think of the product in these like concentric circles with like sort of tweeting being at the core payments and crypto just comes a bit later. And so I do think we'll see it. I just, you know, they have to probably resolve the core product issues. I will say, you know, something that reader with Vinny said, and I'd love to hear what you're saying. It feels like the energy that, you know, around Twitter is down a little bit in terms of like, I don't find myself, and maybe it's the tweaking of the algorithms as engaged as I was before. But, you know, I want to make sure that's not anecdotal, like, I don't have any kind of data behind it, but I'll kind of pass to you that that's sort of my take. I think they'll get to it. But I think they have core product features to figure out. That's my thing.

Vinny, why are payments so hard and how important are, I guess, you know, secondarily, like how important are payments as we build out functionality? Like it's just feels like at the end of the day, everybody wants to understand what the functionality still of crypto is other than store of value. I know you're big on identity, but where do payments sit in that kind of Maslow's hierarchy of utility?

Yeah. And on the Dogecoin front, like, maybe we'll just double click into that, like, you know, it is a really nice, you know, potential integration, because, you know, one, Elon, he has this really great thing, I think he did with like, maybe when he did the time interview for Time Person of the Year, and he calls out like sort of the two cryptos, he calls up, you know, Bitcoin as a store of value, and Doge as a transactional system. And so, and the Doge team has done a lot of work in the last few months, right, in terms of continuing to innovate on the platform, they now have an integration where you can do payments, or sorry, they can support transactions through like, like the SpaceX network. And so there's some really interesting things that they were a Starlink network by more accurate. So they've done a bunch of really interesting things. There's offline transactions and such. So I feel like we'll see it happen. I feel like Doge will be what it is, because Elon has just pretty much said that very clearly for a number of years. Just not right right away.

Yeah. Getting in the payment flow is a very lucrative business because the amount of money that gets moved around in the payments world, if you look at First Data, FISA, I mean, they're a gorilla, $2 or $3 trillion a year in payments they process on credit cards and other transactions. You know, it's a good business. And once you're in that payment flow, you effectively control it. I mean, Apple, look at Apple Play, look at the App Store. I mean, they take 30% cut in the App Store. They got Apple Pay where they make some interchange there as well and transactions. It's a booming business. So everybody wants to get into payments because it's just a very lucrative business. And the thing about payments is that the marginal cost of a transaction is zero. So you're just making free money once you get to scale. And so the downside of payments is it's really run by the bureaucrats because it's highly regulated. It's And so if you have a situation where you're, I'd say, trying to get into payments, if you're a big company like Twitter, your revenue prevention department in the company is going to stop you from making money out of it because they're going to put a whole bunch of rules in place. And I always call the legal department the revenue prevention department, because that's what they do. And so, legal and compliance will be all over it, making sure you can't... And then also, that informs how the product's built as well. If you look at successful products like Cash App, and that was built by Mike Brock at Square. That was a very successful product. And I think they got to scale quickly, and then they sort of tightened up the regulatory side of it. Vimo did the same thing. Vimo was flying very low to the ground before they got bought by PayPal for 20 million bucks. Same story, right? They even paid fines after... PayPal paid fines after they acquired it because they broke so many money transmission laws, whatever else. But that's why startups are better suited to doing payments than big companies because, well, if Venmo messed up, the investors lose some money. And if they succeed, well, they get bought by PayPal. It wasn't a huge outcome at that point, but they were able to disrupt payments in a big way. And then obviously, the regulations and taxes and reporting in Venmo now has come in. years, years later, but they've already used the time they've had to build a big lead. So it's really hard for a company like Twitter, which is a public company or was a public company to go innovate in payments and beat the existing players out there without having to comply with all the onerous regulations. And the risk to the mothership is just too big. So the Revenue Prevention Department steps in and stops you from getting escape velocity.

Yeah, I double on what Vinny said there. Like, I think there's a lot of promise around the simplicity around payments that exists, you know, through crypto infrastructure. Right. But the reality is like, once you kind of, um, start interacting with, you know, regulators and everyone else, like it's, less of the technology around making payments happen is the actual rails of moving money around. It's more around like support, and I didn't get my money and all the infrastructure around that. And like, hey, was this a fraudulent transaction? Did this go to someone that shouldn't go? And so, you know, conceptually, on a blockchain, you can build a peer to peer payment system very simply, right? With like, probably under 200 lines of code. Um, it just the peer-to-peer payments bit. And there's some apps that do that really well. I think the minute you try to turn into a large company and you have a revenue prevention department, as Vinny calls it, then you end up with millions of lines of code that are dealing with all the customer support issues, all the regulatory issues. And then you end up having to build all this additional infrastructure, which is, you know, what exists at PayPal and every other place.

