0:00

All right, Gary, thanks so much for joining me today. Super

0:02

excited to sit down and catch up and really

0:05

see what I can learn from you. You know, I try

0:07

to approach these these

0:10

I don't even want to call them interviews, just conversations,

0:12

as just a way to learn, learn what

0:14

I can learn, and hopefully the audience

0:16

enjoys that as well. And there's so much that we can learn

0:18

from well from everybody, but I'm

0:20

really excited to learn some stuff from you. So anyway, thanks for

0:22

taking the time to join me today.

0:25

Thank you.

0:26

And yeah, man, you've

0:28

had You've had quite the career. And

0:31

you know, when I look at sort of over your resume,

0:33

if you will, a pretty

0:35

extensive career in a lot of different

0:38

areas. So we'll get down to that later,

0:40

like you know, potentially how

0:42

different disciplines sort of helps you. So

0:45

I want to talk about a couple of big topics. One, I want

0:47

to kind of talk about some energy stuff. I think it's a really

0:49

big topic for everybody

0:52

right now. It's something I spent a lot of time focusing on. I

0:54

want to get into just investing

0:57

in general. I mean, you have your venture fund, so

1:00

I want to talk about some of the ways that you process

1:02

deals and how you do investments and how you think about

1:04

operations for those things. And then I want

1:06

to get into you know, your brother and

1:09

as well you kind of known for this

1:11

real estate. We'll talk a little bit about real estate and then bitcoin

1:13

of course, and maybe some of the correlations between those

1:15

and different ways to invest into that, and then

1:17

maybe tie it all together with how we look at

1:19

energy and investing in real estate, and then it brings

1:21

it all into bitcoin. So

1:25

we'll see if that's not too ambitious,

1:27

So see what we can get through on that. But

1:30

I see, going back to sort of like I said to

1:32

your resume, I see you work for a company,

1:35

Dying Energy, where you kind of started

1:37

out working there, and specifically it says

1:39

that you were working in the European business

1:42

market and

1:44

so you know, I know, and I

1:47

think even in like the natural gas markets,

1:49

and you sort of exited that company. I know, it's

1:51

probably been a long time one.

1:54

I'm just curious. I mean, is this something that you still

1:56

pay attention to? I mean it's energy, right, I

1:58

mean you still kind of watching what's going on

2:00

in the European natural gas markets or energy markets

2:02

in general.

2:04

Yes, Yeah, I do pay attention

2:06

to it tonight at the micro level. I mean, I'm not

2:08

trading energy. Known a

2:10

lot of men who have left their

2:12

wives widows by

2:15

trading at gas and electricity. They are brutal

2:17

and crude. All I know two guys on the planet that

2:19

have made long term money trading crude.

2:22

All these are really really distinct commodities

2:25

and they have a lot of geopolitical and

2:28

local issues

2:30

that are created you can't hedge

2:32

against. But yes, I do

2:34

watch it. I appreciate

2:36

your point on Hey, there was two pipelines

2:39

blown up. That was an acted freaking war

2:41

in terror in my opinion,

2:43

and has really changed the

2:47

supply chain logistics,

2:50

and I think probably put

2:53

the United States in a position where they're selling

2:55

a tremendous amount of energy to Europe

2:58

within weeks after the pipelines blew up.

3:01

You know, So there's a

3:03

whole play going on here. I think. I think you're going to

3:05

see Europe turn into a totally green,

3:08

one grain nuclear

3:11

industry and they'll just float, you know,

3:13

three trillion dollars worth of bonds fifty

3:15

to one hundred year bonds and turn Europe

3:18

into a nuclear power

3:22

community, which really put long term,

3:25

it's going to have a lot of long term impacts

3:27

on global energy if that happens.

3:30

So there's a lot going on. It's

3:32

worthy to watch for sure.

3:35

Yeah, and I think it matters because I mean

3:37

energy sits at the bottom of every market

3:39

and economy, and so like I think,

3:42

you know, I want to get into, like I said, just general investing,

3:45

venture investing in real estate, and then of course bitcoin.

3:48

But when I think about bitcoin, I think about, like, you

3:50

know, we have this nation

3:52

technology that's growing and there's massive growth

3:54

potential there. But then sort of we have this like macro

3:57

picture that hangs over everything, and

3:59

like if the entire crashed, I mean, it's going to just drag

4:01

everything with it. So I think it's like kind of important to

4:03

sort of understand these different disciplines

4:05

and so you know, again being with energy sort of

4:07

underpinning this. If it could potentially

4:10

cause massive disruption to the global

4:12

markets, I mean, this is something that we should be paying attention

4:14

to. I think about to your point,

4:17

you know, the pipeline that got sabotaged,

4:19

I think general consensus even out of the United

4:21

States now as it was probably Ukraine

4:23

in behalf of the United States doing that it

4:26

seems like even the New York Times is saying

4:28

that now. But sort of going back to

4:30

that, it looks like like last year

4:33

Europe sort of got saved by this like abnormal

4:36

warm year, and now this

4:38

year already it seems like it's gotten much

4:41

much colder. They're burning through their stockpiles much

4:43

faster than they were before. And so the

4:46

United States is, to your point, right,

4:49

jumping in to fill that gap. But what

4:51

happens if, you know, because the United

4:53

States energy is super cheap compared to the

4:55

world natural gas specifically, right, very

4:57

cheap compared to the world, if they're able to export

5:00

a good amount of energy to the

5:02

rest of the world, Europe specifically where it's much

5:04

more expensive, which of course the European I'm sorry, the US

5:07

energy producers would want. Wouldn't that

5:09

wreck energy prices for US in the United

5:11

States?

5:13

Or not? Really? You mean by driving

5:16

you mean by driving them up because too much

5:18

new demand?

5:20

Yeah, exactly. I mean if you're you know, if we can sell it

5:22

for two three dollars in mcf in the US, but it's

5:24

twenty five over in Europe, I mean, how does that equalize

5:27

the market?

5:29

Well, you got you got it there. There's a huge

5:31

locational differential. You

5:34

got to you know, there's big capital costs

5:36

to put it on a big tanker. You're

5:40

roughly two eighty three dollars here.

5:44

Look, they're short in Europe. Europe produces

5:47

nothing. They don't produce their own food on

5:50

scale, they don't produce their own energy.

5:53

Each country doesn't even have its own bank.

5:55

It's literally being controlled

5:58

by three or four people that you and I don't

6:00

know. No one voted these people in office.

6:03

They're just part of the euro construct

6:06

and NATO sitting there. NATO

6:08

is holding the euro together

6:11

and the European Union, and

6:14

uh, I

6:17

just think it's all falling apart.

