Plain English with Derek Thompson - Market Meltdown Why Tech and Crypto Are Crashing - and What Happens Next

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Yo, Rob, our Villa from 60 songs that explain the 90s here to inform you that we are back with 30 more songs because the 90s were super long and had a ton of read music, please join us every Wednesday for more 60 songs.

That explain the 90s.

Only on Spotify today is an emergency episode of sorts.


We’re moving Friday’s episode up because the stock market is vomiting all over itself, and I thought some of you might be interested in understanding why?

So if we win back the tape to last fall, when markets were near their Peak, there was this moment in history is very specific moment that probably should have told all of us that we’re living in a simulation and The simulations Architects are laughing and laughing as they get ready to pull out the rug from under our feet.


So October 28, October 28th, 2021 a trading platform for cryptocurrencies comes out with an advertisement featuring Matt, Damon walking through some CGI room.

Waves his hands at Columbus.

He waves another arm at the Wright brothers.


He talks about bravery and grit.

He walks to a CGI window.

And Mars is there, of course, and he turns from the camera and says fortune favors the brave.

Now, the price of Bitcoin peaked about one week later and it has since crashed more than 50%.


Matt Damon bless his heart.

Love his movies.

Matt Damon was the top.

He said fortune favors the brave and like, Basically milliseconds later the bottom fell out of crypto, but it’s not just crypto this year.

The NASDAQ is off 30 percent growth stocks and pandemic, Darlings, Peloton, Zoom crash, more than twice that amount hedge funds, that bash those growth stocks.


The ark tiger Global have seen some of the fastest, collapses of any hedge fund in history and it’s starting to give people summer of 2000. era Vibes that summer, of course, was the Getting of the end of bubble, when many companies that basically just on their names, instantly got rich without any sort of business model.


They collapsed and the same way.

I suppose that many companies the last few years put the words blockchain or token and their company description and then immediately got rich and that brings me to today’s guest.

Who’s Jason?


Jason is an early internet entrepreneur.

He’s a veteran of bubble, an angel investor and companies like uber and a prolific podcaster as well.



Listen up.

Today’s show is that one of the hardest things to do when either the market is soaring, or when the knife is falling, is to maintain perspective.

I think a lot of the companies that are failing right now are bad companies.

A lot of the company’s failing right now are Griff’s wrapped in brain-dead religious fervor and reality is catching up to them.


But a lot of the companies that are getting killed right now, are good companies.

Great companies, the Amazons, and Google’s of the Next Generation like four years.

A lot of startup Founders have basically been fundraisers and now we get to see who’s really a CEO.


And if you’re an investor will look this is not an investment show and I am not an investment advisor, but it is a matter of straightforward math just straightforward math.

That fortunes are collected at the top.

But they’re made at the bottom.


The bottom is near.

It’s time to pay attention.

I’m Derek Thompson.

This is plain English.


Jason, welcome to the podcast.

Thanks for having me.

I’m very excited to be here.

So, the market is absolutely disgusting right now tech stocks have been destroyed this year.

Cryptos been demolished growth, stocks are down 70%, if they’re lucky.

What is happening at the moment.

Do you think we’re witnessing the popping of tech bubble 2.0?



It’s a great question.

There’s a lot going on.


So this is unlike anything.

I’ve seen, we had the 2008, Great Recession that was based on.

One thing real estate and a bunch of people getting mortgages probably shouldn’t have gotten mortgages in defaulting and people doing really complex derivatives around those people who should never have been given mortgages.


Then you had bust, which I guess is most analogous since it’s the same cohort of companies, same style of companies.

That was very different as well.

Because at that time, he had tens of millions of Internet users.

Most of them weren’t on broadband.

People were still Afraid to put their credit cards online and the business models were not established.


And so it was a very different world.

The number of customers you could reach, was typically Millions to tens of millions.

Now, it’s billions like really real addressable Market, you know, you go onto the App Store, you can reach billions of people, you want to both app stores, you know, three billion people.

And so what we’re seeing right now is we had a very vibrant market and then the pandemic happen, what happened.


When the pandemic happened everybody looked at text.

Ox and said, my God, it’s so easy to make money with tech stocks.

They only go up.

In fact, Dave Portnoy had a reoccurring joke, when he was trading stocks every day from Barstow who just say stocks only go out and that was kind of like, we all laugh.


Like, no, they don’t.

They go to zero.

Like literally I’ve seen many socks.

Code is 0, people forget that and that’s important for people to remember.

So Jason, you were there for, bubble in 2000 and you’re obviously here.

Now, for whatever this is going to be called the 2.0 web three bubble, the name will come.


Can you do a brief history of the twenty-first century in tech for us?

Like, how did we get from bubble to the pandemic bubble?

So, how did we get here?

We had very few companies going public.

And so for the last 20 years, we talked about how few companies were going public and the argument.


I heard as a private Market investor.

I’ve invested in 300 companies privately.

Before that.

I was a journalist and an entrepreneur So I’ve been on both sides of the table.

Entrepreneur investor, that going public kind of sucked and the markets were challenging to you and you had to disclose everything.

So all of a sudden we have all these unicorns, we have all this incredible Innovation going on and the business models become incredibly juicy and SAS.


As a business model selling software to businesses.

Reoccurring Revenue that starts to turn things like Salesforce and Slack are just printing money and Then you have consumer products, like, Instagram.