And unfortunately, somebody sues you eventually, and then you have to call in.

Or just someone calls in and says, I didn't get my payment. What happened? And you know, yeah, exactly. Yeah.

Well, this is the biggest problem that Twitter hasn't solved yet is identity, right? And until they solve identity, they can't solve payments. And I, you know, I think there's just, I've spoken to people at Twitter over the past decade about identity, eight years since I've been involved in the civic. I'll be quite insulting. I'd say most of them are just a bunch of low-grade people who don't understand how the space works. They've bumbled along for way too long at the company. I've never been impressed with anyone I met at Twitter who told me they understood identity. It was always trying to a bunch of hacks. And I can say that now because they're probably all fired. But they never really got identity.

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Twitter should move to ingesting verifiable claims and credentials in a decentralized way. You can That could even go as far as saying, hey, here's an example, if you've got your ID established with even Experian or TransUnion or whatever, or a bank, you should export those credentials to Twitter and Twitter should be able to rely on third-party credentials to verify who you are. Twitter shouldn't be trying to verify every single person in the world because it's a global service. They don't have the ability to go and dig into every single service. What they should do is say, if you want to get verified, these are the tools we use. We use open source, we use DUDs, we use verifiable claims, whatever it is, and these are the providers you can use. basically look at that entire web on a global basis, allowing people and companies to do attestations for people. So for example, Sonny could come to Civic or his bank and say, hey, can I just get a credential that says I'm Sonny? And we could issue it to him, and he can go to Twitter, and Twitter could read that credential and verify it. And the thing about this system of verifiable credentials is that when Twitter reads that credential, Civic doesn't know it's being read. And so the privacy loop is between Sunny and Twitter. So you solve the privacy issue because you're not letting people... For example, you're logging with Google using OAuth. Google knows every time you log into everything using Google because the service is paying Google, asking for the token, it's going back and forth, and Google knows that every time Sunny logs into Facebook as well. Every time OAuth is used to log into any single website or service, Facebook knows about it. They're a centralized authority. With verifiable claims and credentials, you can basically present stuff. And as long as the cryptographic proofs are there, and it hasn't been revoked, then you can assume that if he's still in possession of those keys, that that's sunny, and you could ask for additional challenges and whatever else around that. But Twitter I think they don't think about things on a global perspective. It's very much a US perspective on identity. And then also, the second thing is, they were very focused on getting as many active user accounts as possible. Even if they were bots, they didn't care because they were just charging advertisers for tons of page views. And there was no real incentive to stamp out the bots and reduce page views. And so it was just like, let's not have a high-friction service. Now, I think that what the algos should What you should do with algos is this, you should say, if someone has a verifiable credential claim or an identity attached to their account, that gives them a boost in the rankings. Now, that means I will see your and Sunny's tweets way before I see some random tweet account unfollowing that hasn't been verified. It doesn't mean that their account isn't being surfaced, it just means that it's lower priority. And what happens then is it forces people to say, hey, let's verify ourselves to get higher rankings in Twitter results pages. And everyone who is a legit, reasonable person would say, okay, if I can do it in a private way, and I can verify my identity, and I get more engagement, I get more exposure to a bigger audience, there's a good economic reason why I would do that, so I will verify myself. For those who want anonymity, and by the way, you can do this in an anonymous way. You can do an assertion. So you could say, here's a verifiable credential, which proves I'm a US citizen uniquely, and I'm over the age of 21, and that's it. And then using those credentials, I can never reassert those credentials on another Twitter account without being marked as the same person. But you don't know who I am. So these are things. We can do things like drop tokens into wallets. Civic does it with Civic Pass right now. We can drop a soulbound token into an ETH wallet or a Solana wallet and verify that person's unique. And any other wallet they try and create, you can't replicate that same token. There are ways to do this. There's just no will for Twitter to change the way things work. They're just doing it like they've always done it. And that's the issue.

Can I tee up something to you just, and I think this is a quick, it's outside our show notes, Molly, but I think it'd be a good one. Vinny, help us understand like what an ideal Twitter identity system looks like, because I know it'll involve crypto from your perspective. So can you give us like your pitch on it? identity on Twitter, or not even be on Twitter, but just give it to us.