6:21

So you know, Russia has been selling energy

6:23

to Germans

6:25

far deeper, cheaper than we're going

6:28

to ever sell it to them. They have been the discounted

6:30

decatherm, the discounted kilowatt,

6:35

and they are now going to find other places

6:37

to sell that energy. So I actually

6:39

think this is going to turn around where you're going to see

6:41

energy prices fall because of what

6:44

has been done, the collateral consequences

6:46

of what many of these politicians,

6:50

it's professional politicians, these

6:53

decisions like have a lot of really

6:56

long lasting collateral

6:59

impacts like dominoes falling, and

7:02

there is so much energy on the planet. Mark

7:05

at one hundred dollars crude all or four dollars

7:07

nat gas, it

7:09

doesn't really I think we can

7:14

continue to find energy at

7:16

or around these prices. And

7:18

the truth is if we export them to Europe, they're

7:21

gonna have to pay whatever they have to pay to

7:24

get it there because they if we keep all

7:26

of these you

7:28

know, okay, that guy, you can't buy from that guy.

7:30

I mean, this does not work in any market

7:33

in the world where you can tell people who they can and

7:35

cannot buy from. It's only benefiting

7:37

other countries like India, which

7:41

may be a good thing, okay, but India is really

7:43

benefiting from

7:45

this. No crude all stop just because

7:48

it's got a Russian flag on the

7:50

crude oil barrel. It's still being

7:52

sold and it's still moving on this planet. And that's

7:54

what fungible products do. That is exactly

7:56

what bitcoin will do without

7:59

all the transportation and the heaviness and

8:01

the big ships being exposed.

8:03

If you get crudell, you really get bitcoins

8:06

so quickly, it's unbelievable.

8:12

Why is that? What do

8:14

you mean by that, how is? How is?

8:16

I have some comparisons to oil and bitcoin,

8:19

but I'm curious what your comparisons are. How do you get

8:21

oil you get bitcoin?

8:22

Well, well, let's say that you're a Russian

8:25

oligarch and you own a

8:28

billion acres of fossil

8:31

rich fossil fuel rich geology.

8:34

Why would you pay a transportation

8:37

company three thousand miles to

8:39

move a decatherm of energy

8:42

when you could place

8:45

a data center instead of building pipelines

8:47

that get blown up. You

8:49

place a data center right next to your

8:53

natural gas facility which is producing

8:55

natural gas at about a dollar or twenty

8:57

cents, but by the time it gets to Germany,

9:00

it's been upgraded to three dollars

9:02

because of transport costs. Just like you

9:04

or not, you or I getting on a train,

9:07

Okay, we have a delayed to get

9:09

to where we're going, and we have to pay. We're

9:12

not you and I are not having to get on a train now, So

9:14

we've arbitraged the train

9:16

experience. I think putin if

9:19

if I was running his energy division, I

9:22

can assure you they're all younger than me and you. These

9:25

guys are going to look at I can convert

9:27

natural gas to a USB and

9:30

then move that energy anywhere

9:34

anywhere one. I

9:36

mean, if there was too little

9:39

energy on the planet, they don't have to

9:41

mind bitcoin. They can just produce those

9:43

deca therms into the marketplace and the

9:45

marketplace will pay you. However,

9:47

what if in the case of an

9:50

over supplied situation, which I maintained

9:52

we were always oversupplied last thirty

9:55

years, we have been oversupplied with energy

9:57

and it always shows up because at one hundred dollars,

10:00

if you notice one hundred dollars, it can't get past

10:02

one hundred dollars and stay there. All

10:05

the fracking that we discovered did

10:07

not occur. That innovation did not occur

10:09

at one hundred dollars. It occurred at ten to thirty

10:12

because the scientists, the geologists, the drillers

10:15

figured out, shit, we want to keep drilling.

10:18

We've got to figure out how to do it at thirty, not at

10:20

seventy. And that's where innovation

10:22

showed up. So I think you're going to see arbitrage.

10:26

A natural thing for people to do

10:28

a Pootin would do would be to arbitrage

10:33

the availability the ability to produce or

10:36

refine natural

10:38

gas into another product called bitcoin.

10:41

It's no different than making a

10:43

liquid gasoline, right, a distillate Bitcoin

10:47

will have its own market share, So

10:49

why you wouldn't want to go for the highest

10:51

margin yielding refined

10:54

product. I think that's what markets.

10:56

Well, that's the point of it there, right, I think the highest

10:59

yielding Right, that's

11:01

the point. So it's like if I can get three or four

11:03

bucks an MCF selling the m the gas,

11:06

but I could get ten dollars mcf putting

11:08

it into bitcoin, I'm gonna put into bitcoin. And

11:11

so then you see, you know, potentially Russia

11:13

taking a large amount of natural gas off, right, Plus

11:15

you said transportation cost, political risks, all

11:17

those types of things. So then

11:20

it's like, well, it's a higher economic return

11:22

if I just put it in a bitcoin. I can put it on a USB drive,

11:25

as you said, send it into the world over the internet.

11:28

At some point, maybe this is what

11:30

a market. This is what a market does. But at some point

11:32

maybe then because all that natural

11:34

gas comes off the market, it pushes the price of gas

11:36

up, and then maybe it starts to be a better return

11:39

to go back to gas at some point. But I guess

11:41

that's sort of how the market would would play out to be interesting

11:43

to see. But I guess to your point, there's

11:45

so much abundance in that

11:47

natural gas that maybe they just want

11:49

to continue to put it in and put it into that into the bitcoin.

11:53

Well, look, we just took a one

11:56

point seven million barrel as a crew it all off

11:58

the market after the pipelines

12:00

blew up. Now crude all

12:02

has nothing to do with those pipelines, but China's

12:05

demand must be off. The just

12:08

have fallen off the cliff for

12:11

one Saudy company to

12:13

I think it was a ram code to remove a million and

12:15

then putin said we're going to take seven hundred

12:18

off and now Opek collectively

12:20

is talking about another million. Well,

12:23

if you're taking all this supply off the market,

12:25

where's the demand because the price is not going

12:28

up. Furthermore, twenty percent

12:30

of off ussil fuel. Man, it's leaked all

12:32

over the place. This is one of the most inefficient

12:34

industries. It's one hundred

12:36

year old pipes. Okay, so there's

12:39

leaking, there's inconsistencies,

12:41

there's swaps that you lose. It's

12:44

just a lot of friction. By

12:47

no means is the energy market efficient.

12:50

And like if I can,

12:52

let's say crude all is at fifty dollars

12:55

and that gas is at two dollars. If

12:58

I sell into a two dollars market, I

13:00

have to print that cash, that income.

13:03

But what if I can store that

13:05

same amount of money a billion dollars

13:07

of natural gas that I was going to sell in March,

13:10

I actually go, hey, I'm going to roll it till September.

13:12

How do I roll it? I don't have to go

13:14

to storage companies and roll it. I can

13:17

roll it in a bitcoin right,

13:19

and then I move my time and only I have

13:21

very little cost. I only have the

13:23

cost of the cost of capital to

13:26

hold that in a vault that

13:29

is not subject to being blown up. It's

13:32

not subject to restraints

13:34

or constraints by any US government or

13:36

any government for that matter. For a

13:38

piece of my energy. We're not talking about

13:41

all the energy. We're talking about just a little

13:43

marginal piece, maybe three percent, five

13:45

ten percent. I maintain

13:47

that the biggest most successful miners

13:49

in the world will be fossil

13:52

fuel producers, sovereigns

13:54

and super major oil companies.