Obviously, you have 15 users and they have 15, they have 15 employees and they got 100 million users.


Like wow.

This is such incredible efficiency.

So we have this industry set up where it’s like these companies are not going public and their money printing machines and you can’t lose, right.

So that’s when you should start to get nervous over funding happens and founder.


Say, you know, I can every time I’ve raised money seed series a series B.

It’s got Easier and I don’t need to have discipline.

I don’t need to worry about the bottom line, because everybody’s rewarding the top line and obviously, Uber was a big beneficiary of this.

They just kept raising more and more billions of dollars and it was like, well, what can we do?


Let’s go to another hundred cities.

Let’s do food.

Let’s do Vito’s flying cars.

Let’s be super ambitious.

If the money is coming in cheap.

Our companies were 20 billion and we can give away five percent of the company.

Get a billion dollars will figure out how to make that worth more than five percent.


So that’s kind of all the That up and then of course, the public market start getting excited.

Retail investors join the party.

Again, always an interesting sign.

And this time the retail investors are much younger and they’re very sophisticated and they’re very risk-taking and they have this app called Robin Hood, which I was a seed investor in as well.


And it makes it super easy.

They take all the friction out to trade.

Remember the friction to trade was $25.

You had to get on the phone and tell a broker what your order was like, literally, when I started Trading, Socks in the 90s.

You had to call up say I want to buy 100 shares of this at Market.

They say great charge.


You 25 bucks to put your order in.

Now you can buy like a fraction of a share of Apple traded 10 times a day and pay nothing.

So anyway, that’s all the setup and people lost their discipline on the investing side, people lost their discipline running the companies.

Then, the public markets said, as they got overheated during the pandemic whenever Bruce home, there’s no sports to bet on and people have stimulus checks and people stopped spending money.


People forget that last But the stimulus tracks were a couple of grand but if you’re not going to Coachella now, you got another couple Grand.

If you’re not going on vacation, if you’re not going out to eat all this adds up, couple hundred bucks here, a couple of thousand dollars there.

Start buying an FTE should start buying stocks what stocks you buy?

I don’t know, reddits at AMC and GameStop or funny stocks to my right through.


As I mean stocks yet, the rise of mean stocks all this starts happening and people getting disconnected from the fundamental reality of business, which is you serve a customer with the product or service, you charge them a price, or you monetize them in some way.

And then there’s a At the end of the day, all of that went out the window.

This is a full-blown contagion.


The great news is there’s, you know, a lot of companies that are not sustainable but most of the companies actually have real businesses and even some of the ones that are most punished.

If you look at some of the most punish companies Peloton comes to mind, people love their peloton’s, they got three million subscribers like to have three million subscribers are in, Era, would be extraordinary.


So even the ones that are absolutely decimated have pretty loved.

Ox, you talk to anybody with a pellet on there.

Like, you can take this from me, you know, Pride for my dead hands.

When I have a heart attack on it.

Like they’re not giving it up.

And so this is a big swing, probably too far for the overheated markets.


But, you know, this is when fortunes are created.

I always tell people, fortunes are created in down markets.

They’re collected and up markets.

And and here we go.

The cycle starts again, which is great for me as an early stage investor.

That’s a great line.

We should let me do a little bit of summarizing and then kick the question back to you.

So, I think you told the really, really interesting history and Important history about how software created this incredibly important business model where people could have extraordinary scale with.


Very few employees.

That’s wonderful for profits that grows becomes more sophisticated.

It enters more markets.

You have this low interest rate environment where muddy is cheap.

It’s easy to push money into companies and they can achieve scale but we probably got over our skis in, a lot of different ways.


The same way that in the early 2000s, there were companies going public that had no business models today.

There are companies that were essentially going public or raising money based on.

On a narrative, not based on unit, economics based on the ability to make money off of individual subscribers.


And so that seems like.

So, whereas that seems like an interesting difference between 2000 and 2020 to the difference between business models, not being there versus unit, economics, not being there.

That’s correct.

But it, you know, in 2000, you did have some companies who went public with the idea that they would figure out a business later.


So they were like, incubators going public, which is really weird.

And you did start to have things like truth social where they didn’t have any products, and their deck was like, this is selling our drums Twitter thing, right?


So you did have people like going public.

Just based on whatever I guess they call it momentum or something.


I’m pretty old school, you know, there’s a product and there’s customers and there’s a team that builds that and so, when I make my investments, I just look at those three things who’s the team, whose customers, what’s the product that connects them together and how much you charge for it and you get Fly.

Wielding going things, go well, and what’s really brilliant, you know, as a kid from Brooklyn who has no business being like one of the top seed investors in history, to be honest.


I didn’t go to MIT.

I went to Fordham at night while I was a waiter and a busboy.

And one of the things I was struck with was it’s a really Milestone base system.

At least when I got out here and you would get some friends and family or a seed investor to give you 100 K 50k, you build a prototype.


You might get one customer, then you might get a venture.

It’s or a seed fund to give you 500 k or a million.

Then you get to ten customers, 25, customers six or seven employees.

You get two or three of the management team members and now you can raise the three or four million and, you know, and so it goes Milestone based, and something.


Very strange happened over the last three or four years.

I’d have people, I invested in, and I would be like one of those first two or three Milestones out of the first four.

And then they say, guess what?

I’m raising money.

