Anthony Pompliano’s Story: Lessons on Bitcoin, Life, and Investing (w/ Raoul Pal)

RAOUL PAL: Pomp– the man who needs no 
introduction. Finally, I'll get you on   Real Vision. ANTHONY POMPLIANO: Thank you 
so much for having me. We've been planning   on this for a while. RAOUL PAL: I know. It's 
just before we had to do things in camera and   in person. It was a fucking nightmare. And now we 
just do Zoom. You're in Miami. I'm in the Cayman   Islands. It's easy. ANTHONY POMPLIANO: Absolutely. 
I'm excited to do it. RAOUL PAL: So listen,   I want to do something a bit different with you, 
because you get a lot of sound-bites, you're all   over the place.

I want to hear the Pomp story. I 
want to know who you are, where you've come from,   how did you get here, all of that stuff. So 
let's start at the beginning. Where did you–   go for it. ANTHONY POMPLIANO: So I have a mother 
and at one point she decided to have a child.   No. RAOUL PAL: She probably regrets that by now. 
ANTHONY POMPLIANO: Oh she definitely does. No,   I was born in Hollywood, Florida. We lived in 
Lakeland and Cooper City, and then we moved to   Raleigh, North Carolina when I was young, seven, 
eight-years-old, whatever it was. And I'm the   oldest of five brothers in my family. And, 
you know, all of the good and the bad that   came with that from my parents. I probably gave 
them nightmares at night, but also they loved   every second of it. I ended up going and playing 
football at Bucknell University, studied economics   and sociology there, and then was in the 
military, did six and 1/2 years in the   military. Did an deployment overseas, came back. 
RAOUL PAL: What age did you come back from the   military? ANTHONY POMPLIANO: So I signed up when I 
was 17.

I needed my parent's signature to sign up.   And I basically signed up with the National Guard. 
And I knew that I was going to go to college. I   was going to go play football. And then basically 
I would just owe some time, like after school.   But what ended up happening is, I got deployed 
when I was a junior in college. Literally like   two weeks into the school year I got a phone call, 
and they said, hey, you're going to Iraq with this   unit. And I was like, no, I'm not. I'm going to 
go play the football game on Saturday. And they   were like, that's not how this works. So I ended 
up doing that. I was 20-years-0ld when I got   deployed in 2008 and was there, kind of total 
deployment, 13 months. RAOUL PAL: Where did you   end up? ANTHONY POMPLIANO: I went to Taji, Iraq, 
which is about like 12 miles north of Baghdad.

And   we did, basically night route clearance. So we 
drove along the roads, super slow, like five,   seven miles an hour and looked for roadside 
bombs and ambushes. We basically would go out   in front of the resupply runs or other soldiers 
and try to sniff out, kind of all of the danger.   So we're driving in the middle of the night with 
out lights on and kind of slow. And then they'd   come behind us and they'd get to go 60, 70 miles 
an hour with all their lights off and just try to   beat people with speeds. So it was– RAOUL PAL: 
Was that a little terrifying You're a kid and you   get sent there.

You think you're going to be 
playing football. The next minute you're trying   not to be blown up on the side of the road. 
ANTHONY POMPLIANO: When you're 20, you think   you're invincible. Right. So there's an element 
of, hey, this is fun. And the best part about   the experience honestly was– I got deployed. I 
was– by far I think I was like the youngest guy,   at least five years if not more.

Most of the guys 
I was there with, I'm pretty sure were kind of   late 20s into their early 30s. And these guys had 
families. You know, they were married. They had   kids. They had mortgages. I was basically just a 
young idiot kid who had been in college and was   worried about the football game on Saturday or 
the party on Friday night. And so to kind of get   thrown into this environment where, not only are 
you around a bunch of pretty mature men who are   in the middle of, like, living an adult life, but 
also in a situation of danger. And in many cases   I was in charge of some of those guys. It just 
was a situation where you got to grow up really   fast. Right. You kind of learn very quickly, 
like, you can be the big smart-ass all you want,   you can be the funny guy, but at the end of 
the day, like,– RAOUL PAL: Hi, I’m Raoul Pal.   Sorry to interrupt your video – I know it’s a 
pain in the ass, but look, I want to tell you   something important because I can tell that 
you really want to learn about what’s going   in financial markets and understand the global 
economy in these complicated times.

That’s what   we do at Real Vision. So this YouTube channel 
is a small fraction of what we actually do.   You should really come over to realvision.com and 
see the 20 or so videos a week that we produce   of this kind of quality of content, the deep 
analysis and understanding of the world around us.   So, if you click on the link below or 
go to realvision.com, it costs you $1. I   don’t think you can afford to be without it.
ANTHONY POMPLIANO: It just was a situation   where you got to grow up really fast. 
Right. You kind of learn very quickly, like,   you can be the big smart-ass all you want, you 
can be the funny guy, but at the end of the day,   like, you got to be an adult. Right. And so 
it was probably a really positive experience   in hindsight. But at the time, you're just 
a 20-year-old kid running around with a gun   in the desert, and you frankly are too stupid 
to realize how dangerous it is.

RAOUL PAL: So   what made you leave? ANTHONY POMPLIANO: I mean, 
once you do like six and 1/2 years, basically–   so that was one contract. If you sign a second 
contract, you're probably going to end up doing,   you know, over 10 years. And everyone always talks 
about 20 years is when you get to retire. And so,   like, if you've already halfway over then, pretty 
much like, why would you not just finish it out?   And so I knew that if I signed a second contract 
I probably would stay. And I just didn't really   have the desire, really, frankly, to kind 
of do it for 20 years. And on top of that,   when I came back from Iraq I was on a soldier's 
salary, which basically is not that great,   except for when you're overseas it's tax-free. 
And I came back and on the way transitioning back   in Kuwait they have all the defense contractors. 
And they basically sit there and they say, hey,   if you go right back for six months, we'll pay you 
$90,000.

And if you stay the whole six months and   don't go home at all, we'll pay you a 10k bonus. 
You get 100k. Or if you do it for 12 months,   we'll pay you $180k with a $20k bonus. You get 
$200,000. Pretty much guys were sitting there   saying, wait a minute, you're going to pay me a 
lot more for doing exactly what I just did and   maybe I might actually be safer and there might 
be better food and better accommodations? Like,   it's pretty compelling. But my father had a very 
clear conversation with me that was like, you're   not going back.

You're going to go back to finish 
school, and so that's what I did. RAOUL PAL:   So you finished school. Your experience is 
now over in the military. What do you decide   to do? ANTHONY POMPLIANO: A weird experience 
was when I went back. I had basically missed   three semesters. And so I went back to school, 
basically my class that I went into college with,   they were graduating. So I went back, kind of the 
second semester senior year. They're all basically   checked out ready to leave, and I'm staring at 
four more semesters of school.

I frankly don't   know anybody other than my friends who were 
leaving. And so I had to kind of reestablish   friendships. I kept playing football, which 
was great, and really kind of helped with the   transition back from the military. And in the last 
semester that I was there– I ended up doing the   full four semesters of work in three semesters. 
But in that third semester my dad called me again.   He was just like, look, you got to either go get 
a job or you can make a job. And I was like, well,   getting the job sounds dumb. I don't want to do 
that. So, like, let's make a job. He was like,   well, you could start a business. And I was like, 
OK. How do I do that? And like, you know, I mean,   just like, in hindsight, so dumb. And he just 
walked me through it. He was like, look, basically   you can go work for somebody or you can create a 
company and people work for you. RAOUL PAL: What   did he do? How did know how to do this? ANTHONY 
POMPLIANO: So he basically lived two lives.

So   his first life was, he worked for 25 years 
at MCI and then AT&T, you know, rose up,   literally the classic story of like, him, his 
father, his brothers, his whole family worked in a   single company and kind of did the corporate thing 
for decades. And then as he got older, he ended up   basically becoming like a technology executive, 
working for companies other people had started   and then he started his own companies.

And so he 
really got bit by the entrepreneurial bug. And   he never really pushed it on my brothers or I, but 
he definitely, I think, wasn't there to discourage   us, if that's what we wanted to pursue. So it 
was kind of the perfect way, I think, to say,   hey, look, if you're interested in this, I'll 
only encourage it, but I'm not going to tell   you to go do this. And so that's what I did. I 
basically– me and three buddies from high school,   we created a company. It was literally every 
mistake you could possibly make in the book,   but it was in the online advertising space. And 
then there was a second company. RAOUL PAL: But   why did you start in the online advertising 
space? I mean, you knew fuck about fuck,   if I put it correctly. ANTHONY POMPLIANO: 
Literally, if I started to explain how these   things come together, like, we knew that in the 
local community around the university, basically   all of the local businesses wanted to advertise 
inside the school. So basically there was   three main employers in this little town 
in Pennsylvania, in central Pennsylvania.   It was the local school district, the public 
school district.

There was a local hospital, or   the university. And those were basically the three 
main employers. And small businesses, if you're a   local pizza shop or whatever, you basically want 
to advertise in those three places because that's   where you're going to get the most eyeballs. But 
the school districts had a very antiquated kind   of advertising system where literally there 
was pamphlets on a table. And in order to get   approved, there was like an archaic process. Like, 
you had to send in your pamphlet and this stuff.   These guys were like, look, man, I'm trying to 
figure out what the special is on Friday, let   alone trying to plan six weeks in advance.

And so 
we just got the idea of, like, why don't we just   create an online directory? And so as we kind of 
learned more about these public school districts.   Still to this day, one of the most popular, most 
visited websites in the world are the portals   where parents sign in to check their student's 
grades, their assignments, their conduct, all   that kind of stuff. But the schools don't monetize 
it. Right. The schools aren't in the business of   monetizing it. So rarely on the internet do you 
find a high traffic website that's not monetized.   But literally every school district in America has 
sometimes hundreds of thousands, if not millions   of page views on these sites where parents sign 
in. And so we started going around the country,   going to these school districts saying, hey, 
look, put this hyperlink on that page. It   looks very professional, and it'll link to a local 
business directory, kind of like what a Yelp is.   And we'll go sign up the schools, or the local 
businesses. And if they pay us– I think was   like $15 bucks a month, we'll basically split it 
with you.

We'll give you $10 and we'll keep $5 for   ourselves. And so we got free traffic from the 
school. They got a free check of money, right,   for just putting a link on their website. And then 
the small businesses got to advertise in front of   the parents and students in the school district. 
And so probably a pretty decent idea– horrible   execution. Literally every single possible 
thing we could do wrong, we did. And we ended   up learning a lot from it, which was probably the 
most valuable part of it. But that's really what   kind of kicked me off down the road of technology 
and company and investing.

RAOUL PAL: So what did   you do after that? What did you do with that 
business? You shut it down? Did you sell it?   ANTHONY POMPLIANO: We basically– we "sold" it, 
and I put that in air quotes because I think that   we basically got back just enough cash to, like, 
cover what we had invested. So definitely didn't   get rich off of it. But, again, just kind of like 
literally went through the entire lifecycle of a   business on a very small scale, and just learned 
a lot.

And from there I then start a second   business. That business did a little bit better. 
That was online data. And so if you think about   back in– this is in like 2012, maybe. All the 
APIs for these social media companies were wide   open. So you could literally ping Twitter and say, 
hey, give me all the tweets within a three-mile   radius of this GPS coordinate. Right. And they 
would literally just dump all the tweets to you.   And so what we did was we basically came up with a 
piece of technology called identity stitching.

So   one of the problems back then was, there wasn't 
a lot of context. So if Raoul goes and he tweets,   "I love ice cream," that's not very helpful for an 
advertiser, for a sports team, for the military,   for law enforcement, for anybody. But if instead 
we know that you just checked in on Foursquare   three minutes ago at an ice cream store, then 
you say, "I love ice cream," then we can kind   of stitch that together. Now all of a sudden 
that tweet's much more valuable because either   a competitor wants to know that or that business 
or whatever. And so what we started to do was just   figure out all these little things. How do you 
stitch together various social profiles? And so   you may sign up with the same email address on 
multiple accounts. Well now we can match 'em.   You may use the same profile. You may use the 
same name. You may use the same URL in the   profile. And so we just started trying to figure 
out how to stitch together, and we were basically   selling into sports and entertainment venues.