13:56

They will be the most effective miners going

13:59

forward, probably end

14:01

up buying Marathon Riot if they

14:03

have to. And

14:05

that's where the that's where Bitcoin will

14:08

be produced from those energy

14:10

producers, nuclear

14:12

power stations, full on nuclear power

14:15

stations. We'll start selling

14:17

eighty percent load factor for

14:20

the first time in their lives. They can actually

14:22

be a storage facility and

14:25

not have to sell base

14:27

load. That's nuclear's biggest problem.

14:29

They have to sell baseload. There's no modulating

14:33

like you would a gas plant turning it on,

14:35

turning it off, turning you know, lowering

14:38

the volume. Yeah.

14:40

Yeah, if you think about it, to

14:43

your point, right, we have this abundant energy. The

14:46

whole world operated on this theory called peak energy

14:48

until about two thousand and eight, where we thought we were going to run

14:50

out of energy, and then that was just proven to your point

14:52

with fracking things like that, And of course human

14:54

ingenuity always finds a way somehow.

14:57

But you know, in regards to sort of where

14:59

we're at in the world, something I've been talking a lot about,

15:01

which you know, I got it from sort

15:04

of the zolt On Posar talking about,

15:06

but really sort of the shift from you know,

15:08

the world had been on commodity money for five thousand

15:10

years. In nineteen seventy one,

15:12

we got off of the gold standard. We've been in this fifty

15:15

one year fifty two year experiment

15:17

of this paper money, and the world's

15:19

rejected that that paper money experiment is over.

15:22

It's fallen apart, and we're seeing this where

15:24

these nations are now. China bought

15:26

half the lithium mines in the world. They don't want US

15:28

treasuries. They'd rather have lithium in the ground, right,

15:30

And we see Opec and Russia saying, hey,

15:33

we'll just hold oil in the ground. Why would

15:35

I pump more oil out of the ground at this price.

15:37

I don't want to sit in the US treasuries. That's

15:39

losing money. I'd rather just keep the oil

15:42

in the ground. But now I

15:44

kind of you know, the

15:46

picture you're painting, I guess, so to speak, is that,

15:48

well, now they could continue pumping the

15:50

oil or natural gas, whatever that energy out

15:52

of the ground, but now get it for the one hundred

15:55

dollars a barrel, even though that's not where the market

15:57

is, because they can put it into bitcoin. So

15:59

rather than say I'll just keep the oil on the ground,

16:01

they could get more oil on the ground, but now

16:03

store it in something other than

16:06

US treasuries. And so that's a pretty big shift.

16:08

I think that we could see happen.

16:11

Yeah, it's big, and I think

16:13

if you do the research, you'll

16:15

find that the net present value calculation

16:19

of keeping energy in the ground, it's

16:22

a twenty year decision. Every deck of therm you

16:24

keep on the ground, you're literally rolling out

16:26

eighteen to twenty years. It's a bad

16:29

trade man, And because

16:31

you have so many different producers,

16:34

you have a quasi cartel

16:36

that doesn't function anymore. It's literally

16:38

not functioning as a cartel. My

16:41

example, just a little while ago, one

16:43

country set a million barrels coming off.

16:45

Oh gosh, they now have a public entity

16:48

called a Ramco. Isn't that amazing? And

16:50

then Putin decided to pull off seven hundred

16:52

thousand barrels. Right, the

16:55

price didn't go up like it

16:57

might have gone up for a day or two, but it's right back

16:59

down to where it was seventy one bucks.

17:02

They're making ten dollars a barrel in

17:04

Europe, and they're making fifteen to twenty

17:06

dollars barrels here. There's

17:08

not been a dry well drilled in

17:11

five years. Dude, I have not heard of a dryway.

17:13

Have you even heard the word dry hole?

17:16

Like there aren't any dry holes anymore. This is pure

17:19

science. They know exactly what they're going to tap

17:21

into, where they're going to tap into, and

17:23

they can accelerate, which is amazing.

17:25

See that's what bitcoin can't do. Bitcoin,

17:28

you cannot accelerate the production of bitcoin.

17:31

You can put water,

17:34

Just push water in pressure down a hole

17:36

and accelerate the volume of crude oil anytime

17:39

you want, or natural gas if

17:41

the price peaks. I don't think you're going

17:44

to see peak prices peak

17:46

oil. Like that very

17:48

cold day in Germany, you're never going to

17:50

have enough energy. But on an average day,

17:54

I think we have energy for a long

17:56

long time. And if the greenies were smart,

17:59

they let crude all go three hundred bucks.

18:02

But they keep talking about suppressing prices,

18:04

taxes, everything's too high. They're so

18:06

dumb they should let crude all I

18:09

was with Beck, I said, dude, let's go to three hundred

18:11

dollars crudle twelve dollars gasoline,

18:13

and we'll stop war tomorrow morning.

18:16

There will be no reason to have war at three hundred dollars

18:18

crule. And then I would because

18:22

what are you fighting over? Everybody's making money, man,

18:25

America would like the oil companies

18:27

make so much money. Consumers

18:30

would control their consumption

18:32

better. Okay, I maintain

18:35

energy in the United States and Western

18:37

Europe is way too cheap, especially

18:39

here, and I think I can prove

18:41

it to your audience.

18:44

If ninety nine percent of the people didn't turn

18:46

their laptop computer off last

18:49

night, I'm pretty sure electricity is not priced correctly.

18:53

I don't leave my refrigerator wide

18:55

open at night, right I don't

18:57

leave my car running all evening. I

19:00

turn it off. So when

19:02

electricity is priced correctly, I'm going to start

19:04

turning things off. We're addicted

19:06

to convenience.

19:08

Well, that might be easy for you to say. I'm guessing

19:11

there's a lot of people making an a medium wage in

19:13

the US that would probably beg to differ, that can barely

19:15

afford their gas to get to get

19:17

to working back in twelve dollars gasoline

19:19

would just absolutely crush them.

19:22

They pay ten dollars in Europe right now. Okay,

19:24

what they do is they don't they don't walk

19:26

to they don't drive to the grocery store for lower

19:28

Brett.

19:30

All I'm saying is that we are very

19:32

abusive of what we have and energy

19:35

because we don't turn it off. That tells me it's

19:37

not price correctly, right,

19:40

it's priced in a way that allows

19:42

us to be lazy. Just give you.

19:45

I mean, we could probably do an hour on this, because it's a

19:47

really interesting conversation. If

19:50

you removed all

19:52

of the TVs at source, pull the plug

19:54

out from the UK, there's seventy

19:57

two million homes in the United Kingdom, that's

19:59

four hundred megawatt coal

20:02

fired power station coming off the grid.

20:04

If you were to do that, remove

20:06

the power card from the TV

20:08

outlet, Okay, that standing energy

20:11

consumes an entire power

20:13

station, coal fired power station. Imagine

20:17

that all over the world, especially on the West.

20:19

Because like, I've got eight TVs here, dude,

20:21

They're all plugged in. They're all

20:23

sucking energy and I never turned them off.

20:27

So well, you unplug

20:29

them, they're turned off. They're just there. They're

20:32

turned off.