Yeah, yeah, yeah. And then they count even bot views as impressions, which is rubbish, right? You're right, the incentives didn't exist, but the bigger picture here, Mollie, sorry, let me just finish the point. The bigger picture here is that Elon's not wrong. Okay, if you move to a advertiser-less service or a lower advertiser service, and you can build real value in the platform by having real people engage, you will have higher engagement rates, and the advertisers that are left behind will actually spend more money because they're going to get better ROI. You may have a smaller user base because you can't tout these big numbers, which aren't real anyway, but it would be a higher quality advertising platform.

When you look at direct sales... And at the end of the day, it was a display ad at the end of the day too, right? It was just a display ad.

It's also not without controversy, because there's a question about the aggregation of that much data. Wasn't there a project that was trying to do that? It was like, It involved a globe that would scan your eyeball and then you'd be issued a token. World coin? World coin.

I think Sam Altman was involved with that one too, right? Yeah. Yeah. Yeah.

I mean, it's a little too late type of thing. I mean, we've been through this with Bitcoin 2017. The argument for Bitcoin to be more than a store of value, that battle was fought and lost in 2017. So this ordinal thing, it looks cool, but it's not going to scale because Bitcoin's not going to increase the block size. It doesn't matter. It's kind of a flash in the pan. Maybe it becomes a layer two type solution so it runs on lightning or stacks or whatever, whatever. It's not going to be something that natively runs on Bitcoin forever. It's not going to get to scale. It'll be a niche thing, which maybe a few people want to use and some hardcore Bitcoin people want to use, but it's not going to go. Bitcoin can't handle that. Seven transactions per second. For the entire Bitcoin network, it's not going to be able to handle this. The mempool, they're going to clog up the mempool with this stuff. The fees will go up and up. It's basically in a hype cycle right now. The fundamental issue here is the Bitcoin blockchain is a one megabyte block every 10 minutes. There is no capacity for providing the world or even a country with the ability to create NFTs on Bitcoin. It doesn't work. The math doesn't add up. And so unless the community is willing to increase the block size, which we know it will not, then it's not going to happen. There's an argument that this thing will probably work better on Bitcoin Cash or Bitcoin SV because they've got much bigger blocks and they can scale it. But that's not going to matter because Solana and Ethereum and Polygon really have such a lead on all the others. I think this is a dead end.

I think it's the second one, but, um, but so like, let's kind of talk about it. Ordinals is the protocol that they're using. Right. And then 12-fold is the product and you're saying it's the second product using Ordinals? I believe so. Yeah. Got it. Got it. Help me understand the protocol. Yeah. So let's kind of take a step back and start from Ethereum and then we'll go why it's important on Bitcoin. So most NFTs, which we've spent a lot of time talking about in this podcast in the past, have a combination of some information stored in the blockchain and then generally some information stored off the blockchain and maybe in some decentralized storage like IPFS or Filecoin or take your pick. And so the interesting thing there is that you require kind of those two pieces to come together to get the full information about what is the representation of the NFT. So that could be in that like there's the The data behind NFT could be put into the blockchain and then the image itself or something like that lives in a storage system. There was one project, I mean, there's several projects, there's one project of reference that moved everything onto the blockchain in Ethereum, it's called On-Chain Monkeys. And what's interesting there is the entirety of the NFT is fully included into the transaction on the blockchain. And so what Ordinals really created was a similar thing on Bitcoin. where an entire NFT is encoded into like a Satoshi. And so all of the metadata, all of the information required, so there's no kind of secondary system required to recreate that. And I think that's what's exciting about this. Obviously, it's on the Bitcoin ledger. And so, It kind of creates some excitement that there's some more utility on that ledger other than just transactions which have been there. That said, that ledger is much more expensive to transact on, and so Vinny, I'm going to toss to you here. When you think about, you know, doing these things at scale, you want to move to a place where the transaction speeds are high, the transaction costs are low. And so, you know, overall, it's a very exciting development, but I don't think it's like an innovation forward, in any way that like, creates sort of a new advancement for the space, but Vinny, I'll toss to you.

It's very niche-y.

And the Yuga drop is only like 300, right? And so you can see that they've kind of had to navigate around that as well. So I think, you know, between the transaction price, the speed, I don't think this becomes anything much bigger than sort of a little bit of a news splash here.

So really, they're going to creating a bunch of Rolls Royces that no one's going to want to buy. Like, I'm having a hard time understanding why do it then?

I agree with you. I think it's a bit of a cash grab. I think there's 300 people out there in the Bitcoin ecosystem that will buy these. And yeah, that's it. Yeah.