They 
really wanted to know, like, who's in our stadium?   Right. If you've got somebody– this was before, 
kind of, influencers and all this stuff. But   if you've got somebody with a big following and 
they're talking about your team, you might want   to give them a special experience, bring 'em in 
the locker room, give 'em a discount or whatever.   And then also law enforcement and military. 
And so if you kind of think of a police   use case, they called it digital canvasing. 
So if a shooting happens on the street corner,   when they show up, pretty much everybody ran. 
There was a shooting, so everyone took off.   And so historically they had just gone to local 
shop owners or residents and said, you know, did   you see anything? But now what they could do is 
they could basically say, hey, show us all of   the social media content that have been created 
in a two-blocks radius in the last three hours.   And if you had created content they could see 
that.

And so that whole business led me to–   eventually I met some people at Facebook and I 
ended up actually working at Facebook, kind of   after that business. But it was just a really 
interesting time, I mean, kind of in the early   2010s, just seeing social media, how fast the 
stuff was growing, how important it was going to   be for society. And frankly it was a lot of fun. 
RAOUL PAL: And what did you do at Facebook? That   must have been a big shock, because you didn't 
want to work for anybody, and now you're back into   a monster. I guess it was a bit smaller then. 
ANTHONY POMPLIANO: Yeah. I joined, I think it   was like 4,000 employees, just under 4,000 
employees. And the two stories I always tell about   Facebook– so one is, when you use these products, 
especially when you're younger, before, kind of,   technology entrepreneurship got so celebritized, 
you forget that there's employees and there's   buildings and there's like a company behind it. 
Right.

You're just kind of using this faceless,   nameless product. And so I remember when I went 
out to California. It was the first time as a kind   of teenager or older that I'd gone to California. 
I went to San Francisco. I knew nobody. And I went   on the campus. And I remember just being blown 
away by, kind of how exciting and fast paced and   how smart everyone was, how ambitious they were. 
And so pretty much on the spot I was like, yeah,   I would love to work here. Like, this is amazing. 
And so I ended up running the growth team for   Facebook pages. When you think of Facebook pages, 
basically the top of the advertising funnel or the   top of the funnel for their business product, 
you have to have a Facebook page to become an   advertiser. And so in 2014, I basically 
stepped into a job as a product manager.   Nobody had really worked on growing that product. 
And I think I started out with a team of like   six or eight people. And over about a 12-month 
period we grew to over 30 people, two offices,   and ended up driving quite a bit of revenue to 
the bottom line.

The stock price takes off and   as with everything in life, you probably get too 
much credit when things go right and you get too   much blame when things go wrong. But I then had a 
couple of other opportunities that Facebook after   that. But that's where I started. RAOUL PAL: 
And then, so after Facebook, where did you go?   ANTHONY POMPLIANO: I went to Snapchat. I was there 
for a very short period of time. And then in 2016,   I started to invest full-time. And that was 
probably– the big decision was like, hey,   do I want to keep building companies, whether I'm 
the founder or helping other people build them,   or do I want to invest? And for whatever reason 
in 2016 decided I think I want to spend a lot   of time investing.

RAOUL PAL: So here's 
the most connecting themes– you go into   the military knowing nothing about being in the 
military. You then start an advertising business,   knowing nothing about the advertising industry. 
And now you're about to walk in investing. What   makes you think you have any idea what to do 
there? ANTHONY POMPLIANO: I think that it's   two things. Right. So one is just like, I'll bet 
on myself all day long.

And some people see that   as arrogant. Some people will see that as a level 
of selfconfidence. I actually look at it the exact   opposite, which is, when you bet on yourself, 
what you're really betting on is your ability   to learn. Right? I mean, that's all betting on 
yourself is, is, hey, I'm going into this knowing   that I don't very much about it, but I'm willing 
to bet that I can get up to speed very quickly.   And not only will I be above average at it, but 
I think I can be good at it. Right. And so that's   just having the intellectual honesty to one, 
recognize you don't know anything about it, two,   understanding that there's a lot of people who do 
know what they're doing, and you probably should   go find those people and learn from them.

And then 
three is also having the patience and discipline   to realize, like, it's just going to take reps. 
Right. And so, like, how do you basically get the   reps in a low risk situation first before you kind 
of move on to bigger and bigger things? Because   that's literally how I started was myself and a 
gentleman by the name of Jason Williams, who had   previously sold a pretty large health care company 
for about half a billion dollars.

We started,   essentially angel investing is really what it 
was, kind of $50-$100,000 checks of technology   companies. And we said, look, let's see if we 
can figure this out. Like, let's see if we can   do it. Let's see if we can enjoy it. RAOUL PAL: 
So you start with a blank P&L, no portfolio,   not really sure what to look for. How do you 
start? ANTHONY POMPLIANO: Yeah. So there are three   things we did. One, I had the benefit of, I had 
worked in Silicon Valley for a couple of years,   and so I knew some people.

I didn't have a great 
network but I knew enough people where I could   basically call them up and say, hey, have you seen 
any interesting deals? And they would say, yeah,   there's this, like, great deal. And so unbeknownst 
to me at the time, like, there was some, like,   really good deals that we ended up getting into, 
just because a friend of a friend or a friend   was investing. And so in that first portfolio 
it was only like a $3 and 1/2 million fund,   right, which, like, compared to most people 
they're just like, why would you even do that?   But we didn't know how much money we could 
raise. We didn't know anything. Right. And so   we were literally seed investing in these deals. 
And today, two of those companies are now worth   over a billion dollars where we're seed investors. 
We've got a couple that are worth hundreds of   millions of dollars. And in hindsight, we started 
off fast. Right. At the time it doesn't it feel   like that because you're like, I have no 
clue if this is something we're good at,   if we're going to join– and also the feedback 
loop takes a long time in venture investing.   Right.

It's not like you would make a decision 
today and tomorrow the price moves up or down and   you know whether you were right or not. Right. 
It's not like kind of trading. Instead it was,   we're going to invest today and we're going to 
invest a ton of time working with these founders,   and then we'll find out in three, four or five 
years whether these decisions actually worked   out or not. So now we're starting to see 
some of those data points and it's really,   really compelling. But there was a good number 
of years there where you just kind of have blind   faith that, hey, you know, I made sound decisions 
based on the information I had at the time.   And as long as I continue to help the founders, 
I'm going to work out.

RAOUL PAL: So what's the   maths behind, you think, of VC portfolios? It's 
kind of 80% zeros? My guess it's about 80% zeros,   18% kind of OKs and 2% knock it out the park 
winners. [INAUDIBLE] How do you think it played   out over time? ANTHONY POMPLIANO: Yeah, so it's I 
think a little difficult, or a little different,   depending on the stage that you invest in. 
Right. So if you're a really, really early stage   investor, you're more likely to have more losses 
than, let's say, if you're a growth stage investor   and kind of everywhere in between.

The one thing 
that I will say is, I think that the losses are   probably overblown. So it's probably not 80%, 
90% type loss. Like everyone always says 1 in 10.   It's probably something more like maybe the top 
10% or even 5%, they drive 90% of the returns.   And then there's a big, big middle gap. Right. So 
you might talk about out of every 10 investments,   maybe one is the outlier, then you've got six 
or seven that are kind of singles or doubles.   So maybe you either get your money back or maybe 
you kind of two or three asset.

And then there's   the ones that go out of business as well. And so 
I think that the fallacy of, like, 80% go to zero,   directionally it's correct or philosophically 
it's correct, but the numbers are actually a   little bit kinder to venture investors. And as I 
started doing it, again, going into it completely   uneducated was actually a huge blessing. 
There's a lot of people that I've met over   the years where they were a young person.

You 
know, I had started doing this when I was 26,   27-years-old, like 27-years-old maybe. And they 
had spent three or four years working for, like,   a legacy venture firm. And so they had learned a 
certain process. They had learned, really, kind of   a risk mitigation strategy. Right. If you think 
about, kind of a traditional venture diligence   process, it actually is somewhat pessimistic in 
its execution. Because what you're constantly   looking for is you're looking for all the reasons 
why a deal potentially couldn't work. Right.   You're trying to find that red flag.

I'm naturally 
an optimist, and so I went into it saying, well,   like, convince the possibility and that's good 
enough. I don't want to do the diligence on   all the ways it can go wrong. I want to do all 
the diligence on the ways it could go right.   And so, again, I didn't know that that 
like a good thing. Now in hindsight,   like, I understand that's actually a really, 
really important component of what we did. And   then we started to deploy capital. And you quickly 
realize, like, nothing the founder tells you at   the preceding C level matters other than who 
they are. Like, literally nothing. Right. And   so if you look at everything from Lyft, Uber, 
Airbnb, all kinds of big winners, all the way   down to the companies in our portfolio, like, if 
you bet on the right founder, they'll win.

And   now I've invested in a number of unicorns at 
the seed stage, and it's the one thing that   I constantly go back to is just, find the right 
founder going after a massive market. I'll bet all   day long. And people underestimate how asymmetric 
these investments are. We're not talking about,   oh, the investment could go up 5x, 10x, 15x, we're 
talking about investments that have 100-plus-x   type potential if you end up investing in 
what become multibillion dollar companies.   And so I think that the technology background I 
had in growth at Facebook really allowed me to   understand, kind of the exponential nature, 
or kind of the parabolic nature of some of   these types of investments. We we get to Bitcoin, 
that definitely is an advantage I have. And so it   was just like, look, go find the best founders. 
Who cares what the valuation is.

RAOUL PAL: What   defines the best founder? What is– for you. I 
mean, different people have different criteria.   What's like one founder versus another 
for you? ANTHONY POMPLIANO: It's a   problem-solver. That's all it is. Right. Like 
if you really think about building a business,   yeah, vision's important, recruiting's important, 
the ability to fund-raise is important. The idea   is actually somewhat important in terms of, like, 
you've got to make the right decisions about what   markets to go after, all that kind of stuff. But 
if you're a problem-solver and you have critical   thinking skills, you can think from first 
principles, you're an independent thinker,   you are going to get all those other decisions 
right. Right. And so, like, a good founder rarely   goes after a bad market.

Right. Now they may make 
mistakes, they may do these things, but, like,   the decision-making framework that they use will 
normally get them into the right markets. It'll   get them good people around them. It'll get them 
capital, and then it'll get, kind of out in front   of customers. And so things can go wrong, but 
really what you're trying to figure out is just,   can this person make decisions with a lack 
of information in an uncertain environment,   and do they have a propensity to solve problems? 
And so the way I always talk about it is like,   when something comes up, there's two types of 
people. If all of a sudden you get an email   and that email has an issue, there's 
people who read the email, don't answer it,   and then they wait two days and then they try to 
go answer it later, and, like, they're very much   in the defensive mode.

And then there's people 
who, they get an email and there's a problem and   they immediately pick up the phone and they call 
the person and say, hey, how do we solve this?   Those two people are very, very different. And I 
think you always want that first– or, I'm sorry,   the second person, the person who will call and 
kind of be offensive in nature. Because what it   does is, it really allows you to take something 
that is, frankly, valueless in the beginning–   it's usually an idea with one or two people– 
and create something that's massive because   they just solve every problem along the way, so 
that they kind of earn the right to continue the   journey. RAOUL PAL: OK. You're now in the 
VC world. You're learning how to do stuff.   Where does crypto come into this? How does 
this discovery happen for you? ANTHONY   POMPLIANO: Yeah.

[INAUDIBLE] my wife, wishes 
that it never came along, because then I   wouldn't be thinking about it all the time. So 
in 2014, I think it was, or either end of '14   or the beginning of '15, working at Facebook 
we hired David Marcus. He was the president of   PayPal. He comes over and he's going to run our 
Messenger product, kind of the messaging app that   got spun out of Facebook proper.

And it's first 
time I ever hear about Bitcoin, so relatively late   compared to most people, even hearing about it. 
And David kept talking about it from a remittance   standpoint. You know, could we put this into the 
application? Hey, this is really interesting. Now,   I didn't know it at the time, but have since come 
to find out, David and a couple of other guys had   bought a bunch of Bitcoin. And so there's a book, 
Digital Gold, you can go read about, kind of   their journey. But they really understood it and 
were really excited about it very early on. And   so I heard him talking about it. He wasn't like 
telling me personally about it. He was more just   talking about it in the office. And so I turned 
to an engineer and I was like, what is this? And   as one of the great mistakes in life, the engineer 
said, "It's stupid." And so I said, OK, and I just   went about my day.

[LAUGHING] I didn't Google it. 
I just, like, did nothing, right. And so, like,   lesson number one, when smart people are really 
excited about something, like, pay attention,   but just didn't do anything. And so the next 
time I kind of came in contact with it was,   in 2016 when I started investing there was a 
kid, JP Bareck I met him when was in high school.   And he was now a freshman in college. And he 
said, you know, can we meet for some coffee?   We sat down and he said, you've got to pay 
attention to this.