20:33

Energy though, to be stand their stand so

20:36

that I can hit a button and they instantly

20:38

go on without any warm up. They is

20:40

sucking energy from the universe. So

20:43

all I'm saying is, if it was priced correctly,

20:46

there'd probably be a company that created out

20:48

there that would sell a card that would like disconnect.

20:51

This is not complex. Somebody could have

20:53

done this a long time ago. There's just no juice

20:55

in it.

20:56

For lack of a pun, Well, that's because what you

20:58

said earlier, which is we have no

21:00

shortage of energy, and so back to the market,

21:03

the market is always going to price it correctly

21:05

if you will. Obviously, government regulations

21:07

and so forth sort of gummed that up a little bit. But we

21:10

have so much abundant injury. That's that's why it is cheap.

21:14

Yeah, it's it's cheap here, right, and

21:16

it's abundant here, and.

21:23

But government regulations want to change that. So you

21:25

talk about Europe. Energy is expensive

21:27

in Europe, but yeah, because Germany shut

21:29

off the freaking energy man. And like I'm

21:32

in California. In California,

21:34

we talk about natural gas being cheap, and natural gas

21:36

has gotten cheaper. It's the most abundant enjurgy source

21:38

we have in the United States. In California

21:40

and natural gas, my natural gas bill went up

21:42

four hundred percent. Like

21:45

what the heck? How did my natural gas bill go up

21:48

four hundred percent when natural gas came

21:50

down. It's

21:52

it's it's pretty insane. So that's the government regulation,

21:55

the artificial scarcity that's put into place,

21:57

and that I'm sure you're aware. I

21:59

mean earthly affects the lower

22:01

income people. I mean that's a massive

22:03

chunk to their profitability.

22:06

And restaurants. My friend that owns a restaurant, he can

22:08

barely keep his doors open anymore. His energy

22:10

bills went from you know, four hundred month over

22:12

three thousand dollars a month they put

22:14

in California, they put this is this is a different

22:17

topic, but they put a thirty percent tax

22:19

on pork because

22:21

of emissions, right, and that goes

22:23

into government regulations. But energy, uh, you

22:25

know, they put these costs on energy, and

22:27

like, he can't pass those energy price

22:30

increases into his consumers on the price

22:32

of food, so he's getting squeeze at the margins.

22:34

He can barely barely stay open. So

22:37

I don't know. I think I think the market's efficient

22:40

to I think to the point that you're making, though

22:42

I agree that typically we would say that

22:45

high prices are the cure for high prices. So

22:47

if if energy prices got high enough, then people

22:50

will figure out a card for their TV disconnected

22:52

or whatever, like, we'll figure out a way to use less

22:54

of it at some point.

22:55

Yes, yes, and you know,

22:58

not to be disagreeable, but I think markets are

23:00

rarely, rarely, rarely ever efficient.

23:03

They're they're disagreeable. It's

23:05

more fun that way.

23:06

They're they're never price right.

23:09

Okay, like this idea that

23:11

Wall Street is some fucking god.

23:14

Okay, Look, we

23:17

don't do good at predicting prices and

23:19

making allocations of data

23:22

because the data is skewed, like

23:24

there's no actual real data. I

23:26

don't know what CPI really is. It

23:29

doesn't feel like what it came out did three point

23:31

one percent today. It feels different

23:33

to me than that because I look at

23:35

a price of a dozen eggs and it's

23:37

like, wow, now your

23:40

crazy country is doing exactly

23:43

what Europe did, which is,

23:45

hey, we don't want to be energy intensive.

23:47

We don't want to have drilling rigs, we don't

23:49

want to have refineries around like they do in

23:52

Louisiana, Texas. California

23:54

doesn't want any of that ugly stuff. It's

23:56

all nail polish and lip gloss.

24:00

Let's not have any power stations here, dude, you

24:02

guys are gonna wake up one day. You're going to pay forty

24:04

thousand dollars for power because

24:07

the guys in Vegas they're going to take it from me. Because

24:09

it's moving right through Vegas, and then the guys

24:11

from Arizona, those utilities

24:13

are going to take it because it's moving through there. You're

24:16

at the very end of the food chain,

24:18

and you refuse to do anything down

24:21

the ground or above the ground. In

24:23

terms of making the state look like

24:26

a state that actually runs on its own energy

24:28

sources, I like,

24:31

one day California is going to wake up, dude,

24:33

the water's not going to be flowing, and you're gonna have to pay

24:36

forty thousand dollars. It's that's

24:38

an inevitability.

24:40

Yeah, for sure. I mean already we have you

24:44

know, I think we're like ten times higher than we're

24:46

not ten times, about five times higher. I mean, in

24:49

we have a tiered energy system, and so in the summer

24:51

we're being you know, forty five cents a kill

24:54

a lot hour, like forty five

24:56

cents at the top tier. Right in Texas,

24:58

it's like eight right some states

25:00

it's even less than that. So yeah,

25:03

we're paying, we're paying for it for sure. Let's

25:07

let's let's keep it going. I want to get into more

25:09

about investing and then we'll

25:12

kind of tile this back together. But uh,

25:14

you your company now, so you've sort of exited

25:16

the energy markets. You had

25:18

another company you're in like a capital

25:20

allocation business, private equity, and

25:23

now you have your own firm, Card one Ventures,

25:27

a play on your name, as you told me. Instead of

25:29

Card down the one, the own is the one. I

25:31

like, that's a good, good play on that. But

25:33

but Card one Ventures, and so let's talk about

25:35

that for a minute, Like, I'm curious, you know,

25:37

having exited businesses before having

25:39

successful exits working for private

25:41

equity. Obviously you've been allocating

25:43

capital for some time with

25:46

Card one Ventures. How are you looking at

25:48

allocating capital any

25:51

specific markets? I know obviously you're very interested

25:53

in bitcoin and technology, but is that your

25:55

main focus? Are there other focuses? And then how do you

25:57

go about finding companies and deals that

25:59

you like in those spaces?

26:02

Well, Card

26:05

one Ventures is really about and

26:08

Card owned Digital Ventures

26:12

is about investing in the future. So

26:15

I've been in energy payments.

26:18

You made the comment about the European business.

26:20

I spent fourteen years there building two really

26:22

big businesses in the energy

26:24

space. So I got a lot of understanding

26:28

of lobbying and change and how

26:30

the governments work with these new ideas.

26:34

Look, I am a really concentrated

26:37

human being. I don't. I'm not a good multitasker

26:40

at all, so I tend to go

26:43

into one area. I think this

26:46

digital space is so large. I've committed

26:48

the rest of my life into this space. I

26:50

don't have time to be an

26:53

energy guy and the payments guy and

26:55

then a digital crypto

26:57

bitcoin guy. This opportunity

27:00

is so large. I basically have sold

27:02

everything I possibly could

27:05

that required operational involvement.