I just raised ten million dollars, you know, at a 50 million dollar valuation for, you know, twenty percent of Buddy or 15% of the company.


I’d say really, we don’t have product Market, fit yet.

Like we’re skipping like, five steps.

And they’re like, what should we take it or not?

I’m like, yeah, take it.

But realize like in order really be worth 50 million dollars.

We will be graded on 10 to 20 times our cells.


So you’re going to need five ten million dollars in a hot Market, with a great company for that to be reality or 20 times your earnings 30 times running.

So just be ready to throw off two million dollars in profits.

Be worth 50.

And that’s that may be a long road.


It may be a two or three, four, five year Road, depending on the product or service.

And so when I saw that, that was like a really red flag for me and when it actually preceding steps, one of the red flags come pouring into the picture.

Well, they first started the red flags.

I would say couple years before the pandemic where the the valuation discipline went out the window.


So people would say well this company graduating from y combinator wants a 15 or A million dollar valuation that used to be five to ten for the entry price.

So it probably doesn’t matter, because if it becomes a unicorn, does it matter?

And I would say, well I invested a true bread, 5 million and comment, five million, and ten City had five million.


Those are all unicorns and you’re asking for 5 million more than those three combined.

So your for Troopers.

I don’t think so.

They had more con, the meditation app had more accomplished than you do.

So that’s what I was like.

This is getting weird, but I sort of suspend disbelief because it will listen if I’m buying 10% of the company.


The Outcomes are bigger Google Apple Facebook.

You can see it.

The Uber.

These outcomes are much bigger.

The idea that a company would be worth 10 billion or 20 billion was just crazy years ago.

So the outcomes are bigger because of the global market.

You can address millions of billions of customers globally with your products and services today.


And that didn’t exist, 20 years ago, either the idea that you could fluidly launch an app, and, you know, 100 markets where you can launch, Uber in a thousand cities that Playbook didn’t exist until Google really, You know what, on their March watching Gmail and every country and support spliff rated.


And so everyone had the platform through which you got these apps.

It’s interesting when theme of the story that you’re telling is that there was Contagion on the way up and Contagion on the way down, right?


It’s by momentum going here, exactly.

Which is, which is a great observation, what happens?


What happens now, I mean, because you’re looking right now at the crypto stocks that are down set, you know, 50 to 80% the growth stocks that are down 70 to 80%.

Do you think that right now were near the bottom of this Tech crash, or are we rather as Keith rat boy said General partner at Founders fund and former executive at LinkedIn and square.


He said, he’s getting quote, June 20, June 2000 Vibes, June 2000 is when the absolute bottom fell out of the NASDAQ.

The NASDAQ fell from at 4900, at the beginning of 2000 down into the 1000s, didn’t get back to its.


Peak for 14 years, right?

So if this is June 2000 Vibes, as some people, I guess you’re saying, we’re not going to get back to November 20 21 until the mid 2030s, right?

So that’s a very different picture than even a lot of pessimistic.

People might be holding a debate that.


What do you think is gonna happen?


Yeah, I won’t be that bad.

Because remember, like the apples and the Tesla’s and the Google didn’t exist back then really in their current iteration talking about how much grown up middle-aged businesses that have it.

Enormous value and aren’t going to fall 34 and the printing money.


Yeah, they’re not going to fall and it printing so much money and they’re sitting on so much cash and they have these franchises that you just can’t imagine going away.

Nobody’s giving up their iPhone.

Nobody’s giving up, you know, their Amazon Prime account.

Like these things are to have staying power.


Nobody’s like stopping their Google searches.

So that is a difference.

But I would say we’re bouncing along the bottom right now and so each stock has to go through this.

They should moment where people say, what is the actual value of this company?


How much cash do they throw off?

And how much value do I put?

You have to like, it’s basically a now, a weighing machine as opposed to voting.

I think this is going to be successful.

The markets is a famous quote.

I don’t know who I was told to me by Bill, girly, famous, venture capitalist, who was a mentor of mine.


I don’t know who told it to him.

But the markets are a voting machine initially and then they become a weighing machine and what you’re weighing is the earnings.

So if this company is throwing off a billion dollars in profits a year, how much do you value the company at 20 billion?

Because you’re going to get 20 billion returns and then you still only company in 20 years.



What is the future earnings of this?

And so, a whole group of companies that didn’t really have product Market.

Fit are going to quickly have to get to product Market.


In other words, customers are going to have want to have their products.

They have this second group of people people love their products, but maybe they’re spending more than they make.


Well, now they’re going to have to prove that.

They can continue to grow while not blowing through this cash, which means operational, excellence and discipline.

That means free lunches, crazy office spaces, huge ridiculous salaries, redundancies having ten times as many employees as you need and a bunch of pet projects all over the place.


Like Google has with their, you know project, you know, X projects and you know, all those kind of things that drain money.

Well, that’s gonna have to go away.

You got to focus on your core business and so each stock is going to that can the stock Be viable.

Uber is just one of the great examples because people said, hey ride-sharing, it just will never work and that’s obviously not true.


The prices of ride-sharing have gone way up in the pandemic to get drivers to come back.

People are still paying and it’s back to pre-pandemic levels and people are paying, you know, what would be According to some like really high fees 20 bucks to have their food delivered to their house.

Seems like a pretty good deal.