And I was like, what is this?   And he wasn't so much pitching me on Bitcoin 
and Ether from, like, an asset perspective.   He was really interested in the mining business. 
And so I understood data centers. My father,   that's what he did at MCI, AT&T and all that. 
And so I understood that business. And when I saw   crypto-mining or Bitcoin mining, immediately 
it was like, this is a data center on steroids.   Right. I have persistent customer demand. So I 
always know that 100% of my computing power will   be monetized, because there's always demand. Two 
is, I don't need a sales force. I don't need a lot   of the administrative staff, and all the things 
that change the cost structure in those data   center businesses. That's all removed because it's 
an automatic, persistent demand for the computing   power. And then three is the starting cost for 
something like this is very low.

Right. In most   data center businesses you're talking about 
SOC-2 qualified tier three data centers,   very expensive square footage. You've got to have 
certain cages and you've got to have all sorts of   licenses and approvals, and just, there's 
a big cost of either building that or going   into some of those, kind of approved tier three 
spaces. With this, in Bitcoin and Ether mining,   literally people were doing it in their basement. 
Right. They were doing it what we used to call,   like, chicken coop mining facilities.

Like, 
they literally just found an outlet where they   could plug into, that had internet and they would 
start mining. And so the entire cost structure of   what used to be a data center was now getting 
flipped on its head, and people were making a   lot of money. And so I took a little bit of 
personal money– actually I've never even   told this story before. I sold my Facebook stock 
at the time and said, OK, I'm going to take half   of it and I'm going to put in my bank account. The 
other half I'm going to take and I'm going to go   put it into this crypto-mining stuff. And I 
bought a couple of miners. We put it in a,   kind of hosted facility. And there was a 
dashboard. And you could essentially look   at that dashboard at any point to see how much 
computing power you had.

You could see how much   Ether was coming in. And you could see, kind of, 
the price fluctuations. So what that meant was,   kind of what your balance sheet was equal to. 
And so by the time I actually buy the equipment,   I get it set up– again, you know, I know nothing 
going into this– it's like beginning of 2017.   And I have no historical context to halvings or 
market cycles or anything. And we start mining.   And all of a sudden Ethereum goes from like $8 to 
$10, then from $10 to $30, and then $30 to $100.   And the entire time– like every day, like I'm 
mining Ether, and I'm sitting there saying, like,   in April it was like $10 bucks. By May– or 
maybe it was March it was like $10 to $30,   and then from $30 to $100, by, like, May. 
RAOUL PAL: Were you mining costs the same? They   hadn't gone up? Or they'd gone up a bit? ANTHONY 
POMPLIANO: No.

Exactly the same. So not only am I   mining profitably, and it's like a cash flow 
machine, I'm getting paid every day, but then also   my balance sheet is expanding. So if I had– 
you know, it's easy to do the numbers. If I had   10 Ether and there were $10 each, and the 
next thing you know, three weeks later,   it's 10 Ether are worth $30 each, like, you're 
essentially making money on your balance sheet,   plus you're also getting more and more cash flow. 
And so I just became fascinated.

I was like, holy   shit. Like, what is this? And so I just started 
spending way more time looking at this. And   what I started to realize by kind of educating 
myself was like, this is exactly what Facebook   was. This is exactly what Twitter was. This 
is exactly what Airbnb and Uber, and all   these things– RAOUL PAL: [INAUDIBLE] essentially. 
ANTHONY POMPLIANO: I didn't know how to articulate   that, but I could see– because I ran these growth 
teams, I understood the analytics that went into,   kind of viral products.

Right. So when I saw 
Facebook and I started to think about it, and   I had some context from, like, Venmo, kind of 
watching them grow. I had read a lot about PayPal,   and kind of PayPal mafia, and so kind of the 
virality of money and how quickly it can kind   of really drive adoption. And so the more and more 
I looked and focused and kind of educated myself   on this stuff, I just said, oh my God. Like, 
the entire world is underestimating this thing,   because they don't understand, they don't think 
in these exponential terms. And so I always say,   like, Wall Street thinks linearly.

Right. They're 
always constantly saying, like, what's month over   month growth? What's year over year growth? And 
for a business to do more than, I don't know,   20, 30, 50, maybe 100% year over year growth is 
pretty rare. In this case, we were talking about,   especially in 2017, 20x. Right. And so it was just 
like, oh, here we go. And I'd seen enough viral   products to realize, like, this thing is going 
to be something that is much bigger than people   expect. And so by the end of 2017, I had 
pretty much decided, I don't want to do   venture investing across all of these sectors, 
because I can't focus enough on just crypto.

I   need to go spend all my time on this. And so once 
I deployed, kind of that first fund with Jason,   we started trying to figure out, OK, how do we go 
and basically invest just in this one industry,   and eventually kind of did a couple of things to 
be able to position ourselves to do it. RAOUL PAL:   And so crypto-winter happens. I guess it's 
the right time for you because you're actually   deploying capital into that period. It's obviously 
slightly terrifying because you don't know whether   your hypothesis is completely false or not. How 
does that work? ANTHONY POMPLIANO: Yeah.

So in   the technology world, one of the things that was 
fascinating to me, and frankly it was fascinating   because I didn't have enough capital invested 
to really feel the pain, but it broke every,   kind of preconceived notion I had. So when 
a network effect business really takes off,   it's nearly impossible to break the network 
effect. Right. A true network effect business,   once it gets going, it just doesn't break. 
And so when Bitcoin sort of take off in 2017,   it's a network effect. Right. It's going to 
keep going. Like there's no way that it can   basically break out of that. And so when '18 
kind of happened and the market turned over,   it completely changed the way that I looked 
at network effects and virality and a lot of   this stuff. And so I was able take some of the 
lessons I'd learned, but now realize that price   is different than the true value of the network. 
And so by separating those two things, the network   effect and the value of the network can continue 
the way that you would expect technology adoption   to occur, but this price component is a completely 
separate yet related thing.

And so in 2018,   Jason I partnered up with Mark Yusko, who you know 
very well. And Mark's got Morgan Cree, Capital   Management. And Jason I basically had learned 
two lessons in venture investing. We said, one,   we had no follow on capital. So we had made great 
investments. Right. Two companies ended up being   unicorns in that first portfolio, but we had no 
follow on. So we were basically taking dilution   on the chin. And so we said, we got to get 
follow on capital. And two was, in 2017,   everyone and their mom was running ICOs. They 
were raising money from family offices and retail,   and it was absolute bonkers, free for all. And for 
whatever reason, from day one we said, these ICOs   are all garbage. We think people are going to get 
in trouble. We don't think that's the right group   to go raise money from because they're going to 
have really, really emotional reactions, whether   it works or it doesn't work.

And so institutional 
capital is going to kind of be the Holy Grail   here. And so when I met Mark, I basically sat down 
with him and I said, look I understand this stuff   pretty well. I think that I've got a pretty good 
deal flow and I can get us into a lot of great   deals. You have the institutional relationships. 
You can provide a lot of legitimacy to this.   And so if we team up in some way, I think we can, 
one, raise institutional capital, and then two is,   I think we can go make a lot of money for 
those LPs by deploying it into this space.   And so in 2018 we went out we raised the first 
fund.

Publicly it's known– it's about a $40   million fund. But the key to the whole thing was, 
the first two US public pensions in the United   States invested in dedicated blockchain or crypto 
fund. And so these two public pension funds end up   investing. And then they were joined by a 
hospital system and an insurance company,   a private foundation, you know, all of the kind 
of traditional institutional LPs. Small fund,   but really important that those were the types 
of limited partners that we had in the fund.   And so we went out and we basically did two 
things. We put– I think in that fund it's   like 15% of it in Bitcoin.

And then we went and 
we started investing in the infrastructure of the   industry. And so in that fund there's investments 
in Coinbase, Figure technologies, Blockfi,   eToro, a whole bunch of different companies. And 
so what we of got a front row seat to was, like,   oh, these guys really, really 
want exposure to this industry.   They may not come in and just buy Bitcoin directly 
from day one. They're going to want a holistic   exposure. They're going to want stocks, bonds, 
currency, and commodity exposure to, kind of this   digital asset space. And so our pitch basically 
evolved into, look, every stock, bond, currency,   and commodity will be digitized in the future, and 
your entire portfolio as an institution will be   digital in the future. So you'll have digital 
stocks, digital bonds, digital currencies,   digital commodities.

And you're likely to buy the 
exact same asset from the same counterparty, it's   just in a new technology form factor. And so the 
framework that we used was, go back to kind of,   pre-1970s, 1980s, and what you find is, everything 
was analog. So literally people would open outcry   method on the Stock Exchange floor. You would get 
the physical mortgage or deed to a home. You would   have physical currencies, all of this stuff. 
But there was a transition to what I called the   electronic age of securities. Right. So we got 
electronic CUSIPs. There was electronic CUSIPs.   Same asset, it's the same deed, it's the same 
stock certificate, it's the same currency,   now it's just in a new technology form factor. 
And that unlocked immense global value. And so   the institutions that were early to recognizing 
this, and also had the courage and conviction   to act, had a massive advantage for a number of 
years. Right. They were able to generate alpha,   still buying the same assets, still buying from 
the same counterparty, new technology form factor.   And then over time it got commoditized down. 
Right.

So literally the best example is like,   the guy who was picking up his phone and calling 
his stock broker to run over on the Stock Exchange   floor and open outcry buy or sell stock had a 
disadvantage compared to the first couple of   institutions that figured out, I can execute the 
same trade on my computer. Right. And so we said   that to institutions. Like, hey, we're going to 
move from an electronic world to a digital world.   And when that happens, if you're early to 
understanding that and capitalizing on it,   you'll be able to generate out-sized returns 
because you're going to basically get in before it   gets commoditized.

Right. Now eventually everyone 
will do this, but being early will be important.   And so we had a couple of, frankly courageous, 
and just very forward-thinking courageous CIOs   who said, yeah, I buy into that. I agree with it 
and I want to be a part of this. And so we started   investing capital on behalf of them in 2018. RAOUL 
PAL: Are you still part of Morgan Creek or not any   longer? ANTHONY POMPLIANO: Yeah. So basically 
the first two funds that we raised, about $110   million, give or take across fund one in fund two. 
So I'm still a general partner there. And then for   the next fund I've gone out to do it under my own 
name. And we can talk about, kind of, some of the   advantages of doing it under your own name versus 
under an institution as well. RAOUL PAL: Yeah.   I'd love to hear what you're up to now, in that 
side.

We'll go into a bunch of other stuff. But   how do you think about this whole space 
now, in terms of the VC investing side   and what are you up to? ANTHONY POMPLIANO: Yeah. 
So I think that one of the key differences, or   kind of evolutions that the world's gone through 
recently is the barrier to entry and the friction   for individuals building audiences and building 
brands has drastically been reduced.

And so I've   been fortunate over the last three or four years 
to build some pretty large audiences, and it's   kind of grown into a pretty attractive business 
in itself. But what I started to understand and   was lucky enough to have a number of people way 
smarter than me kind of talk me through was,   look, there's going to be a point, and starting 
now but it'll get more popular over time,   where founders, they're not going to 
want to take money from the institutions.   They want individuals. Right. The individual 
actually can bring more value and can bring   a greater brand awareness than an institution. 
Now that doesn't mean that all the institutions   go away. Right. In venture capital, for 
example, Benchmark, Sequoia, Andreessen,   those guys are absolute tier one, best of 
the best, world class investors, and those   institutions will persist. But what happens to 
all of the tier two and tier three investors is,   if a founder is faced at a pre-seeder seed level 
with taking money from an individual with a very   large audience that can bring awareness, signal, 
and value, versus take it from an institution,   more and more of these founders are deciding, I 
want to take it from the individual rather than   the institution.

RAOUL PAL: What made you think 
this? What made you realize that this was a new   path that could happen? ANTHONY POMPLIANO: I 
started to realize it, I think, when– just   talking to founders in general. Like, founders 
would introduce me to other investors after I had   invested in the company. And they would reference 
me, rather than the institution. And for me that   was always weird. Like, why would you do that? 
Start asking them. You know. And as part of that,   I got enough data points where it was like, oh, 
the individual partner at an institution is more   important than the institution, is basically what 
the feedback was.