27:09

I had bought a lot of bitcoin over since

27:12

twenty and eighteen, started

27:15

really turning on a lot of volume about two

27:17

and a half years ago and ran into

27:20

node forty, and

27:23

I had this whole venture idea if

27:26

I could find some technologists that were

27:30

humble enough to realize just because

27:32

you have a great idea does not mean

27:34

that you are a great general or

27:36

a great strategist. I've met

27:39

a lot of Palo Alto people, and one

27:41

thing, you know, they know how to do free really

27:43

well. But I

27:46

don't believe in free. I think actually

27:48

free is bad. It creates bad

27:50

incentives. I like

27:52

knowing what I'm paying. Okay, so if

27:54

I walk into a range Rover dealer and he's like, hey,

27:57

this is a two hundred thousand dollar car. I'm

27:59

keeping my car, man, I'll wait till

28:01

these prices come down. It's not right

28:03

value for me. So

28:07

I think this industry

28:09

could consume probably

28:12

six businesses like

28:14

analytics, reporting, analysis,

28:17

big data tracking,

28:19

accounting, audits. Has nothing

28:21

to do with bitcoin, except it has everything to

28:23

do with digital assets. And I think

28:25

we're we are moving

28:27

down this slippery slope

28:29

of digital We went from

28:33

you know, the big Vinyl reel listening

28:35

to the Beatles to now I've

28:37

got a telephone that's got forty thousand

28:40

freaking pieces of music

28:42

and I'm paying four subscriptions. Man,

28:44

Okay, I'm paying four subscriptions.

28:47

Talk about how deadly technology

28:49

can be. I'm buying

28:51

music from Spotify on

28:54

an Apple iPhone.

28:56

Apple's music thing is embedded

28:58

in that technology. I pay twelve hundred dollars

29:00

for the bloody phone, and in

29:03

Apple pretty much destroyed

29:05

the music industry in stage

29:08

one right, put it on a little little

29:10

thing, and I'm not listening to their music.

29:13

It's amazing to me, right, So I

29:15

look at businesses that are

29:18

needed and wanted that

29:22

will currently are required in the

29:24

legacy world. All of those

29:26

industries will be required in the

29:28

digital world.

29:30

So service at service based

29:32

companies, Oh totally dude.

29:34

Reporting there's forty

29:36

three thousand tax in accounting companies

29:38

in the United States alone, four

29:40

and a half million people accounting

29:43

for legacy assets. Now

29:46

this is already one point three trillion

29:48

dollar industry. I think it's going to a twenty

29:50

or thirty trillion dollar industry.

29:52

None of those old companies know how

29:54

to do this on digital. This is not like

29:57

tracking a title on a

29:59

on a home or the purchase price

30:02

of a home. So

30:06

there's tons of these businesses. You know, there's

30:08

the mining business. So I want to be in a

30:10

place where I have a

30:12

choice to buy bitcoin or

30:15

hey, let me take let me go invest

30:17

money in a business that has some operational

30:19

risk, has some human errrow risk, but

30:23

it feeds the industry.

30:25

It actually helps the industry expand.

30:28

I am not one of these guys that have any intention

30:30

on buying bitcoin, holding

30:33

it forever and ever and ever and

30:35

never selling it. I actually want

30:37

to sell it so that I can reinvest

30:40

in the industry at some point, so

30:42

that the industry expands. Right

30:45

and to me, like these industries

30:48

need investment and we

30:50

can leave it to JP market to do

30:52

all the investing. I would actually

30:54

like bitcoin to perform like you, and I think it's

30:56

going to do, so that I can roll

30:58

my investment in the space. I become

31:01

more wealthy, and you become

31:03

more wealthy, and then we can protect We

31:05

can invest in this industry

31:08

and not have a bunch of outsiders with really

31:11

tons of capital and insight

31:14

and they come in and take the whole market. So

31:17

when you have an opportunity like this, I start

31:19

shifting everything I used to do and focus

31:22

on this area. It's proven to be really

31:24

really one, very fun

31:26

and very rewarding.

31:31

I never get the glittery object syndrome

31:33

where I'm looking over here, right, I'm

31:36

actually looking at you. Okay, there's enough

31:38

people for me to learn to know.

31:40

I need to know more about mining, how

31:42

the economics, economics of that

31:45

work. I'm more concerned about

31:47

the economics than I am in the politics.

31:50

Yeah. I love that. It's sort of

31:53

like the Warren Buffett investing principle of instead

31:56

of diversification or diversification,

31:58

it's really about concentration in right, and so Warren

32:01

Buffett calls it like his deal box.

32:03

Right.

32:03

He only invests into the core things that he knows,

32:05

understands, and he believes in concentration. And

32:07

if you look at most of the big investors, well,

32:09

the ones that we know about, the successful ones,

32:12

they've all got that way through concentration.

32:14

And so that makes sense that you want to sort of focus on

32:16

where you see not only probably

32:18

the biggest opportunity, the most alpha, if you will, but

32:20

probably also where your interest lies as well.

32:23

Right, So, like there's probably lots of other

32:25

areas you can go make money, but not only do you

32:27

see there's a big money making opportunity, but

32:29

also probably very interesting for you, so

32:31

that you're sort of chasing your I

32:34

hate to use the word passion, but something that gives you

32:37

excitement, right, I mean you love it

32:41

and it has massive legs.

32:42

You know.

32:42

I think back to sort

32:45

of this like oil analogy. Right, if you look at

32:47

like oil as the commodity, and you can think about,

32:49

you know, the millions or tens of millions

32:51

of technologies that are built around the

32:53

oil industry, from sonar

32:56

for ships to you know, petroleum

32:58

transfer pressurizer to you

33:01

know, measurement technique. I mean there's there's there's

33:03

a billion I mean like the new the new

33:05

head on the on the on the drill rig

33:08

or whatever it may be. And so then we have sort of bitcoin

33:10

being this commodity asset as well,

33:12

and then potentially billions of technologies

33:14

that we've built around the bitcoin industry

33:17

as well to kind of facilitate that that

33:19

that sort of commodity if you will. You

33:23

know, I don't know if if bitcoin, I mean obviously

33:25

doesn't have a million use

33:27

cases like oil, Like oil goes into sneakers

33:29

and cleaners and things like that, but the industry

33:31

itself I think could be built out

33:34

very similar to your point. You know, not only

33:36

just in the mining space, there's unlimited

33:39

amount of potential there, but you

33:41

know, to your point, services software,

33:44

tracking, payment facility

33:46

facilities, things like that. You

33:48

do have this like payments background

33:50

as well. Node

33:53

forty is more about like reporting

33:55

and things like that, like tracking reporting. Uh,

33:58

I'm curious what you think about it from a payments

34:00

standpoint. I know when we had

34:02

met or talked before at the Bitcoin

34:04

conference whenever that was this summer,

34:06

this last summer, you were kind of talking

34:09

about the amount of chargebacks

34:12

that payment companies deal with and how costly

34:15

that is for them. Of course, bitcoin is final settlement,

34:18

so I'm just curious what your take is about

34:20

using bitcoin in the payment space, where that potential

34:23

is and if that's something also that you're focusing on.

34:28

Well, there's a lot in that question. I

34:33

think that if you look at the plumbing I

34:35

see. I look at the payments industry as a fifty

34:37

to sixty year old plumbing industry,

34:41

and the plumbing is falling apart.