Actually, if you had an assistant who you were paying 20 or 30 bucks an hour to would be the same amount probably or maybe Little less actually used toward a Shore over eight.

So I think each of those businesses is now going to have to tighten, their belts.

Austerity measures and just prove to the public markets.


Hey, this is a profitable company.

The free cash flow is there, and we’re worth believing in and we’re disciplined.

We’re not going away.

I think it’s going to be a bouncing along the bottom and then companies go private layoffs.


The entire austerity measures across the entire economy and there’s a Leo.

Of contagion that occurs.

I saw this, you know, both the other crises 2000-2008, everybody starts laying off, 10 to 25%.

If any company according to Jack Welch can get rid of the bottom 5% and operate better.


So then everybody says we’re not going to waste this crisis.

So we’re going to do a we’re going to do layoffs.


We have to do layoffs bullshit.

Like they’re just like we’re going to get rid of the people.

We don’t like here who are Slackers and that everybody has 10%.

When you see that 25% life, that means the fundamentally.


The business needed to cut costs.

But with five or ten percent, that’s people being opportunistic, but if the contagion right?

So that if you’re not laying, I was going to say to stick with the theme, this contagions and layoffs as well be contagious and investing contagions and selling off and then it seems to me like if you’re in an industry where all of your competitors or laying off by percent of their Workforce, your investors are looking at you thinking why aren’t you trimming the so-called facile?


You want to call him?

What’s wrong with you?

Are you an idiom with you?


And that’s how I think you’re.

I think you’re prescient to see the possibility of layoffs being a contagion to yeah.

It’s happening already.


It’s happening.

A lot of what you’re saying reminds me of the previous episode that we did with the writer Morgan household who was on a week or two ago where he said, you know, when rates are low monies flush your in the narrative economy because the company with the best story attracts the most easy money, but now the rates are rising.


When it gets tighter, you’re shifting from The Narrative economy.

Into the value economy.

You have to prove that you can produce cash flow and profits.

And that’s why we’re shifting that only our investors shifting from stories to earnings, but also in the answer you just gave companies themselves.

Shifting from.


We have this incredible story, give us money or the total addressable Market is three trillion dollars to.

Oh, no, that’s a story that was for a different economy.

This is the values.


We have to show.

We have cheap offices were remote Workforce.

We lay off the people who don’t work for the company.


We only focus on a very specific.

Bottom line unit economics.

And so you’re going to see a lot more discipline.

I think come out of hundred percent.

Speaking of like about that the narrative versus like the reality and the and the economic is that so Voting in weighing right?

Like the Voting is your voting on the story and the weighing is you’re weighing their name.


So that actually does fit.

I think pretty well.

Speaking of voting and weighing.

I want to get your thoughts on the crypto crash specifically.

And before I do that, I want to remind myself and listeners where you are on crypto because I can’t really remember another subject where I know so many really, really smart people who think this is like the next internet and a bunch of really, really smart people who think this is absolute beanie babies in the cloud.


So just briefly before I ask you the deeper stuff.

Where do you place yourself on the crypto Spectrum?


So there’s a very interesting collection of technologies that are being bundled together.

Some of them are new, and some of them are not like blockchain very new and ft is very new other things like distributed.


And you know, decentralized not new, right?

We had that with Napster and Nutella and a lot of different Services were not centralized.

Actually Napster was, Nutella wasn’t Bitcoin BitTorrent wasn’t.

So, this is existed.


In fact, Travis’s company before it was called red swoosh, which was a distributed way to share big files, right to save money on Bama charges.


So crypto is an interesting collection of Technologies.

Some of them are very real and have great application or profound.

And then there was an entire level of grift laid on top of those and a religion.

And I watch the same grift. era the same.



Literally some of them I would say their names, but there were people who companies, who then became like these incredible kingmakers in crypto.

In other words, they so they spend a good yarn.

They actually told a really compelling story about how this was going to change the world and they weren’t necessarily wrong.


And that the thing that was in common is there’s a grift here of like some future promise, some future product to come and we’ll see if it comes.

But we’ve been at this crypto thing for 10 years.


And I think because money is embedded in the technology tokens and ft is because the money is embedded in it.


People are getting rewarded for not doing work.

You’re rewarded for putting a white paper out or an idea or a promise of future tokens and things to come on these projects.

So, people get these huge rewards before they actually do the Milestones.


Like, I talked about the Milestone based system here in Silicon Valley so that if you don’t have the Be system, it perverts the whole thing.

And that’s what’s happened in crypto. 99% of these projects are run by grifters or idiots in some combination, in some cases.

Like some people don’t know they’re idiots and they don’t know they’re a grifter and they’re telling everybody.


Hey, give us your money buy more Bitcoin.

Like I saw this Michael sailor guy telling people like, you know, if you believe in Bitcoin, you’re the only thing you can do.

That’s sensible, as mortgage your house, take any business.

You have been converted into Bitcoin, you know, and he said that would Bitcoin was a 50 or 60.

According to you know, what I saw.



So yeah, if you took that guy’s advice, then your house is now Worth or your, the equity formally inside of your house is not worth 40% less than it was three months ago.

Just exactly good investing.

I’m very careful with giving this kind of advice.

So that’s, it’s a new, I have a nuanced, take on crypto.


I do think that if you were going to make an analogy between the tech companies today, and era and then crypto crypto would be very much more like era than this new cohort of companies because they haven’t built anything yet.