And then I got a phone call from   an individual who– very well known in Silicon 
Valley. And he basically said, look, you know,   you should go do this for yourself, and you should 
do it under your own name, and that's a really,   really valuable, defendable thing. And I think 
there would be significant advantages for you   to go do that.

And so I, frankly just kind of 
got thrown down this rabbit hole and started   thinking more and more about it. I started 
calling a number of people I knew and just   asking them what they thought about it. And 
I pretty much called, I would say either the   three smartest or the three richest people 
I knew. Right. I just kept calling. I was,   like, hey, you're smart and rich, like, what do 
you think? And two of the three conversations   literally had the same response, which 
was, why haven't you done this already?   It was like, it wasn't even a debate. It was just 
like, of course you should go do this. And so I   just took it to heart. And I said, look, let's 
go try it. And I think it's less about, like, me   specifically, and it's just more of like, this is 
going to be the trend. Right. You're going to see   a ton of these solo capitalists who say, look, 
in the past you either had to have a big exit   as an entrepreneur, you had to have been a partner 
somewhere so that had a big windfall, then you had   a capital base and you would just invest your own 
money.

But now what's going to happen is, there   are going to be LPs, whether they're institutional 
or not, that want to back individual managers,   and they want them to invest under their own 
name. So on a cap table it's no longer the   institution's name, it's just, Pomp. Right. And 
the value that can come from that over time is,   people seek out the individual. Right. They 
want that individual. And if you look in Silicon   Valley, there's a ton of people who have done a 
very, very good job of this, in kind of the angel   or pre-seed stage.

RAOUL PAL: Tim Ferriss parlayed 
a lot of this as well. ANTHONY POMPLIANO: Tim   Ferriss, Naval Ravikant, right. A bunch of 
these guys have done a fantastic job of this.   And they've been very, very successful in doing 
it. But I think that now what we're realizing is,   whether you're an investment manager, you're a 
corporation, or you're an individual, you got to   have your own distribution, you got to have your 
own audience, and you've got to do things under   your own name. You've got to own the success or 
failure under your own name. And if you're good,   you'll be rewarded. Right. And so I had 
already kind of accidentally backed into–   I had massive distribution.

I had a big 
audience. And I was willing to take the   personal risk of doing it under my own name. And 
so I ended up using an AngelList rolling fund,   which is kind of a nuanced fund structure. RAOUL 
PAL: How does it work? ANTHONY POMPLIANO: So   basically if you think of a traditional fund, a 
GP goes out, they spend six months fundraising,   and let's say they raise $10 million. Right. 
And they say, OK, I have a $10 million fund,   and now I want to call the capital. But I'm 
going to do the capital calls infrequently,   and I'm going to do them at variable amounts. 
So if Raoul is an LP in my fund, I may say, OK,   two months after I've closed the fund, will you 
please send me 10% of the capital? And then I wait   six months.

And then I call 7% of the capital. 
Then I wait another three months and I call 20% of   the capital. Right. And it's kind of an infrequent 
variable amount and time every time. And so when   that occurs, it's really hard for LPs to do 
cash management. Right now a good GP will just–   they'll explain to the LP what's going to happen 
in a couple of months, and they're good, but not   everyone does that. So that was kind of problem 
number one. Problem number two was, the GP raises   money for six months, and they may not go out 
to fundraise again for two years. And so during   that two-year period, if the LP and the GP meet, 
there's no ability for the LP to invest in the   GP.

There's no ability for the GP to take money. 
And so what the rolling fund structure basically   said was, we're going to go find individuals– 
take myself– we're going to use software as the   back-end, and then we're going to create this 
rolling like structure, which means that, Pomp   can take in money every quarter, regardless of how 
much he's raised in the past or what he wants to   do in the future. LPs can persistently commit to 
his fund. And rather than commit a set amount and   then not know when the capital call's coming 
and for how much, Pomp is just going to call   an equal amount of their commitment every 
quarter.

So if you commit and say, hey, I'm   going to do $100,000 a year, every quarter you're 
going to get $25,000 capital call. RAOUL PAL: But   isn't that complicated, because different people 
are going to get in at different prices and to   different assets and different investments? And 
do you not have to keep a huge spreadsheet of   everybody and what they've got? ANTHONY POMPLIANO: 
You are an absolute pro, because that is one of   the complexities of this. Now AngelList has done 
a great job. They've built a bunch of software for   this. And the way that they protect the LP is they 
say, each quarter is essentially a separate fund,   but they're crosscollateralized.

And what that 
basically means is, if you invest, and let's say   in the second quarter there's an absolute home 
run. Well what you don't want as LP is to have   invested, let's say, a million dollars over eight 
quarters, in quarter two, home run, you get back   the money you put into that Q2 fund, and then 
all of a sudden the GP gets a huge windfall and   they're disincentivized and you haven't even made 
all your money back you've invested with that GP.   So by cross-collateralizing it, basically the 
GP doesn't get carried until they pay you back   the capital you've invested across all of the 
quarters.

So if you put a million dollars across   eight quarters, they've basically got to give you 
a million dollars back before they take carry.   And so, think of it as a kind of a blank 
slate. You can customize a rolling fund   to look identical to a traditional fund, 2 
and 20 structure, two-year investment period,   eight-year fund with an extension. Or you can 
make it look something much, much different in a   subscription model that's persistent forever, and 
kind of looks nothing like a traditional venture   fund. So by compartmentalizing every component of 
the fund structure and putting it into software,   it basically has digitized this and added 
optionality. And so the reason why I like it is,   as a GP and an LP, we double opt in every quarter. 
So I go and I make the capital call in quarter   one. When quarter two comes along and I make the 
capital call, LPs don't have to fund the capital   call. Right. And I don't have to call the capital 
in quarter two. So if I'm not doing my job,   the LPs aren't going to fund it.

And if I think 
I don't have deals, I'm not going to make the   capital call. Right. And so it's a double opt 
in every quarter. And so what I think it does   is, it strips away some of the things that venture 
capitalists have used for a long time to basically   get rich. Right. Then it's, hey, once you 
commit, it's basically an annuity for 10 years.   And so, by taking that away and saying there's 
this double opt in mechanism, it holds the GP   honest, and it also gives the LP lots and lots 
of optionality. And so the conversations I've had   with the LPs who have invested in the fund, they 
are incredibly excited about that optionality.   And then the icing on the cake is, this is 
all done via the fund structure that allows   me to talk about it publicly. Because normally a 
manager can't go out and talk about the fund. Take   somebody like me with a large online audience, 
great distribution, I can literally just say,   hey, I have a fund.

If you'd like to invest and 
you're an accredited investor, here's the link.   And so it completely changes the game 
for fundraising for individuals with that   distribution. RAOUL PAL: How is that different 
for this? How come you're allowed to market the   fund in this way, but a traditional fund you 
wouldn't be able to? What's the red change   here? ANTHONY POMPLIANO: When you set up a venture 
fund, there's basically three separate types   of regulatory structures you can use. One of 
them basically allows you tons of flexibility,   in terms of the number of investors and the amount 
of capital, but you can't say anything about it   publicly. And then there's another structure that 
says, hey, you can talk about it publicly but you   only get 99 accredited investors, and then you get 
2,000 qualified purchasers. Right.

It's kind of   the structure. And so the rolling fund structure 
goes after that second bucket. And so far,   you know, look, I've been able to raise, 
basically the equivalent of almost a $20 million   venture fund, a seed fund in a matter of literally 
weeks it was raised. And I did one Zoom recording.   Right. I basically had a very light deck. And 
then I answered a bunch of questions for LPs   over email.

Right. It was kind of the perfect 
type of experience for both the LP and the GP,   where everyone felt like they had the information 
they needed. They also had access to get   questions answered. But I didn't have to go do the 
traditional roadshow where– quarantine would have   prevented it, but, like, go to everyone's office, 
sit down, do an hour-long pitch, follow up,   do six different calls. RAOUL PAL: So much more 
efficient. I mean, we essentially raise all of the   capital we have ever used for Real Vision in the 
same way, from our subscriber base, using the same   regulatory change. So does that mean that for you 
to get the next round of investors in, you just   launch a second rolling fund, so therefore you can 
keep talking about them, as opposed to once you   hit the number, the restriction number? ANTHONY 
POMPLIANO: So I don't even have to launch another   rolling fund.

I can just– like right now I have 
it shut. I'm not taking any new capital. When I'm   ready to take on new capital I can just open it 
up and say, hey, if you'd like to invest, you can   go here. Once I fill out the full slots– I save 
some of the accredited investor slots, because I   didn't want to kind of sell them all out, if you 
will. And then from an institutional perspective,   I basically have 2,000 slots. So it's almost 
unlimited. Right. It's so many of them. And so   at some point I'll turn it back on and say, hey, 
I'm taking more capital. And institutions come in.   They can invest. And the beauty for them is, 
if they say, hey, look, I was going to invest   $10 million in an early stage venture fund.

It 
was going to have a two-year investment period   they just on day one, OK, I'm basically going to 
invest all that capital– instead of two years I'm   going to do it in one year. And that means that 
I get a two and 1/2 million dollar capital call   every quarter, and at the end of that I'll have 
deployed my $10 million. And Pomp will go out.   He'll find deals. He'll deploy the capital, and 
I can go into the AngelList portal at any time. I   can see NAV, I can see the investments, I can kind 
of see all the information.

And so what it does   is it just drastically reduces the bureaucracy 
of, kind of, the world that venture capital had   become. Because basically GPs have two separate 
things they have to choose. You can choose to   have a small team, but lots of, kind of, pain, 
right, in terms of reporting and access and LP   communication. Or you can choose to have a really 
big team and the GP does very little of that. And   so naturally if you have a big fund, you have the 
cash flow to build a big team.

But what ended up   happening was a lot of these micro-VCs, or kind of 
smaller sub $100 million funds, they didn't have   the cash flow to go hire a 10-person team. And so 
what they ended up doing is, the GP does all the   work. The GP sources the deals. The GP underwrites 
the deals. The GP negotiates. They consummate the   deals. They do all the reporting. They do all 
the LP calls. They do all the fundraising. Like,   it's a real big job. Right. Now what AngelList 
has done, and they've done a fantastic job of it,   is they basically have used software to 
solve a lot of these problems. RAOUL PAL:   So what are you investing in, in the fund? 
ANTHONY POMPLIANO: As I tell all the founders,   hopefully they're all going to build 
a billion businesses. [LAUGHING]   RAOUL PAL: Yeah, but what kind of areas, right? 
It's a big area, this whole [INAUDIBLE] space.   What are you doing? ANTHONY POMPLIANO: Yeah. So 
I'm basically spending, I'd say 3/4 of the time   on Bitcoin and infrastructure related to it, 
and then I'm spending about 25% of my time   in other early stage opportunities.

And so, again, 
at the earliest stages, I just look for people who   are super, super talented. And I 
frankly don't care what they go build,   I just want them to be going after a big market. 
And what I've realized over time is, like,   the founders are smarter than the investors. 
That's why they're going and betting their   career. They're making a bigger investment than 
the investor is. The investor is investing money   and a little bit of their time. The founder is 
choosing to invest majority of their time and   maybe a little bit of capital. And so when 
you look at that in terms of a conviction   bet, the founder actually is making a bigger 
conviction bet than the investor. And so whenever   I see somebody who has a deep level of conviction 
around something, and I think that they're smart,   they're a problem-solver, they can recruit, they 
can raise capital, they can tell a story, like,   you almost are arrogant if you don't invest in 
them. Right. Because what you're saying is, this   person who has such deep conviction to go spend 
their time on something, they're wrong.

And that,   when you frame it that way, all of a sudden you 
say, wait a second, like, that doesn't feel right.   And then the other piece of what I've learned over 
time is, there's a lot of investors who optimize   for batting average. I want to optimize for 
slugging percentage. I want to strike out a lot,   right, but I also want to hit a lot of grand 
slams. And so you've got to get up to bat when the   bases are loaded, and you've got to take home run 
swings.

And so if you do those two things then you   got a shot. And so I'm more likely to invest in a 
lot of companies than a little bit of companies.   And what I'm willing to do is, say to the founder, 
your vision is what we're betting on here,   because you're the person who's investing the 
time. You're the one who's got the conviction.   And so in some weird way, what you're really 
doing is, you're just helping somebody or   facilitating them to go build their dream, right, 
is kind of how I look at it. And so you just go   to pick the right people. And if you pick the 
right people, they take care of the rest. Yeah,   you can be helpful, maybe you can introduce 'em 
to somebody, give 'em a little bit of advice, be a   good sounding board or whatever, but any investor 
who thinks they built the company is just full of   shit.