34:43

Okay, what does plumbing look like? There's only

34:45

three or four major banks Okay,

34:48

well as far Ago, JP, Morgan, Chase

34:50

to the rest of Most of these people visa massacart

34:53

or not a bank. They are a

34:55

vendor, vendor and

34:57

vendor. They literally take zero risks.

35:00

There is no risk. You cannot go into their

35:02

p and L and say see where they took any losses

35:04

whatsoever. They're like a toll

35:07

between Germany and

35:09

Switzerland, and the price

35:11

is always Hey, we make a fifty one percent

35:14

net operating margin. When you take your car across

35:16

boom boom, boom boom. It doesn't matter you

35:18

stop your car, We're still making fifty one percent.

35:21

The car blows up, we make fifty one percent.

35:23

If the car doesn't make it, we make fifty one percent.

35:26

And if you decline to get through the border. Hey,

35:28

we make fifty one percent. I mean everything they do

35:30

makes fifty one percent. The other

35:32

thing is the cost of the chargeback. Six hundred

35:35

and fifty six million chargebacks.

35:37

That's a visa number. They actually

35:39

make money from these. This is not a cost center.

35:42

This is a you said it,

35:43

and most people say that,

35:45

Hey, look there, it's costing. No,

35:48

it's costing Joe, consumer,

35:51

me and you. Six hundred and

35:53

fifty six million events a

35:55

year times one hundred and eight dollars

35:57

and thirty six cents, plus the sixty

35:59

two thousand amateurs that are employed.

36:02

Sixty two thousand people are

36:05

employed at Barkley's and various

36:07

banks issuing and acquiring banks filing

36:10

chargebacks like a ping pong game between

36:12

each other and in monsterly

36:16

monsterly non noncentralized

36:18

manner with exquisite

36:22

bias. Every player has

36:24

bias. There, Okay, Barkley's

36:26

issuing. That's the consumer side of the

36:28

bank is trying to reduce the phone calls

36:31

inbound because it's a twenty seven

36:33

dollars event. So what do they do. They create

36:35

an app and they say, hey, go on the City Bank app

36:37

and just dispute this the retailer's

36:40

got eight percent refunds. Now, can

36:42

you imagine it going to

36:45

one hundred podcasts and

36:47

they're all one hour and eight percent of them

36:50

fail. Can you

36:52

imagine that? Right? The friction, So Joe

36:54

Consumer's paying for it how because

36:56

the retailer gets screwed and they take

36:58

their rates and they take them up further and

37:01

further and further. So

37:04

now bitcoin comes along, right, and

37:06

I think that the bitcoin

37:10

decentralized marketing department,

37:12

which I was laughing about earlier. It took me two

37:14

years figured out, Oh wow, they're so bad on marketing

37:16

because they have no centralized marketing

37:18

department, which

37:20

is a problem, right, because you're competing with

37:22

people that invest tens of millions

37:24

of dollars at every rugby match, Visa

37:27

MasterCard, Visa Massacard. This is why

37:29

it's so hard to get

37:31

legacy players to unwine

37:33

their position because they have been robotized.

37:36

Man. Okay, like they

37:38

think, like you notice

37:40

this thing. Visa says, we do thirty thousand transactions

37:43

a second. Yeah, bro, but you don't settle

37:45

any of them. Okay, let's

37:47

talk about subtle transactions.

37:50

But Joe Consumer doesn't understand that. See

37:52

Joe Consumer. Here's why does.

37:54

Joe consumer even care?

37:56

He doesn't, Why do we tell him

37:59

we're the some one's bringing this shit up? Okay,

38:02

like settlements the deal. If you're a retailer,

38:05

you care about settlement. Do I have my money?

38:07

Yes, I have my money, Thank you very much. No refunds.

38:12

So I think this is what I think is going to happen.

38:14

Mark, I think you're going to find that the very richest

38:17

part of the value chain

38:19

and payments, gaming,

38:22

gambling, digital anything

38:25

only fans or whatever that's called. The women

38:28

do probably the guys will do it one

38:30

day, Adult pornography. All

38:33

of those are monster rich,

38:35

fat margins that Visa

38:37

MasterCard make that all moves digital. The

38:41

moment we're ready for prime time

38:43

to be able to take forty thousand

38:45

transactions every thirty minutes

38:47

on adult or gaming

38:50

or gambling. This game over for

38:52

the credit card industry because they're going to be left

38:54

with the in store ship

38:56

that the whole system was built for. It was built

38:58

for in store and look at each

39:01

other, share my credit card with you, and

39:03

then signing it on a wet piece of paper. That's

39:05

how that industry was built. Think

39:07

about it as a speedway. The

39:10

problem is you now have a car that

39:12

does seven hundred miles an hour kay,

39:15

the fastest most liquid car

39:17

on the planet, and it

39:19

does it with electricity, and it's really

39:22

fast, and the course can no

39:24

longer handle it, like the course

39:26

that the plumbing was built on. It's

39:28

just too old.

39:30

So we should be let's talk about that for a minute.

39:33

So you said, like bitcoin or

39:35

whatever, visa does whatever, thirty thousand transactions

39:37

per second, like whatever that number is, it doesn't

39:39

really matter, first of all for me. Let's just

39:41

think about it. Right, So with technology

39:43

it needs to be one hundred times it needs to be a thousand

39:46

times better. Right, we don't really improvement

39:48

offers. But if I go to a merchant and

39:50

I want to run my visa or my credit card, whatever

39:53

it probably takes, I haven't really timed it.

39:55

I don't know thirty or forty five seconds for me

39:57

to sit there and wait for that to go through, right,

40:00

roughly thirty forty five seconds ish

40:02

something like that before

40:04

they you know, printed and get me the receipt

40:07

and have to sign it whatever. But the merchant

40:09

now not only has to pay the fees whatever, two

40:11

three percent, four percent depend on their risk

40:13

plus their statement fees, et cetera, et cetera, and then they

40:15

don't get the money for maybe seventy two hours roughly.

40:18

Right, So, what we've

40:20

done technology has sped up our

40:22

transaction times. We

40:24

now have instant transactions,

40:26

but we still don't have instant settlement,

40:29

So the transaction, the discrepancy between

40:31

transaction settlement has grown massively wide.

40:34

So as a merchant, one,

40:37

my customer experience is slow, there's friction.

40:39

Two, I have to pay exorbitant fees,

40:41

and three I don't get my money for a long periods of time,

40:44

and time is money, so the faster I can get my money the better.

40:47

Now, if I wanted to accept

40:49

the transaction over lightning, which I've

40:51

done many of these lightning transactions like in El Salvador,

40:54

just even at conferences and events and things like that,

40:57

like literally, like before I pull my finger

40:59

off the button, like the transaction is already

41:01

there. It's not thirty seconds or

41:03

forty five seconds, it's two seconds. And

41:07

on top of that, then the merchant receives

41:10

final settlement, not just settlement, but

41:12

final settlement immediately and

41:15

with no fees. So it seems like it's one hundred

41:18

x or a thousand times improvement. To

41:20

me, it seems

41:22

like we've been hearing about for years,

41:24

like, oh my gosh, okay, it's coming in cr

41:27

Strike told us two years ago. INCR the one

41:29

in six payment processes one

41:32

and six merchants use them as paying processes. They're

41:34

going to integrate this in there. And it

41:36

is a good idea whose times come it is one hundred x

41:38

or a thousand times better? I

41:42

mean, one, I guess do you see it being that

41:44

much better?