And Every time I talk to his crypto, folks, they asked me to invest at a 50 million dollar valuation on a white paper.


I’m like, this thing’s got spelling errors in a bra and these ideas are obvious and they exist and like I don’t think you’re going to disintermediate Airbnb with their tote with your token.

I know who you are.

You’re not as talented as that my know them.

I know you you’re not them and you are writing a white paper and getting 20 million dollars and then your absconding with it to Puerto Rico.


Like it’s not obvious to everybody what’s going on.

Apparently, it’s not it feels sometimes.

Extremely Obvious to me, but sometimes I feel like I’m going crazy because extremely brilliant people who are unbelievably intelligent and all sorts of other ideas or other domains are true Fanatics, True.


Believers when it comes to crypto and they talk like anthropomorphised fortune cookies.

It’s like, all they say is just stuff that you can break open a cooking and find inside of it, except the word crypto is printed on the label.

It’s what you said.

What I want to know what their book is.

Yeah, you know, that’s right.


That’s right.

Yeah, exactly.

Our honey things are because this thing is just about who holds the next bag, you’re lying about religion reminded me.

It was it a Winston Churchill who said of Stalin riddle wrapped in a mystery inside an enigma.

I feel like I’m going to think of crypto from now on is a real technology wrapped inside a grift inside.


A religion.

Like that is what crypto is, there is something real in there that I remain curious about, but it is so difficult to dig through the religious proselytizing, but it’s worse for the grift and person yet.

It to the final technology.


It’s worse than that.

They’re running psyops on everybody.

Especially if you’re a journalist or a you in the media or you have some kind of influence any time.

I would say, like be careful, you know, Bitcoin zeros are real possibility, you know, most Technologies do get replaced.

There will be something better than Bitcoin by definition.

There always is and nothing lasts forever.


Bitcoin will go to zero someday.

We just don’t know when that day is could be 100 days from now, maybe 100 years from now, but almost in technology looks like things have a 20-year run, you know, whether it’s a While or Yahoo or Facebook any you get a good 20 year on 30-year run.

Sometimes things can cross the chasm like apple did but it was a little struggle in the middle there.


So what they do is if you put up anything they’re like, okay Boomer have fun being poor.

You don’t get it and toxic Bitcoin.

Toxicity was is it is established strategy of the group.

You have to tell everybody all other projects are shit.


And if you don’t buy this, you’re going to be poor and it’s really like a psyops.

That’s Run on Twitter, run on Reddit and they have all these accounts and they’re just trying to make you feel like an idiot.

And then you go over to Signal or Discord and you see pump-and-dump rooms where the like we’re going to have a new coin to pump will just put these things together.


It’s a giant graft where Psy Ops is being done.

On people who call out the grift and then they’re like, oh you put laser eyes in your Twitter.

Now you’re part of the group and people want to affiliate.

Speaking of crypto potentially going to 0, I just want to read a couple of facts and figures that I saw, as I was researching for this show.


So coinbase.

The crypto trading platform announced its earnings this week.

I think just today, retail trading volume for on coinbase was 177 billion in the fourth quarter of 2021 down to 74 billion in the first quarter 2022.

It’s a 59 percent decline in retail trading, volume monthly Traders also declined by 2 million.


You move on to end of T’s Wall Street Journal, recently reported that by Measures nft interest is plunged by up to past seventy percent worldwide, search interest in the term and of T, which peaked in January this year has also now declined by 70%.


I mean, what are the odds that we’re looking at a shake out in crypto?

That could be truly catastrophic for these Founders for their investors and for some major Venture capitalists that put their reputation and their rinsable money on the line.


In this industry.

I would say, 90% plus of the projects, go to 0.

Yeah, pretty clearly like, and 90 95 % of the value of n.

Ft’s goes to 0 and then you’re left with whatever is a real project.


So I do think with the nft S tying real world benefits to them is clever.

So you can put IP intellectual property copyright, which the board 8 Club did so you can take your Ape.

And then you could put it on the front of your building and make a board ape Yacht.


Club bar with your monkey and then that can kind of draft off our.

Somebody else who’s creating a nursery school or a TV show with it.

That’s kind of interesting and weird.

It’s almost like if the Marvel characters like you own doctor strange, and I owned, you know, the Scarlet Witch and I could make a Scarlet Witch show and you can make a doctor strange, you know, theme park.


It’s kind of weird and trippy and that’s where like, you can kind of, get excited about it.

And say, well, there’s Interesting there nft is like the Fry Fish Club that I guess Gary Vee was doing a race like 15 million, you get ownership.

Not in the you get a membership, but it’s transferable.


So imagine if Soho House memberships, could be flipped and sold on an open market without the permission of.

So, how’s that is kind of interesting.

So I think there will be some interesting nft projects where they have some rights.

That come with it.

Okay, that’s cool.


But that’s 1% of what’s going on now and do.

That’s Soho House.

Like so house is cool.

Like, so house is a great idea.

It’s a great product.

When crypto was a highly profitable.

How did how they profitable?

I’ll give it all the plotted, real business.


Yeah, when crypto was at its peak of Prost ization, people weren’t saying we’re inventing, a better Soho house.

They said we’re inventing a better world.

He said we’re remaking, human nature were taking over the Internet.

This isn’t this is we had web to its broken rebuilding web, three web.