Right. Like, the founders built the company. 
They're the ones who did all the hard work. And   frankly, the only credit that the investor gets 
is being not stupid enough to write the check   in the beginning and then not sell because it's 
illiquid. Right. RAOUL PAL: So let's talk about   the super narrative, the whole kind of space. What 
is it in your head? Where do you think it's going?   Because you're building businesses 
around it, right? I know what that means.   That means you're looking for positive 
funding ways of playing a super trend,   make as much money out if as you can, a number 
of ways. You've got a media business. You've got   an investment business. I get it. Where is this 
space going? ANTHONY POMPLIANO: Do you want the   institutional fix or do you want 
what I really believe? RAOUL PAL:   What the fuck do you think? [LAUGHING] ANTHONY 
POMPLIANO: I think Bitcoin's going to be next   global reserve currency, and I think that 
every single person that's listening to this,   every single person in the industry is 
completely underestimating this thing.   I believe that Bitcoin is not only the hardest, 
soundest money we've ever seen in the world,   but I think that it is the absolute 
apex predator in financial markets.   And the reason why I think that is because there 
is one key trend that most people in finance don't   understand, and it is the superiority of digital 
assets or digital products over analog products   and assets.

And so the technology industry is 
better suited to understand this component,   which is, if you look at store value and medium 
of exchange assets, historically those have been   analog, and then they basically became these 
electronic CUSIP assets, which was just a kind   of slight improvement on the analog version. 
So there was still middlemen, there was still a   lot of bureaucracy, there was a lot of, kind of, 
human interaction, right. When you send a wire,   in many cases, there's humans involved in that 
process. So it's not a truly digital process.   The digital product is not only superior to the 
analog or electronic products, but it is also   never– I literally cannot think of a single 
example where a digital asset is smaller than the   analog equivalent. And so I always go to– let's 
go to Bitcoin and gold.

We'll start there. Gold   has served as the store of value for 5,000 years. 
It's done a fantastic job of what it's supposed to   do. It is not scarce. And the reason why I say 
that is, because people claim gold is scarce,   but it's a narrative. Gold has a scarce narrative. 
And we used to live in a narrative-driven world.   That narrative-driven world would be, somebody 
told you a story, and that story was believed   because somebody else told them that.

And enough 
people started saying it that they all started to   believe it. But just because a narrative exists 
does not mean that it is true. And the reason why   you cannot say that gold is scarce is because you 
cannot prove it. You may think it could be scarce,   you may have data that suggests that it is not as 
easy to find as other assets, but you cannot prove   how much gold is available. What you can show is, 
here's how much we've dug out in a certain time   frame. But even to the point where I say, tell 
me how much gold is in the circulating supply?   Nobody can prove it. People can guess. They can 
get close, but nobody can prove it. And so that   narrative-driven world we used to live in got 
disrupted by the internet. The internet said,   we are going to drastically increase your access 
to information, and we are going to switch from   a narrative-driven world to a provable world. You 
have to prove things now, you can't just rely on   the narrative.

RAOUL PAL: Yeah, that doesn't work. 
That's not true, right? Just seeing what's going   on in social media, we're still narrative-driven. 
ANTHONY POMPLIANO: But that's why social media is   breaking is because the internet is able to show 
the narrative that we're told on social media   from the existing institutions, politicians, et 
cetera is a narrative. It's not true. I can prove   that you are wrong. I can prove that– RAOUL 
PAL: But everybody will tell you you're wrong.   You know, the weird thing is, like, when it 
comes to politics and who's right, who's wrong,   everybody will prove something different. So 
I'm not sure yet– ANTHONY POMPLIANO: But you   can't prove two separate things.

If you 
make a single statement, gold is scarce,   and I say, prove it, you can't. If I say 
to you, Bitcoin is scarce. And you say,   prove it, I can show you, there are 21 million 
Bitcoin. I can show you the exact number in the   circulating supply. I can show you the exact 
daily incoming supply. And if I say, great,   this is Bitcoin. Show me gold's equivalent, 
nobody can do it. You have to put an asterisk   next to every number and say it's estimated. Now 
this is important. And this really, really upsets,   kind of the legacy finance folks, and it upsets 
the gold bug community. But the reason why it's   so important is, gold is a narrative and Bitcoin 
is provable.

And the difference between those two   things has nothing to do with the legacy 
world. The players of the legacy world,   they think that the narrative has value. Their 
entire careers have been built on this. The next   generation doesn't believe the narrative. The next 
generation says, prove it, and you can't with the   legacy assets. RAOUL PAL: Obviously I agree about 
bitcoins. We're not going to argue about that.   Bitcoin is a narrative too. Right? 
All of these things are based on   trust. And it's not the trust of the network and 
the scarcity, because we understand that that's   provable. The trust is whether you'll accept it 
from me.

And that's a narrative. Digital gold,   or whatever narrative we've all chosen right now, 
and because it is a behavioral incentive-driven   network, that the more people come into 
the network, the higher the value goes,   we're all incentivized to build on that 
trust layer by saying, oh, trust me,   this is– they're all narratives. I mean, every 
exchange of value is a narrative, because we have   to believe there's value. ANTHONY POMPLIANO: But 
I think the difference here is, you're believing   a narrative in the legacy world. Because when 
I say to you, what is the dollar backed by?   You believe it– literally the dollar says, "In 
God we Trust." It is a belief system, right.   It's backed by the government. RAOUL PAL: By god. 
ANTHONY POMPLIANO: Yeah. And so the new thing is,   everyone wants to say, Bitcoin's a religion. And 
I'm like, thank you. You are literally validating   Bitcoin as a currency, because every currency 
is a religion, right, whether it's fiat,   whether it's gold, whether it's whatever.

The 
difference is not so much the belief or the   narrative that you're talking about in terms of 
why somebody accepts it or why somebody doesn't.   I'm talking about the actual asset itself. 
When you go and you look at the asset, you   cannot prove, right, how many dollars exist in the 
world? Nobody knows. RAOUL PAL: So if you take the   assumption that people are looking for a scarce 
asset, one is clearly superior than the other.   On a relative basis, they're better than other 
assets because they have a more relative scarcity,   and one is better than the other.

[INAUDIBLE] I 
think about this a lot, because there's a lot of   this space I don't like. The religion part, I get 
it why, because it's an incentive-based system.   It's behavioral incentives. It's behavioral 
economics writ large here. So I get it. You need   to defend your own network, because that's where 
the value comes. But last time I checked there was   quite a lot of world religions, and a multitude 
of gods. I'm still confused why people think there   can only be one god in this particular space, 
as opposed to certain gods of different scales,   the old kind of Greek or Roman stuff. You might 
have Zeus. He might be the king. How do you think   about that whole thing? Because I know it's a 
hot potato right now. How do you think about   it? ANTHONY POMPLIANO: Yeah, so I have a very, I 
think, nuanced view of kind of where we are today,   what's important, what's not, and then where we 
end up.

Right. And it's important to understand   gold's, kind of rise to prominence in the modern 
world. So gold served as kind of money and an   exchange of value for a very, very long 
time. It's hard to carry around, hard to   divide. It's hard to just eyeball, you know, how 
much gold is that? And so eventually we said, hey,   look, instead of carrying this gold around, why 
don't we just leave it in a vault or in the bank   and we'll carry around paper claims on the gold. 
And I'll say, hey, if you sell me that horse,   I'll give you my paper claims on the gold and you 
can go to the bank and you can turn in the paper   claim and they'll give you the actual gold. And so 
that made commerce easier. Right. The technology   of the claim on the gold actually increased 
the velocity of money and the ease of use,   or the exchange of value.

After we did that, we 
eventually then created this electronic CUSIP   system. We created credit. Like, we built all 
these layers on top of gold as that kind of layer   one technology. Now, in 1971 we decided we're 
going to unpeg gold from the paper claims and   kind of all this stuff went to the wayside. 
But that structure of layer one, layer two,   layer three's is really important. Because that's 
what's happening in Bitcoin today is, layer one is   optimizing for security and store of value. It's 
exactly what gold did. It didn't optimize for the   fastest transactions or the easiest of use. In 
optimized for security and store of value. If   you held the asset, you knew it was secure 
and you knew it would store value because   of that scarcity narrative.

The same thing here 
is, if you look at Bitcoin, it is secure and it   will store of value over long periods of time. Now 
what we're starting to see is layer two be built,   right. So lightening network and a few others, 
liquid, all these things. You'll eventually get   layer three, layer four, et cetera. Now 
most people put me in the camp of, oh,   you're a Bitcoin maximalist. It's not really true. 
I believe Bitcoin is by far the winner, the king   when it comes to the digital currency. I believe 
it will be the next global reserve currency. I   think that's a foregone conclusion at this point. 
And so from a US Dollar value standpoint, again,   it is going to be worth multiples of where 
it is today over a long period of time.   But I actually think that all this other nonsense 
that's going on has a purpose.

There's a lot of   experimentation going on. There's a lot of 
innovation going on. Right. And what ends   up occurring is, that experimentation is going to 
eventually flow to be built on top of the hardest,   soundest money. And so I used to draw this diagram 
of, let's say, decentralized finance. Right.   People don't like when I say it, but Bitcoin was 
the original decentralized finance. It is the most   decentralized product in the space. So literally, 
decentralized finance was born out of Bitcoin. Now   what we're seeing though is, Bitcoin, because it 
optimized for the security and the store of value,   the development on top of Bitcoin is going to take 
a long period of time. And so what people did is,   they got impatient. They said, oh, we 
can't do this. We've got to go and we   got to build this stuff now. So they wanted 
to do experimentation and innovation. So went,   they built Ethereum and they're building on 
top of that.

We use that one as an example.   Well, you have sound money in Bitcoin, but all 
of the infrastructure around Bitcoin for the most   part is centralized. So whether it's exchanges 
like Coinbase, whether it's custody providers,   whether it's data providers, it's all centralized 
infrastructure around sound money of Bitcoin.   In the Ethereum world, you have decentralized 
infrastructure. Right. So everyone's decentralized   infrastructure, decentralized infrastructure. But 
it's built on top of something that is not sound   money. Ether is no different than fiat currency. 
There's no cap. There is a variable monetary   policy decision that is made on a periodic 
basis by individuals. Now, to their credit,   they have made the right decision every time 
in that they continue to reduce the supply,   but they have the potential to increase it if they 
wanted to when they make that decision. RAOUL PAL:   Why does it need to be funny? I don't get that. 
I don't know understand that they should be   competitive. ANTHONY POMPLIANO: This is my point 
is, I believe that they shouldn't be competitive.   But this narrative in the decentralized 
financial outcome, the Ethereum DeFi world that   Ethe is money.

Right. They say it all the time. 
RAOUL PAL: No. ANTHONY POMPLIANO: It's not money.   Right? It's something completely different. And so 
what I ultimately believe will happen is, you'll   take Bitcoin, the asset, right, the sound money, 
and you'll take that decentralized infrastructure   and you'll combine them. So you won't have the 
centralized infrastructure that's currently around   Bitcoin and you won't have, kind of the unsound 
money of Ethe.

What you'll do is you'll take   Bitcoin, you'll take decentralized finance, and 
you'll put those two things together. And what we   will get is we will get a fully decentralized kind 
of financial system that uses Bitcoin as the core   currency. RAOUL PAL: This has been my point all 
along is the collateral of the system will be   Bitcoin. ANTHONY POMPLIANO: Yeah, exactly. And 
by the way, that's not bad. RAOUL PAL: No. And   everything around it could be built around 
it, and the space for lots of innovation and   a lot of different technologies, and there 
will be interoperability built across it,   but the foundation stone is Bitcoin because 
nothing's going to challenge that now   as that collateral layer. ANTHONY POMPLIANO: 
Yeah. And I think that the key piece– and this   is always like my olive branch to the Ethereum 
community. And I'll get to it in a second.   Your viewers will love for me to talk about why 
I disagree with a lot that's going on there.   But the olive branch that I always extend is, I 
say, listen, you guys have the right idea.

And   by the way, you've made a very rational decision 
to go build decentralized applications in the area   that has the lowest friction to build them, right, 
in terms of from a development standpoint. It is   easier to build a decentralized application today 
on Ethereum than it is on Bitcoin. But that does   not mean that that is the ultimate final state. 
What we are already seeing– smart contracts   are a great example. The smart contracts are 
starting to come over to Bitcoin. Right. And   you're starting to see all sorts of innovation 
around that. Now, smart contracts– Metallic   saw into the future and said, hey, I want to have 
the ability to create smart contracts.