41:44

And two?

41:45

If so, then what do you think is the big

41:47

roadblock holding it back? And three where do

41:49

you think sort of like what kind

41:51

of time frame or what is it going to take to see kind of more

41:53

adoption there?

41:56

I think the best way to approach it

41:59

is to look at history. It

42:01

took Visa mass Card fifty two

42:04

years to get seven credit

42:06

cards in everybody's pocket, hundreds

42:09

hundreds and hundreds of millions dollars

42:11

of advertising at every major sports

42:13

event. American

42:15

Express has its own program for more

42:18

wealthy people. Look adoptions

42:20

hard man, okay, like scaling

42:23

adoption, global adoption. Visa

42:25

mass Card have been massively ineffective

42:28

in China, massively okay.

42:30

The only place chargebacks take

42:32

place is in the Visa mass card system.

42:35

So this does not happen in the East.

42:37

Okay. I mean I had half a billion dollar built,

42:40

half a billion dollar business on a problem that

42:42

only exists under the mass card

42:44

in Visa. I

42:46

think the adoption is going to be a lot slower than

42:48

we think because I think people misunderstand

42:52

how adoption occurs. And I'm

42:55

quite certain that the

42:58

decentralized state of b

43:00

Cooin's marketing department hasn't

43:02

helped because you have a bunch of people

43:04

walking around talking, and I think people

43:07

think that people that are talking about

43:09

bitcoin represent bitcoin. But there's

43:11

been a lot of misinformation out

43:13

there and we've hit we've

43:15

missed every target we've set out there,

43:17

like you said, like Jack said, Hey, we're

43:19

going to be in payments. You might be due,

43:22

but like not tomorrow morning.

43:24

Okay. So I

43:28

think where this happens is that when

43:30

retailers get smart and they start

43:32

offering discounts to

43:36

the analog world, like hey, I'll

43:39

take the it's one hundred dollars

43:41

for this transaction, or it's ninety five

43:43

if you use digital and

43:47

the lightning piece, like you know better

43:49

than me, Mark when is it going to be ready for prime

43:51

time? Because

43:54

fifty million merchants are

43:57

on planet Earth and I think they're declining.

44:00

That is a lot of covert you have in

44:02

order to get real adoption. You have to make

44:05

all those merchants capable of

44:07

being able to receive this

44:11

new money currency,

44:13

digit allocation, audit ledger,

44:16

whatever you want to call it. And

44:18

I don't think it needs to settle tomorrow like

44:21

instantly. Okay, when

44:24

the settlement process for Visa MasterCard

44:27

is six months, So

44:29

you go wipe a transaction on Sony

44:32

or Apple tomorrow morning, you literally

44:34

have six months to

44:37

say, hey.

44:38

That's the chargeback period, six months to

44:40

charge it back on your credit card.

44:42

With absolutely no proof. You can

44:44

literally say not mine

44:47

six months later, and you

44:50

might not win that, you might not get

44:52

it reversed, but you're going to cause pain in

44:54

the ass for the merchant and for everybody

44:56

in the food chain. Like when you do that, it sends

44:58

a ripple through the whole food that's

45:01

not going to occur in digital, and that's extremely

45:04

valuable and efficient. If

45:07

we can stop the abuse that's going on,

45:10

whether it's me you know, meant to be

45:12

abuse, or whether it's just an era. It's

45:14

nonetheless a lot of friction.

45:19

And what is the you told me the number

45:21

before, like the financial

45:24

impact of those chargebacks in the industry.

45:26

I mean it's it's in the billions, tens of billions.

45:30

Oh, I think we're talking about over

45:32

a trillion dollars losses a year to trillion

45:35

a trillion, big numbers. Oh yeah,

45:38

yeah, Because well,

45:41

one thing that's really interesting is just try

45:43

to go on Visa and master Cards public

45:46

documents on their quarterly reports

45:49

and find out how much they make just from

45:51

fees, fines and chargebacks.

45:54

It's staggering to me that I have a half a

45:56

billion dollar business in the chargeback

45:58

business. Yeah you can. Now I'm

46:00

private, but we were private at the time. Still

46:02

are. I can't see any of that data

46:05

on Visa Maascar. Hmm. That's interesting.

46:08

I think they're making a billion dollars in

46:10

net income every year for sure, both

46:12

of them. From calling

46:15

things fraud, they're not fraud. And

46:17

if they are fraud, how the

46:20

hell can you have nearly

46:22

seven hundred million fraudulent

46:24

events in the United

46:26

States and European business seven hundred

46:29

that is what seven hundred

46:31

million, that's about two thousand

46:34

a day. I think maybe twenty

46:36

thousand a day. How can you have

46:38

that much fraud? And

46:41

Visa Massacord traded a premium

46:43

that is five x Googles excuse

46:47

me, five x Exi mobiles and two

46:49

and a half or two and a half times the

46:52

valuation of Google. It seems

46:54

odd to me. Okay, doopoly, they

46:57

have seventy two percent of the entire

46:59

plastic market. And

47:01

I think you're talking about six hundred and fifty

47:03

six million unit events.

47:06

You're talking about one hundred and six dollars price,

47:09

you're talking about another three hundred dollars.

47:11

Every time a merchant gets a one hundred dollars

47:13

charge back, it has cost h three hundred

47:15

and fifty dollars. Okay,

47:18

how does he ever come out of that? And refunds

47:20

are going up, so the system's

47:23

broken. Visa's big pitch was

47:26

increase refunds, make

47:28

refunds easy, pasy. Guess

47:30

what refunds did. Refunds went from

47:33

one and a half to two percent to eight and

47:36

charge chargebacks went straight up.

47:38

Did absolutely nothing. You

47:40

have to educate the consumer. You

47:43

have to educate the consumer. And the trick

47:46

back to your question, the trick for Visa MasterCard,

47:49

which stops most foreign payment

47:51

companies coming in the United States. They

47:54

used the chargeback mechanism in nineteen

47:57

seventy two to create

47:59

adoption. That was the only way

48:01

they could get you and your wife into the store and go,

48:03

hey, let's move off of cash and checks.

48:05

We want you to hold this a little plastic. That

48:08

was what adoption. That's what they used adoption

48:10

for. You have seven cards in your pocket,

48:12

now real or virtual dude,

48:15

adoptions curd take the chargeback

48:17

mechanism away and make the consumer

48:19

responsible for what he does when he clicks

48:22

a button. Okay,

48:24

we you and I do a deal online.

48:26

It's a legally binding contract, right,

48:30

Like, didn't we sign a legally binding contract.