Three and slightly better, Soho House, like are two extremely different ideas.

And I don’t want to reduce the benefits of the real technology here to just a distributed Soho House token, but it’s it continues to astonish me.

When I hear the real world implications of things like board.


AAP aapke club and it really does cumulate to we created a club and they have a really neat piece of art that is truly unique to each individual art holder and Opens access to all sorts of things.

Like owning an American Express like that is real.


I’m not saying it’s not real but holy shit.

That’s so different than the promise of completely different.

Yeah, and I think making it seem like it’s going to change everything is kind of gets people to buy in and maybe the next bag holder and that’s kind of what you need in all of these scams.


And Griff’s is somebody else has to buy whatever you bought at a higher price, Bitcoin included, you know, aetherium included all of these.

So they do have to have some fundamental.

Value in the world.

So with those entities like you could imagine if Getty Images, right?

So pretty softer, Target pretty big industry or music and music licensing.


The rights to songs.

Hey, if the rights to songs and you and I collaborated we wrote a folk song together and you wrote the lyrics and I wrote some of the lyrics and we say, okay you go 7030 on the lyrics.

You did most of them I did the music Arrangement.

So I’ll do 70/30 on that and Mechanicals and all of that’s recorded somewhere and then some third party could listen to the song and say I want to buy one percent of the song and they bought Percent of, you know, free bird and we wrote it like, okay.


This is a really interesting way to democratize and open up like the ability to invest in music.

So I guess I really do like some of those IP based ideas and I think they’ll come and I think they will be successful and they could change the music industry.

So, but for every example you have like that, the way I describe it.


It’s going to take decades.

It’s probably not going to work.

But if it does, it could be game changing and most ideas will not be.

And so, you know, that I applaud The risk but I don’t like the grift, right?

If I’m being clear there and I just don’t think people should get the rewards for work.


Not done.

And I think that’s a like, a big what?

When you look at entrepreneurs.

They’re at their best when they have their backs up against the wall.

They have constraints, just like an artist, you know, you, you know, Bob Dylan said like, they were like, why did you write Blood on the tracks is one of his seminal albums?


And he’s like, because I owed Columbia Records and album and it was two years overdue and they’re like, okay.

Yeah, but Tangled Up In Blue.

Then this song and that song and Shelter From The Storm is like incredible.

Like how did you get those done?

And he’s like because I owe them the album and it was like discipline for doing.


It was like, it hit disciplines.

Bob Dylan, the great, you know, so sometimes great great constraints make for great art.

I totally agree.

There’s a great line from Robert.

Frost writing poetry without rhyme is like playing tennis without a net.


And I feel like a lot of entrepreneurs in the last two years particularly in the Crypto space have been playing tennis without a net.

And now with with interest rates Rising the net is being reinstalled on the tennis course, and the thing is, I want to actually start with history.


How did bubble Shape the next generation of tech.

And is there any lesson from bubble that can inform our understanding of what’s going to come after this many crash?

So, it was like a nuclear winter.

You could not raise money for basically a year and a half two years and companies couldn’t go public for five or six years and it was very severe.


Venture firms were afraid to make Capital costs there LPS.

So if you were Fred Wilson or you know, do a flatiron Partners at the time, Union Square Ventures eventually, Like do you want to call your endowment Harvard or whoever, you know, Ford foundation and say, hey, we need money when their stock market portfolio, Zaroff, 70% or something.


You don’t because they have to liquidate and it’s the whole thing becomes messy.

So you had this, just everything was frozen.

Now, what that did was it led to a group of people myself, Nick Denton with Gawker, the Flickr team delicious.

We just built products that cost no money.


So, Brian, Alvey, and I am Peter.

Rojas started weblog.

Think we found somebody to be a salesperson.

John Gould who worked basically for I know salary but for you know on contingency for sales and we built a gadget and Autoblog enjoy steak and Nick both Gawker.

And Nick was paying Elizabeth spires 1500 a month and Peter Rojas 1500 a month.


I offered them 2,000 a month.

I got Samsung to do a sponsorship like we just bootstrapped everything and it created this really Flickr was bootstrapped delicious was bootstrap and then all of those companies started to grow and you were able to capture Sure, people’s imagination because you were the one new company was that that was launched that month and the next month or two companies launch.


So this idea that there were like 100 new startups getting funded a week.

There wasn’t a hundred new startups getting founded a year.

There were two dozen.

So it became very quiet.

He became very bespoke and, you know, just wearing a lot of albums or restaurants opening every year and everybody who was in, it was super qualified and there was a density of talent and everything was affordable because Had jobs and everybody went back to work at Sony or Macy’s.


The idea that you can work at a start-up, you know make 50 Grand or you could be a writer a journalist freelance for Nick Denton for 30,000 a year and you could work as a waiter on the weekends or something.

Like that was like great.

I can do something interesting with my life and then the rebuild process began and the economy will be as acute this time because so much venture has been raised over the last couple of years and the business models are so secure now and iPhones exist, that three or four extra Or the mobile phones exist, 3 or 4 x.


The amount of consumption going on high-speed, all that stuff.

We talked about the rails of, you know, money flowing.

It’s not going to crash down to that level of nuclear winter.

But what you will see is people are not going to have four or five job offers like they did for the next couple of years or maybe a year or two.


They’ll still be a lot of jobs.