And so he   created a place to go do that. There's been lots 
of innovation around that. But ultimately what   happens is, people are going to continue to bring 
those innovations back to build on top of the hard   money of that sound money. And so the reason why 
I think that the kind of Ethereum experimentation,   while it is valuable, and it is really important 
for the overall development of the space,   the reason why I do not think it's sustainable– 
if you look at Bitcoin and its decentralization,   it followed one key principle. It didn't take 
a single shortcut. It didn't do a single thing   other than allow for natural adoption to occur. 
And it took a decade to reach any level of real   prominence.

And so when it started, and Satoshi 
said, hey, I've created this thing. I'm going to   put it out in the world, it was centralized. There 
was one person or one group that had Bitcoin.   And then they sent it to the Cypherpunk 
mailing list, and now all of a sudden there   was four or five people, then 10 people, then 
20 people, then 100 people, then 1,000 people,   then 10,000 people, 100,000, a million, 10 
million. Right. And so it kind of naturally grew.   We live in a world where we want to accelerate 
everything. We want to get everything now. We   need to do everything right now. Bitcoin never 
took a shortcut. And so what it did was it got   that natural adoption cycle of a technology. And 
today it's the strongest computer network in the   world.

It's completely decentralized. There's no 
one that controls it. And basically, no one can   screw with it. Right? What's happening in the 
DeFi world is, people know that they need the   actual incentive for people to come in and adopt 
it. That's how they get decentralization. That's   how they get utility from liquidity, all this kind 
of stuff. But rather than allow for time to expire   in that natural technology adoption, what they're 
doing is they're taking a shortcut.

They're using   a financial incentive. And this is where you get 
into yield farming and all this kind of stuff.   They're basically saying, hey, I want you to 
come use my product. So what I'm going to do is,   I'm going to create a bunch more of these tokens. 
And if you come use it, or you sign up, or you   deposit, or you do whatever action I want, I'll 
actually give you a financial incentive to do it.   That works in the short term, because people come 
in, they want to profit, they're capitalists.   But over a period of time, they just move on to 
the next thing that provides a better return.   And so how many of these DeFi 
applications have we see explode in   popularity and then people move on to the next 
one? It explodes, they move on to the next one.   And so what I think the resounding message– and 
it's not like I had this idea. Like, I'm looking   at this after the fact in having watched Bitcoin's 
adoption is, if you want to build something that   sustains, not for six months or 12, I'm talking 
about something that sustains for decades,   you can't take a shortcut in the adoption cycle, 
because the bigger the shortcut you take, the more   unsustainable it is that people will stay.

Right. 
And so if you use that financial incentive to get   people to on-board really quickly, that just means 
they're less likely to stay longer, because you're   actually bringing the wrong people in. Right? When 
you bring in people who are coming for a financial   return, the second that something else comes 
along that provides a better financial return,   they go there. And that's what we seen over 
and over and over again. And so what I think   is happening in some weird way is, Bitcoin's 
adoption is continuing. Right. We went from   individuals on the fringes of society to kind of 
more of a mainstream audience to now an investor   or a retail audience, to then an institution 
audience. I think eventually we're going to get   corporations and then central banks. But as that 
adoption is occurring for the underlying asset,   we now we're seeing people who actually are 
creating decentralized infrastructure, still   in early innings, but there's no tokens.

There's 
no yield farming. There's no sort of financial   incentive that is trying to circumvent or shortcut 
adoption. And so what ends up happening is,   DeFi has exploded in popularity, and people 
have run there, but there are no applications–   decentralized exchanges are different. But there's 
no actual applications using Ethe as money to have   any sort of sustainability to them. Those assets 
are actually– or those applications are actually   going to be built on the asset Bitcoin. And so 
it's going to take a really long time. But I   have no doubt there will be decentralized lending. 
There will be decentralized banking. There will be   decentralized, name your product from the legacy 
financial system. It's all going to get there.   It's all going to be decentralized. The DeFi 
community has it right.

They're just simply trying   to shortcut adoption, and what they're doing is 
actually shooting themselves in the foot. And so   now what you're starting to see is people build it 
for Bitcoin. RAOUL PAL: Yes and no, right? Because   we've seen PayPal scale their business this way. 
Right? Many people have. Now it's a very risky   business, because most of them fail. If you try 
and financially incentivize your customer base,   most businesses run out of cash. Or, you know, 
the other problem is, with a lot of this early   stage token stuff is, VC opportunities were 
never supposed to be mark-to-market and liquid.   And what happens is, there's too much retail 
in the space.

There's not enough regulation in   my view. What happens is, these tokens go up too 
fast. Even the founders of the projects just sell   them, flip for cash, and then you have to wait a 
five-year cycle. Does this project survive or not?   I mean, imagine if half these businesses, or even 
the businesses you set up, were mark-to-market   real time. They'd have gone to zero about six 
times, right? It's a stupid idea to allow that   to happen because you're attracting exactly 
the wrong sort of capital. You know as a VC,   what you need is long term capital as a VC. 
If you have short term capital, it's going to   destroy the businesses and the capital provider. 
ANTHONY POMPLIANO: Yeah. And I think here's the   other piece of this that is fascinating to me, 
is, again, I think the people who are creating   these projects and these experiments, they're 
actually being rational actors.

Right. So I tell   them all the time, I say listen, by the way, if 
you want to accelerate adoption of your project,   your product, whatever it is, you should 
use the financial incentive. Just understand   that by short circuiting the natural adoption 
of a product and technology, it makes it less   likely that that person is going to stay over a 
long period of time. Right. And so you mentioned   PayPal, for example. The difference between, let's 
say, a lending protocol and PayPal is that PayPal   actually is a true network effect business. 
Right. The more people that are using it,   the more value that you actually get out of it, 
virality of money. And so you want to have as   many nodes on the network as possible, because 
that gives you the most optionality as possible.   These lending protocols or whatever the different 
products are don't necessarily fall into the   network effect business.

And so I always, like, 
kind of try to really walk a fine line between   saying, hey, all this stuff is not valuable at all 
and there's no place for it, people wasting their   time. I don't think that's the case. What I think 
you're going to start to see is, over the next,   let's say, five years or so, you're going 
to see many of the people who have built,   actually really interesting, innovative, super 
disruptive things just start to tweak them,   whether it's through interoperability, whether 
it's, they try to wrap Bitcoin and bring it on to   Ether, Ethereum so that they can use it there. Or 
they just say, hey, rather than build this in the   Ethereum world, let's build it in the Bitcoin 
world. But I think ultimately where we end up,   you know, 10, 15, 20 years from now is, there's 
decentralized infrastructure. So DeFi is right   in that sense, but Bitcoin is the asset. 
It's not Ether.

And some people think that's   controversial. There's a lot of people, frankly, 
especially some of the people who I find to be   the most intelligent, most critical kind of first 
principles thinkers, they all tend to agree that,   like, that's probably where we end up here. 
Because it, again, just optimizes for the   biggest value advantage or change, which is, we go 
from using fiat money with an uncapped supply to   an asset that is an artificially capped supply and 
has a completely programmatic monetary policy. And   that is the biggest, most important innovation in 
this entire thing. RAOUL PAL: How are you thinking   through the rise of the derivative market? Because 
derivatives– it's leverage, right? One of the   great benefits we've ever seen was the invention 
of the derivative market.

One of the worst thing   ever to happen was the invention of the derivative 
market. Right. We're thinking in Utopian terms   about, can we construct a new financial system. 
But we're kind of humans. We're going to over   leverage it again and fuck the whole thing up. 
What do you think? ANTHONY POMPLIANO: Yeah. So,   thankfully for me, I am somewhat self-aware in 
terms of my circle of competence and where it is   not. Derivatives, I have no interest in. I have 
no knowledge or expertise there. RAOUL PAL: Call   it leverage then. [LAUGHING] ANTHONY POMPLIANO: 
Yeah. RAOUL PAL: Let's just call it leverage.   ANTHONY POMPLIANO: The things that I see 
going on, especially outside of Bitcoin,   right, is pretty crazy. But there's even some of 
it happening in Bitcoin specifically as well. And   again, it ultimately comes down to– I 
try to tell founders or builders, look,   I have a really open mind, and I think that 
you should go to experiment and try to build   everything you possibly can. Like, there 
should be no sacred cows. You should just go,   build whatever you possibly can, experiment. 
You want to try a bunch of stuff with leverage?   Knock yourself out.

You want to try a bunch 
of stuff on some weird chain, you know,   whatever? Go knock yourself out. But that doesn't 
mean that I think it's all going to work. But who   am I to say? Right? My opinion doesn't actually 
matter. It's what the market decides. And so when   you start to realize that if everyone wants to 
use leverage in whatever derivative product it is,   then the market is deciding that this has value 
to it. Right. If everyone says, no, I'm not going   to do that, then they're going to go and they're 
going to use something else.

And so when it comes   to things that I just, I don't have an interest 
in, I don't have, kind of any deep expertise or   knowledge on, I just say, well what is the market 
doing? And this is where you get into, like, maybe   into the derivatives like, you could look at like 
a decentralized exchange. It's hard to argue that   Uniswap is not being used. Right. Like, Uniswap 
is being used by a lot of people.

But is there a   difference between Uniswap as a decentralized 
exchange, and kind of all of the speculation   and value transfer that crypto has kind of been 
built on over the last couple of years, versus   all of the different protocols, lending, and other 
decentralized products? Right. I put those in two   very, very different categories. The same way that 
you or I would say, Coinbase is very different   than other types of financial products.

Right. And 
so when it comes to derivatives or some of these   other products, that stuff to me is going to fall 
way more in the camp of the financial community,   and also the trading community. For me, I don't 
trade. I just– I really have zero interest in   doing any of that. What I'm more interested in is, 
for example, using the Bitcoin network, not the   asset, but the network as a payment rail. And so, 
can we go in and can we disrupt all of the banks?   Probably. Like, we're an investor in a company 
called Zap, this kid Jack Mallers, who literally   today, he can– RAOUL PAL: The strike– this is 
the strike thing. Yeah. ANTHONY POMPLIANO: He   can sit down next to any other company in the 
world and he can look them dead square in the   face and he say, I can send dollar faster for free 
around the world than you can.

RAOUL PAL: Yeah,   that for free thing is a lie. Right. You 
understand that? ANTHONY POMPLIANO: Why   is it a lie? RAOUL PAL: Because you've got 
two big off a spread you need to cross. One   is your currency, dollar, Bitcoin bid offer 
spread, Bitcoin bid offer spread, British pound   bid offer spread. What he's doing, he's taking the 
money from the market makers. It's not free. It's   like Robinhood is not free. You are the customer. 
You're paying that fee, so it's not free.   And you don't know what the foreign 
exchange rate is. But it's very quick,   very efficient, super cool technology. ANTHONY 
POMPLIANO: If I send you $20 US dollars and   you receive $20 US dollars, is that not free? 
RAOUL PAL: If you're sending dollars to dollars,   send dollars to pounds, there's an exchange that 
has to be paid. ANTHONY POMPLIANO: Yeah. But, well   now, here's my whole thing right, is, if you send 
$20 on strike right now. If I go in the app and I   say, hey– RAOUL PAL: Which I can do with tether. 
Right.

I could do with tether to you. I mean,   it's no different, right? That's pretty standard. 
ANTHONY POMPLIANO: Well if you did that though,   you would have to go on to a crypto exchange. 
You would have to actually convert your fiat   into a digital asset. You would then have to 
send the digital asset. The other person would   have to have a digital asset wallet. They then 
would have to convert from that digital asset   into dollars and then pull it into their bank 
account. With strike, I say $20, I don't have to   even know what crypto is. I don't have to know 
what a digital asset is. I don't have to know   anything.

It debits my $20 out of my account and 
it deposits $20 US in your account. You don't have   to have a wallet. You don't have to have a digital 
asset knowledge. You don't have to have anything.   I send $20, you receive $20. Now what is he doing 
in the background? He's absolutely taking dollars,   turning it into Bitcoin. He's hedging it. 
He's moving it along the Lightning network.   He's switching it back. He's hedging again. Right. 
So there's a whole bunch of complexity that he's   basically kind of melted into the background. 
But I think the key to that whole thing   is, he literally could send you one penny.