You’re still going to have the big companies.

But like I said, people had to go work at the big companies like Facebook’s got a hiring freeze apples, forcing people to come to the office and they’re letting their In learning Guru leave and they’re not fighting for him.


That tells you there don’t, they’re too prideful to do lay off.

So they’re just like come back to the office or quit and basically they’re challenging their own employees to quit and I think they’d be very satisfied if ten or twenty percent.

So what’s going to happen is these crazy offers crazy, you know, a competition for talent at that’s going to get muted?


Does it mean that great talents, not going to be competing for?

It’s just not going to be as insane and illogical.

Which then starts the process, a new, right?

It’s like, it’s like a forest, fire effect, you know, that the correct, the forest burns down, and then there’s nothing and it’s terrible.


And then it creates biodiversity that new kinds of plants that couldn’t grow because of the canopy that whatever block the sunlight suddenly grow, and you have the cycle route rejuvenated again, that’s exactly what’s happened.

When asked what the after shot that you see to the broader economy because, you know, I’m piecing together a couple different ideas.


You putting out here.

Number one, stock.


Obviously, that’s declining wealth, declining.

Wealth leads to less spending and this is the converse of the so-called wealth effect.

People feel less Rich.

So they Splurge less number to less spending means the labor market cools off.


Like we’ve had years of worker, power over the last few years.

Lots of quitting wage growth of the bottom.

I think that’s going to slow down to number three during the pandemic.

You saw an increase in so-called early retirements, but now that a lot of those nest eggs that People who left the labor force during the pandemic had.


Those are 20% smaller now than they were four months ago and prices are still Rising.

So I think you’re going to have a great unretire moment.

I think you’re going to see a lot of people who left the labor force of the last two years.

Start to come back to the labor force, Rising participation rate, and number four, when you put all this together, more workers, smaller portfolios, less spending.


I think all of it will pull down inflation over the next six months.

Unless Supply chains are just disgusting and I think that’ll probably coincide with a mild recession.

So more workers a little bit, less spending a little bit, less wealth, a decline in inflation and a mild recession, pick up that thread wherever you want.


How do you see the economic aftershocks?

So labor participation has been going down since the 90s if you did the like 99 era, especially amongst 25 to 55 to get labor force.

Participation is The share of prime age workers, 25 to 54.


Typically, that’s how they look at it.

The share of all people in the country.

They’re 25 to 54 years old who are either working or looking for work in the economy, correct?

And I think a lot of people gave up they don’t want to work.

They don’t see value in these jobs and they figured out a way to make enough money.


We can parse that a bit to basically opt out of the labor force and you also pointed out the early retirement, you know.

Hey, I’m a nurse.

This is really suck.

Being a health care worker and Endemic, I’m 66.

I was going to retire at 68.

I’ll just cut out now or I’m a journalist and I got a buyout package in New York Times.


Whatever it is.

So the number of people who are refusing to go back to work, has led to awesomely minimum wage going up, not because Bernie Sanders and Elizabeth Warren or screaming about it, but because there’s a competition for entry.


Rung, jobs supply and demand demand for workers, went up up up and supply of workers went down.


So we now see, labor.

Having a lot more power.

Amazon offering 15 to 20 bucks an hour and paying for your associates degree and giving you Health Care day.

One like, they’re really in a massive competition here.


Apple got shamed into it, even McDonald’s which is fought for decades to keep minimum wage low has said, you know what?

Screw it we’re going to get rid of cashiers and put kiosks in and then we’re going to pay everybody else in the business, a little more money and try to keep people motivated.

So this is a pretty interesting moment in time.


So to get out of this, what we’ll probably see, and this is a mess.


So it’s like you and I trying to predict it is like trying to predict a weather pattern and like this crazy, you know 19 World sort of billiard balls crashing into 18 other billiard balls for trying to say.


We’re going to go.

Yeah, some version of this will happen.

We’re okay inflation.

Maybe we get it to come down a little bit.

Maybe people do austerity measures themselves.

They do a staycation instead of going to Europe, they move in with their cousin, instead of getting the apartment, instead of being in a one bedroom alone or getting a two bedroom, so they could have an office They move into somebody else’s two bedroom and there’s no office and they start going back to the office and people lower their personal balance sheets.


Build up a little bit of cash, pay down their debt and then start spending again.

And so the same thing we’re seeing in those companies that have to, like, maybe, you know, in dhara said this on Sunday and his email, which I thought was very great leadership.

I’m still old are the CEO of uber Uber.

He wrote a really great message like, Hey, listen, hirings.


Going to be, you know, something that’s a luxury.

And we’re going to have austerity measures essentially and interpreting it for him.

You know, we’re going to see some rebalancing of people’s personal balance sheets.

And then that’s how the country gets out of this.

I think labor participation is a major one because what you really want in an economy to be vibrant is not printing money and giving people stimulus checks that doesn’t help actually that creates inflation.


As we’ve seen what you really want, is a productive Workforce and you want technology creating efficiencies.



I think it’s important to say that.

A lot of the things that were.

Being are very likely to accumulate to a recession.

It might be a my current session now.




Yeah, we had we had one quarter of negative GDP growth and I believe that a technical recession is two consecutive to.

And so, what’s the chances we got out of it and this quarter.

I agree.

I think the odds are very likely that we are headed into a either a minor, technical recession or a micro recession, which to be clear is also what we had in 2000 2001.


We had a very brief recession.

That we then sort of swung out of even though the rest of that decade was relatively bad for growth.

Last question for you is actually about the future of investing and how investing is going to change.

There are the 2015, 20 million investors who came online since 2020 and meme stock their way through the pandemic and I saw it research from Morgan Stanley.


Today that concluded that the typical amateur investor who got into the market in 2020.

Like the diamond hands generation boarding.

The meme stock roller coaster has now lost.

More than a hundred percent of their games.

So what do you think this is going to do for the future of investing in America?


I think this next generation is like beast mode when it comes to finances.

Like they understand how to do puts and calls and to buy derivatives and to build a portfolio.

This is stuff people learned in their late 30s or 40s, like most people in my generation Gen-X were like, yeah 401K fuck you.


It’s a scam and then they hit like that a kid at 34 and they’re like it.

Maybe I should look at At 401 k again, you got 22 year olds who have been trading stocks for a year or two.

They understand the market.

Yeah, they may have placed some wrong bats, but they know what to put in a call is like I don’t do puts and calls like I just buy stocks and home for 10 years like companies I believe in.


So I think you have this incredibly sophisticated group of people on their finances, maybe Gen-X and in the sum of Millennials were on autopilot.

Yeah, the economy Works.

My parents told me go to college, get a job.

Get a good-paying job like that was Of people’s financial literacy.

Now this group really understands it now did they wipe out a couple of grand Shore?


Because they make that back in a year.


And are some of them becoming like really good at this.

Like, yeah.

Like and I think they’re looking at and saying I’m going to go work for you for 50 Grand a year, 60 Grand a year.

I think I could make that in the market.


Well, it’s interesting because I that’s interesting answer, there’s parts of it that I think I disagree with but it’s possible that it’s possible that I think They might be beast mode on tactics, but done one strategy.


You can understand.

What a put is, you’re going to say.

What an option is.

You can understand what to call is.

You can still think that you can beat the market consistently by knowing a little bit and day trading at 2 p.m.

Rather than getting a full time job, which absolutely is going to make you maybe 100 200 300 thousand dollars, if every year is 2021, but here we are in 2022.


Understanding fundamentally that every year is not 2021 and you can’t just say stock go up.

I bet to the Moon.

That isn’t a strategy that’s going to get you through your 20s, 30s 40s, because stocks go up and down.

So can we change gears is the question for strategy standpoint?


You know, there’s I think there’s a lot of there’s a lot of Truth in understanding that markets are relatively efficient.

It’s really, really hard for most people to beat them on a day-to-day basis.

And as a result, it makes sense to put your money in a relatively diverse index fund and use your time to actually build things that Make the world better that you know, are an expression of your skills.


And so I think that if they if they take the tactics that they learned and they apply it to maybe a more sophisticated strategy and, you know, go out and build something with their time rather than sort of just hang out on, you know, Reddit looking at AMC posts that to me is a better vision of the of Gen Y Gen Z, but I think they should be just look at the go back to Reddit re-examine their thinking when they bought AMC and Say what’s the anti AMC?


What’s a company that’s actually under appreciated that prints money and that I love their product or service?

And let me instead of trying to beat Citadel in some game of chicken.

Let me see if I can get that job for 100k and every month, put a thousand dollars into my wealth for under my Robin Hood shirts though.


Shareholder in Robin Hood was an investor in well front.

If I can put a little bit money into this balanced portfolio instead in forget it.

And yeah, I’m going to pick some songs over here, but I’m going to pick the ones that have a ton of cash free, cash flow that do a dividend and they learn that next part of it.



So you learned the momentum investing.

Now learned like fundamental investing and free cash flow investing, like, turn over another car.

Like you learned how to play Aces.


Learn how to play 10 Jack suited.

Like these are different starting hands, like try to learn how to play a full poker game.


Try to, you know, improve your post-flop play, not just your, you know, shoving the chips in preflop play, right?

That’s, that’s my word, some encouragement.

Now the Work began.

Sharpen your pencil everybody because this is what it’s like to run a, you know, run it run a company in Wartime.



Like it’s going to be like, wartime CEO time you, you cannot be like a overfunded CEO in this market, if you’re gonna be way too soft.

I already see it.

I see it in my portfolio already.

I see people coming to me like, yeah, I think I should, you know, I can’t raise, so I should shut down.

I’m like, you’ve got nine months of Runway.


Get rid of a third of your company, raise your prices, the third.

You’ve now got 20 months of Runway.

We’ll figure it out now like, yeah, I just don’t know if I’m up for it.

I’m like, up for it.

What are we talking about here?

What else you going to do?

And be like, yeah.

I don’t know.

Save the whales or something.

I don’t know.

II had thought of exactly this this Frame but but it’s almost as if the last few years, have raised a micro generation of fundraisers that now has become a micro generation of CEOs.


And this is the moment where the fundraisers have to become CEOs and you’re looking at your portfolio thinking, Who am I backing?

Who’s just really talented at getting the bag.

And who have I backed that can lead a company making money from customers is hard and like learning how to be a Storyteller and gaming investors in a hot Market.


Pretty easy.

In fact, it got easier for them to raise money, each round.

That’s not supposed to be how it goes.


Thank you so much.


Appreciate it.

My pleasure.

Thank you very much for listening.


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