RAOUL 
PAL: Yeah. And the key thing to this one, I think,   it's the first true consumer app. We 
always said apps where you don't even   know you're using digital infrastructure 
or Bitcoin infrastructure or anything   is what needs to happen. And this is the 
start of all of that, when we don't even   talk about protocols and I don't even care. 
If it comes across via Ethereum through–   nobody gives a shit, because I'm sending 
you something. Whatever the value is,   I'm giving you.

ANTHONY POMPLIANO: I think this 
is dead on. Right. When you really understand it–   and the internet's the quintessential example 
of, there's a lot of protocols that are all   talking to each other. There was a very serious 
protocol war, right, of who was going to win, and   ultimately five or six of them won out. They're 
the most popular ones. Everyone uses them and   we're off to the races. I couldn't name them. 
Right. And 99.9% of internet users couldn't name   'em either. All they know is that they go in their 
computer.

Right. Most people don't even know what   the browser name is. Do they use Google Chrome or 
do they use something else? They just know, I go   on the internet, I type in Google.com and this 
thing comes up. RAOUL PAL: Yeah. Even though I   speak on Zoom now, right, we're using different 
microphones that are using different standards.   We are using– I'm on an Apple Mac. You might 
be on something else.

All of this stuff,   we didn't think about it. It's like, I just 
turned my computer on to speak to you. Right.   There's a load of connections, interoperability, 
layers, it's seamless. ANTHONY POMPLIANO: Yeah.   And I think that that's ultimately the world that 
we go to. And if you kind of zoom out just from,   kind of the Bitcoin world for a second and you 
just say, let's just look at decentralization   in general. Right. I've said for a long 
time, I continuously get picked these, like,   decentralized social networks and decentralized, 
name your product, decentralized media company,   decentralized this, whatever. I say, look, 
nobody is going to say, I'm on Twitter.   Oh you built a decentralized Twitter. Let me leave 
Twitter and go to decentralized Twitter. They're   not going to do it. What you have to do is, you 
have to build a better product than Twitter.   And oh by the way, it happens to be decentralized. 
Right. The decentralization is the responsibility   of the developer.

It is not the sales pitch to the 
consumer. And I think that understanding that is   going to be imperative for people as they begin 
to build technologies in this new world. Because   decentralization is going to be the default, but 
the consumer, and Jack's a perfect example of it   with the Strike product, is, the consumer doesn't 
give a shit about what asset, what protocol,   anything. All they know is, if I go to Western 
Union it costs 14% for me to send money back home.   And if I use this thing, it gets there and they 
don't take any of my money. Like, that sounds   like a pretty easy decision for a consumer to 
do. Right? And so if you can get to that world,   now what it does is it offloads the responsibility 
from the user making decisions as to, do I want   financial privacy, do I want decentralization, do 
I want all these different components, and it says   to developers, you're going to have to build 
products that do it for the user without them   realizing you're helping them.

Right. And you're 
going to have to be able to be forward-thinking   enough and confident enough that you can build 
a business with a product that maybe you don't   monetize the user information, or you don't look 
into their financial information. You actually do   things the right way and have that 30-plus year 
view of building your company. RAOUL PAL: Or   there's an applications layer over the top like 
VPNs and stuff like that, that we can select our   own level of whatever basket of stuff is important 
to us– decentralized, not decentralized, beta   sold, non-beta sold, private, non-private, you 
know.

And there's trade-offs. And individuals can   have their trade-offs, I guess. ANTHONY POMPLIANO: 
Absolutely. So, look, I think if you said to me,   like, paint the picture of where are we going, 
you know, 20 years from now? I think that we are   going to have a completely decentralized financial 
system. Bitcoin will be at the core of it. It will   be the core unit of account. It will be the global 
reserve currency. And that key piece to this world   that doesn't get talked about enough, but I think 
is very important is, it will be an automated   financial system. And that automated financial 
system is today, you can't have automation   because there's too many human processes 
involved. Right. If I don't want to go and–   I'll give you another example. If I want to 
go and I want to get a mortgage, for example,   I can't get a mortgage in the United States 
without actually interacting with somebody, until   a company called Figure came along.

And what Mike 
Cagney, the former founder of SoFi, where we're   an investor, what he created was, you could go 
online, you could fill out an online application,   and within five minutes they would tell you 
whether you're going to get the mortgage or not,   and they would fund it within five days. 
Now how did they do that? They say, OK,   go on. You start filling out the application. 
And rather than you say, I swear on my life   I am employed at X company, I make Y dollars, and 
I'll get you that information. And then you go and   you get your employment letter, you go and you get 
your pay stubs, you get your bank to give you a   customer letter or whatever and then you send 
it all in. No. What they do is they say, hey,   you should be [INAUDIBLE]. Just sign into 
your bank account. Just put your username and   password in. And when you do that, we just signed 
in too. You're definitely a customer of the bank.   Right.

Two is, they then quickly scale all 
your data and they say, what corporation is   direct depositing every two weeks? Oh, well that 
must be where you work. Right. A high degree of   confidence on that. And then, by the way, I don't 
need an employment letter and I don't need to know   your pay stubs because I can just look right here. 
This is the exact amount that's hitting your bank   account. So that's a perfect example where, like, 
they automated that process from a paper process   and a human review kind of confirmation process 
with technology.

And that has nothing to do with   blockchain. That has nothing to do with crypto. 
Like, that is just pure technology versus   bureaucratic type processes. I think that is going 
to be pervasive across the financial industry. And   so this automated system that we have, now we can 
actually get a world where, if there wasn't some   regulation– there's a regulation where there's 
a cooling off period in that mortgage process,   where I think it's like a three day cooling off 
period– if that regulation wasn't there from   a technology perspective, Mike and the Figure 
team could literally say, apply. We'll tell you   within five minutes whether you're going to get 
it or not, and we will fund it in five minutes.   So literally you can go in, you can apply. We'll 
tell you within five minutes and we will fund it   in five minutes.

RAOUL PAL: And you'll be 
able to pay for the house instantaneously   too. ANTHONY POMPLIANO: Yes. Yes. Exactly. So, 
again, we are very far away from this world.   Right. Like, there is a lot, a lot of work to 
do. But it is not just a technology build that   needs to happen. It's also, we've got to get the 
incumbents out of the way. Because there's a lot   of incumbents who have a financial interest in not 
seeing that world come to fruition. They actually   make a lot of money by not allowing that type of 
innovation and progress to happen. And so I think   that what we're going to see here is we're going 
to see two competing forces. We are going to see   Silicon Valley versus Wall Street. And that's 
a very big over-generalization, but just the   technologist versus kind of the old school banker 
who, they actually have a business model where   inserting themselves in the process, creating 
bureaucracy allows them to kind of take a tax or a   transaction fee on all this stuff. And so, again, 
I can't predict the future, but what I can tell   you is, based on historical context and precedent, 
the technologists always win.

And so you can   hold on for a while. And I don't know, maybe the 
kind of banker world can hold on for five years,   10. Maybe they can hold on for 20 years. RAOUL 
PAL: Or maybe they adapt. ANTHONY POMPLIANO:   So when you get to, let's say, Goldman Sachs, 
Goldman Sachs has been around a long time.   Goldman Sachs was around before the internet. 
[LAUGHING] Right. Goldman Sachs was around before   fiber.

Goldman Sachs was around before telephones 
and kind of the telephones we know today. Right.   Like, they were around before mobile phones. They 
have adapted to every single piece of technology.   But what they also did was they adapted their 
business model as well. Right. And so I think what   we're going to see is a haves and have-nots in the 
financial world. The people who hold on forever to   the old model will get disrupted and the people 
who are forward thinking, many that you can   already– Fidelity is a great example. They're, 
like, all in on this stuff. They say, hey,   of course this is going to be a thing. Let's be 
ahead of the curve. Let's embrace it. Let's figure   out how we can build a business around it, and 
let's go kind to be a leader in this space.

And so   that split between haves and have-nots will open 
the opportunity for new challengers to eventually   become incumbents by building super valuable 
things that replace the have-nots. And it ends   up creating, kind of this decentralized financial 
system that I'm talking about. RAOUL PAL: Yeah.   I mean, if I look at that world and I see the 
adaptive [INAUDIBLE] of the investment banks,   because they tend to be more adaptive, and I look 
at the central bank digital currencies, I'm like,   so where's the normal money center bank? Because 
literally they're not going to exist.

I cannot   see a role for them. And I kind of think the 
Europeans know that and they're working to do it,   to get rid of it. ANTHONY POMPLIANO: So one of the 
most interesting frameworks for me to talk with,   kind of legacy finance folks about is, if you're 
over the age of, I don't know, maybe 40, 45,   your entire world you grew up in, there was a 
very high friction to switching currencies. So   if you were a macro trader or a foreign 
currency trader, you had the technology,   the systems, you spent a lot of money in R&D to 
be able to do this somewhat seamlessly because   you were trading it.

But for the average person, 
the only two ways to switch from, let's say,   US dollars to another currency was either to 
physically go into the bank and actually say,   hey, I would like take my US dollars and get 
euros. I'm going on a trip. And they would say,   how much do you need and they would change it 
out. Or you could go get ripped off at the airport   by a currency exchanger. Right. Like those were 
basically your two options.

So very high friction,   very expensive. Well when we move to a world 
where all of these currencies are digitized,   so there's a digital dollar, a digital euro, 
all the private currencies, Libra and all   the other ones that are going to come, and then 
you have decentralized currencies like Bitcoin,   the technology layer is basically going 
to be feature parity, to some degree.   Right. Maybe there's some nuance here or there or 
whatever. But everything ends up being digitized.   Now the switching cost between assets 
is drastically lowered, if not removed.   And so what that changes is, we've lived in 
a world, I call it a single currency world,   for pretty much everyone's life that's 
alive right now. If you get paid in dollars,   you hold your money in dollars, you pay other 
people in dollars, and you denominate all of your   assets in dollars. If you maybe are on the fringe 
and you live in a world where your nation state   currency hits hyperinflation or gets devalued 
away, you then switch out.

Right. But again,   you don't go to, hey, I'm going to take my one 
currency and swap it for six currencies. You say,   I'm going to take my one currency and switch it 
for another one currency, and now I live in a   single currency world again. When you reduce the 
friction of switching between these currencies,   there is going to be a world where likely I get 
paid in dollars, but just because of that digital   currency, it doesn't mean that it changes the 
monetary policy. It's a technology change, it's   not a policy change.

So they're still devaluing 
it, they're still printing it. In some ways they   may be able to print even more of it because 
it's easier to do and all this kind of stuff.   But when I get paid in dollars, I'm not just 
going to simply save my dollars and leave it in   the bank. I'm likely, with the click of a button, 
to switch it into a better store of value digital   asset. So let's say Bitcoin is that asset. Right. 
So I go from digital dollar to Bitcoin. It's a one   click thing and now I'm using the store of value 
or the purchasing power protection of Bitcoin,   while I'm not using my dollars. The government 
says, but you know what, when you pay me in taxes,   you've got to pay me in dollars. And so when 
I go to pay my taxes at the end of the year,   I then switch back with the click of a button 
from Bitcoin into dollars and I pay my taxes.   And so I'm actually living in a multicurrency 
world now where I'm able to switch in and out.

Now   most people are not going to be currency traders. 
They're not going to be super sophisticated about   this stuff. And so my prediction is that actually 
we're going to see a bunch of technologists   build things that just auto do this for folks. 
Right. They say, hey, when you get paid,   it's going to go sit in this savings account. That 
savings account is going to happen to have better   purchasing power protection than if you just 
sat with dollars.

And then when you say, hey,   I want to pay something, they'll just auto-convert 
you back into a currency. You won't the difference   and it'll kind of just automagically for you. 
The key to it though is, we are underestimating   what this provides for central banks. Central 
banks are about to have the ability to create   personalized monetary policies. And this is going 
to screw up a lot of people, because we've always   lived in a single monetary policy world as well. 
So the individual lives in a single currency world   and the central bank lives in a single policy 
world.

Well, when all of a sudden you now get   individuals who can live in a multi-currency world 
and central bankers who can actually have multiple   monetary policies– and for those who don't 
know what that means, it basically means,   I can treat, let's say, rich people one way with 
monetary policy and I can treat poor people in a   different way and the middle class with something 
else.

I can say, if you are of a certain age,   of a certain demographic, of a certain income 
level, of a certain geographic location,   of a certain occupation, right, all these 
different things, of a certain spending habit,   I can give you a different monetary policy than 
somebody else– RAOUL PAL: And a different fiscal   policy too, probably. ANTHONY POMPLIANO: 
Absolutely. Now we enter into a world where   there is much, much more competition. 
And when we have much more competition,   you also get much more optionality. And so 
the saving grace of this could be that all the   central banks say, oh, wow, I have to compete 
with everybody else. I should probably, like,   behave myself.

But as we know, the incentive 
is too strong. They say, I can abuse my power.   Oh, there's– people won't go over here or people 
will go over there. I'm going to abuse my power   because there is a financial incentive for me to 
do it. And so I think that you're right in that   the central banks, by digitizing their currencies, 
are actually accelerating the inevitable,   which is that ultimately these currencies are 
all going to be interchangeable with each other.   And not only are they going to try to use this 
multiple kind of monetary policy world to their   advantage, it's actually going to force people 
to go find a single currency world like Bitcoin   that has that purchasing power protection. 
And as you get more and more adoption,   you get more liquidity. As you get more liquidity, 
you get more utility.

As you get more liquidity   and utility, you get more stability as well. And 
I think that that key piece is, today we have up   to maybe 100 million people using Bitcoin. When we 
have a billion, five billion, six billion people   who are all holding this asset, it's not going 
to have 30% drawdowns. Right. It's just simply,   you're going to literally have a switch. RAOUL 
PAL: Yeah, it's going to be a three or four bowl   asset. It's going to be very nonvolatile. ANTHONY 
POMPLIANO: Yeah. And you're also– you know,   again, nobody talks about the dollar crashed. I've 
never heard a normal person, outside of finance   say that.

No one's ever said, oh, the dollar 
crashed today. Right. No. What they say is, hey,   I used to spend $3 to buy that loaf of bread. Now 
I spend $4. Right. It got more expensive. That's   about the only thing that they'll say anything 
to do with purchasing power. Well, we still price   assets today in dollars. And it is coming. It 
is absolutely coming. As soon as we start seeing   corporations reporting Bitcoin on their balance 
sheet as part of their reserves, you're going   to start seeing corporations pricing goods in 
Bitcoin. And they'll start with super-fringe weird   things, almost like gimmicks. Right. They'll say 
at the baseball stadium, ah, come buy the Bitcoin   hot dog. Right. And 100 Satoshis gets you the hot 
dog. And people will laugh and they'll buy it. And   then all of a sudden it's the soda as well. And 
then it's the fries. And then it's the peanuts.   And then it's just the ticket to the game. 
Right. And then it's the salary for the player,   and it's literally the revenue of the team. And so 
that may take 10 or 15 years to happen, but when   we start pricing things in Satoshis, what you're 
going to see is all of a sudden that volatility   basically gets masked.

Right? Bitcoin only 
dropped recently 20% in US dollar terms.   In Bitcoin terms it didn't drop. One Bitcoin 
equals one Bitcoin. It's just like dollars.   $1 equals $1. It's not about, did the dollar drop? 
It's, did the dollar become less valuable compared   to goods that it wants to buy or services it wants 
to buy? And so that's the big leap. Right. That's   the one that scares everybody around, like, wait 
a minute, I denominate every asset in my life   in dollars. When I have to start switching and I 
denominate everything in Satoshis, what happens?   And I did this about two years ago. I started to 
think of everything in Satoshis. RAOUL PAL: Yeah,   I mean, look, it's way too early for that. 
We're no where near it on the network effect.   So yes. ANTHONY POMPLIANO: Agreed. Agreed. RAOUL 
PAL: But as a European I've gone through this.   We've had currencies and then they changed to 
other currencies. It didn't take long before   we went from pesetas to euros. The old people, 
they kept calculating everything in pesetas.   Pretty much within a year or two, everyone got 
used to the euro and forgot about francs.

So   it actually doesn't take that long. What 
it took was a concerted change, which was   the ECB. Not to say that may not happen. As you 
alluded to earlier, some central bank somewhere,   according to game theory, is going to take this 
on its balance sheet and then someone's going   to peg themselves to it, not with a 69 bowl 
asset, not right now. But at some point it   will certainly go onto the balance sheet. And 
then at one day somebody will just say, oh,   we've decided to adopt the Bitcoin standard. And 
there you go. And that's the start of the great   game. ANTHONY POMPLIANO: So we're recording this 
in January of 2021. I think by the end of January,   2022, so basically two years, give or take, there 
will be a material percentage. Probably not 50%,   but somewhere between let's say, 10% to maybe 
25% of Fortune 500 companies will have Bitcoin   on the balance sheet, in some form or fashion. 
And when you think about the importance of that,   you're now talking about every shareholder 
is seeing Bitcoin on the balance sheet,   every executive, every financial show is talking 
about it.

Right. All these different things. And   so when you start to think about the adoption 
that is still in front of us– right, people see   Bitcoin– it went up to $40,000. Oh my god. It's 
a bubble, it's over. You know, this is going to be   the all time high. We haven't even started yet. 
Right. Like, when you really think about it,   we have not even started yet. RAOUL PAL: But 
there's something interesting, and I was thinking   about this from something you were saying 
before. It's interesting because most network   effects remain exponential. But Bitcoin has 
this kind of S-curve price. And the reason being   is because we all still work in our fiat currency 
home base. So at some point it creates enough   value for us that we go or and buy a house 
or a car or a Lamborghini or whatever it is.   But at some point you won't see that drawdown. 
And that's the point when people say, I don't need   to capture value in dollars. My value remains 
in Bitcoin. I know some people are there now.   But that's– you'll see that from when the 
sell-off after the halves and the usual kind   of cycle goes.

When that's gone, it's going to 
tell you something. ANTHONY POMPLIANO: One of the   key pieces that is happening now, but not being 
discussed, but I think it is being under valued   is, we, being you, I, and most of the people 
listening to this, we think in terms of markets,   the finance world, or the technology 
world. So we think very much corporations,   what are venture capitalists, what are hedge 
fund managers doing, how our asset prices moving   markets and this stuff. One of the blind spots for 
the tech industry and for the finance industry is   what many people refer to as kind of the culture. 
Right.

So this is music, this is athletes, this is   kind of all of the things outside of technology 
companies and outside of finance companies.   The culture, right, it's usually like 
hip hop community, professional athletes,   all that kind of stuff. They are obsessed with 
this, and they're starting to talk about it,   and they're starting to use it. Right. 
Cash App is a great example.

Cash App's   demographics look very, very different than 
pretty much any other financial community.   Literally they are songs about it. Right. There's 
people who say, I want– like, pay me on Cash App,   all this kind of stuff. And so when you start 
to see culture shifting towards something,   that's when you really get the flywheel going. 
Because it's one thing if, you know, Mass Mutual   says, hey, I'm going to go put $100 million 
on my balance sheet.

RAOUL PAL: French people   don't care. ANTHONY POMPLIANO: If a tree falls 
in the forest, did it really fall, right,   is kind of the thing. If all of a sudden 
Drake says, pay me in Bitcoin in a song,   people start paying attention. Right. RAOUL 
PAL: Although most of us in financial markets   are slightly nervous of that one, because 
when Giselle asked to be paid in euro,   I remember I changed my entire billing of my 
business into dollars. I was living in Spain.   I changed my entire life savings. It was at 148 
and a half. It was a home run of a trade.

So it   worries me when these guys want to get paid 
in Bitcoin still. ANTHONY POMPLIANO: But it's   going to happen. Right. RAOUL PAL: But that was 
true. I get the point. It's a real point. ANTHONY   POMPLIANO: Absolutely. And so I think that like, I 
have enough data points now, enough conversations,   whether it's a musician, it's a professional 
athletes are kind of– the YouTube world,   the TikTok world, all of these people are starting 
to say, wait a second, what is this thing? Why is   it important? And to their credit, many of them 
aren't just buying it. They're not just seeing it   and saying, hey, I'm going to buy this. Right. 
They're actually doing the opposite, which is,   they're saying, hey, this is interesting to me. 
I don't understand it. Can you teach me? Can you   educate me? Right. Can you get me up to speed? And 
so if they were just running out and buying it,   looking for it to double, that would scare 
me. Right. That would basically tell me, hey,   they're just speculating and it's no different 
than gambling.

But when they say, explain this to   me. Why is this important? Oh, I didn't understand 
that the dollar gets devalued. If it just sits in   a bank account I lose purchasing power. And they 
really start to understand it, you then begin to   realize, wait a second, that's more likely to be 
a sustainable user over a long period of time. And   if they have influence, if they have audience, 
and they're able to, one, get over the hurdles   and kind of understand and educate themselves, 
and then they begin educating other people,   this flywheel can really start to run. And I think 
that it really only takes two or three big people.   Right.

Again, I used Drake as kind of an example 
of a lot of people paying attention, pretty   forward thinking, likes to be seen as kind of on 
the cutting edge of innovation. You take somebody   like that, he literally he comes out with a song, 
"pay me in Bitcoin." All of a sudden you're like,   whoa, wait a second. People say that's impossible. 
That's not going to happen anytime soon.   Well Russell Okung, an NFL player, you know, 
tweets almost every day, pay me in Bitcoin.   Right. And he's on national television saying, 
hey, I'm taking half my salary in Bitcoin.   And so I've already seen multiple players tweet 
at him saying, what's this Bitcoin thing? And so   even if only 10% of them actually take 
time to get educated and start adopting it,   you again, you're going to watch this generational 
shift where people grow up with this being a part,   maybe not a majority, but a part of their life. 
RAOUL PAL: So just to play devil's advocate,   I mean, I kind of agree and the tides 
will shift that way.

The problem is,   Bitcoin goes down 90%. Let's say it doesn't. 
Let's say next time around it goes down 60%   and stays down for three years. If you're an 
NFL player, you're going to feel really stupid,   because you've halved your salary. Right? Because 
your base currency that you spend is dollars.   So it's hard until that volatility 
goes– and for that volatility to go,   you need more adoption. It's kind of– it's a bit 
of a tail wagging the dog, but it's going to take   a bit of time. ANTHONY POMPLIANO: But I disagree 
with that for one purpose, right, which is,   if you had bought Bitcoin at $20,000 in July 17 or 
December 17, and you had continued to buy Bitcoin,   the same amount, every week, all the way down 
through the bear market, you would have been up   like 40%.

RAOUL PAL: Yeah. You're an NFL player. 
You're spraying it on champagne in nightclubs.   You spend all of your cash every month. 
And then every month your salary goes down   because bitcoin's in a bear market. Right? ANTHONY 
POMPLIANO: The people getting paid a Bitcoin,   they're not the ones spraying the champagne. 
There's a lot of those guys, but the ones who   are saying, pay me in Bitcoin, they're the ones 
who are a little bit more financially responsible   as what we could say. But your point is well taken 
that, yes, absolutely. There are some people who,   with the volatility, that will be a negative. 
Right. And then there's some people who basically   say, you know– Russell's a great example. And 
I don't want to speak for him, but I think that   his perspective of like, hey, every time I get a 
paycheck, it's going to be basically split 50-50   is my understanding of what he's doing. And he's 
essentially just dollar cost averaging into the   asset over however many years that contract is. 
And so while there is volatility and it can be a   negative, if you take that approach, historically 
it's proven to work out.

RAOUL PAL: That's for a   401(k) but just 50% of your salary. So, you 
know, why not. It makes total sense. Listen,   my friend, I've kept me for two hours, and it's 
been a fantastic conversation. We talked about   all sorts of stuff, lots for people to dig in to. 
And look, I really, as ever, appreciate your time,   and I've thoroughly enjoyed. It's been super 
interesting. ANTHONY POMPLIANO: Listen, thank you   for doing this. I was excited to see you and Real 
Vision start to cover Bitcoin and crypto because   there's a certain type of audience 
that I think you guys have that,   they're not going to go on Reddit. They're not 
going to go on Twitter. They're not going to go,   kind of, to the corners of the internet and find 
information.

Right. What they want to see is   they want to see you and a whole bunch of your 
colleagues or the kind of guest hosts you have   talk about this stuff. So just keep it up and 
I appreciate you taking all the time to learn   yourself and also educate others. RAOUL PAL: Yeah. 
Thanks. We're all building the network effects in   our own way. Right? We're all building our little 
corners of the universe to spread the word.   ANTHONY POMPLIANO: I couldn't end it any other 
way than, long Bitcoin and short the bankers.   [LAUGHING] RAOUL PAL: Take my friend. That was 
great. See you soon. NICK CORREA: Thank you for   watching this interview. This is just a taste of 
what we do at Real Vision. To learn more about the   complex world of finance, business, and the global 
economy, click on the membership link in the   description.

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