48:32

I did it electronically. I said yes, I

48:34

read the terms and conditions supposedly, and

48:37

then we have another third party decide

48:39

yeah, that legal contract's no longer about it?

48:42

Like that's crazy, right.

48:44

An early business I started was I was doing

48:47

e commerce. I was selling motocross stuff online

48:49

and in the automotive space, and

48:51

specifically on like hard parts, on hard

48:54

parts in in the motorcycle space. The markups

48:56

are very poor. You have like a thirty percent markup,

48:58

you know, if you're lucky. And we would

49:00

get chargebacks all the time where

49:02

we would chip something to

49:05

the address that it was and they would

49:07

say, oh, well, my husband used my card

49:09

and that wasn't my car, or my kid used my card. I

49:11

didn't authorize that, and they would charge it

49:13

back. We didn't even get the product back, and

49:16

the card company would automatically honor their charge back.

49:18

Now, we only had a thirty percent margin on that

49:20

part. So I sell one hundred dollar a part cost

49:23

me seventy, right, I

49:25

was hoping to make thirty. I lost seventy. Now

49:28

I got to sell four more

49:30

parts just to get back

49:32

to profit off of that one loss.

49:35

I mean, it was catastrophic for us, it was. And that was

49:38

that was early on. Before today,

49:40

I've seen some numbers specifically, it gets bigger

49:42

and bigger and bigger. But now the amount of

49:44

returns that are going back to these stores is starting

49:46

to break them. You know, they have to repackage

49:48

or they can't resell it for full price or whatever.

49:50

But that was a long time ago, and it was it

49:53

broke us because again our margins were so small,

49:55

and so you know, I can certainly see from ammerchan

49:57

side, how bad that is? I should

50:00

say, maybe from a vendor side, from a from

50:02

a merchant side. I mean, if I could obviously

50:04

you have reduce my charge backs, get my money faster.

50:06

Seems like it seems like a benefit to me. I guess

50:08

to the point you're making is consumers

50:11

jumped on the credit card bandwagon because

50:13

of the protection they got from the

50:15

chargebacks, but it works against

50:17

the merchant. So now the adoption

50:19

is probably gonna have to come from the merchant side.

50:21

The merchant's now going to say, hey, look we

50:24

want you to use this, and maybe there

50:26

has to be some sort of incentive. I guess to your point,

50:28

some sort of a discount. Hey, you don't get

50:31

to charge it back, but this is what I require,

50:33

sort of like hey you gotta pay me cash kind of thing. And

50:36

then there and then and just you know, that's

50:38

the.

50:38

Way real markets work. The

50:41

real markets work where you know, in

50:44

the old business and the energy business, I mean, we

50:46

have is agreements. Man, you want to trade

50:48

crud, all we have one agreement? Okay,

50:51

Like Bitcoin's going to do a lot of things that no

50:53

one's even talking about. Why do

50:55

we have fifty million

50:57

merchants on the planet. This is a Visa number,

51:00

and we pretty much have about forty nine

51:03

million different terms and conditions

51:05

on all these websites. Why

51:08

can't we have just one standard T and

51:10

C terms and conditions. The FTC

51:12

goes out of its way to talk about clear and

51:15

concise and then they do nothing

51:17

on clear and concise when it comes to terms

51:19

and conditions. This is how much time you

51:21

have to refund. This is what a chargeback

51:23

is defined. Ass Visa could literally

51:26

spend I've pitched them this. Hey,

51:28

we raise a billion dollars okay

51:30

by charging point zero zero zero

51:33

zero one on every transaction

51:35

for one year. Retailers pay

51:37

for it, and we then do Visa maasacar,

51:39

do a monster education program

51:42

and explain to people these are not refunds.

51:45

These are harming retailers.

51:47

Okay, if he gets one hundred chargeback, he's going

51:49

to probably be put out of business or

51:52

his fees and fines to Visa MasterCard are going

51:54

to go up so much. And this is what they do. Hey,

51:56

we'll come in and consult for you and get you out

51:58

of the program for one

52:01

hundred thousand dollars, or

52:03

you can buy our chargeback system and

52:06

buy all these tools and it's one

52:08

hundred thousand dollars and there's no guarantees

52:11

to any of this help. So like

52:13

we're just dealing with a duopoly. Okay,

52:15

that's the problem. Adoption has

52:18

occurred. I went to both

52:20

VISA matter SCAT and said, why do I pay the

52:22

same amount for some batteries

52:26

that my secretary pays for? I should

52:28

pay less? And they were like, oh, horrend

52:31

this. You're suggesting that your credit you

52:33

should be able to buy retail products cheaper

52:35

than other people because your credit's better and

52:37

your performance is a refunder or

52:39

chargeback of vendor is better. I'm like, absolutely

52:43

absolutely. They said that will never fly. We

52:45

will people will be riding in the streets

52:48

if we give you a discount versus

52:50

your assistant. Okay, then

52:52

Bitco do it and

52:55

that is the answer. Okay, like the merchants,

52:58

we need to do a better job with the merchants to

53:00

show them what the real cost is of using

53:02

plastic. It is at least

53:04

ten percent of the total retail value.

53:07

And you have no guarantee that your merchant

53:09

processor is even going to support you.

53:12

Okay, if they don't like what you're selling tomorrow

53:14

morning. They can literally just turn

53:17

you off. So we need

53:19

to do a better job. And I think this is gonna

53:21

come because I'm happy to buy stuff from you.

53:23

I don't refund. I'd love the discount

53:25

it pay me. Let me have a

53:28

discount for being a superior

53:30

consumer that isn't

53:33

raunchy. I don't have viruses,

53:35

I don't send shit back to I don't

53:37

create a whole problem in EU ecosphere.

53:40

And I would love to see Visa master Card

53:42

go after these retailers and say, hey, you can't do

53:45

that. Watch they're going to try

53:47

and say you cannot offer a discount

53:49

for bitcoin. They've done it on cash. Okay,

53:52

Hey you can't offer discounts for cash. Okay.

53:55

This is then okay, now we understand

53:57

what the real rules are. They're trying to protect

53:59

their game, and then we can attack them for

54:02

violating the rights of a human

54:04

to be able to engage in any

54:06

type of commerce. And if these are masacorts,

54:09

start telling retailers you can't take this,

54:12

well, that'll be a very interesting case

54:14

in the Supreme Court in my opinion. So

54:20

did I go off. Let's still go off course on

54:22

your question, But like this is going to be a

54:24

real battle in payments. Man.

54:27

Yeah, And then the last I want to talk

54:29

just one more thing. We'll talk about the battle over payments,

54:32

and then I want to talk about some of the timeframe you continue. You said

54:34

a couple of times that you think adoption takes a lot longer than most

54:36

people think. So we'll get to that. But just back to the battle over

54:38

payments. The other big piece in battle over

54:40

payments, in my opinion, seems to

54:42

be the government

54:45

and just regulations or laws, if you

54:47

will, right. And so you mentioned earlier

54:49

taking like this big Vinyl record and now you

54:51

have, you know, a million records or songs in your

54:53

phone. And actually it was different. We

54:55

used to have If I wanted to listen to Beethoven, I had to

54:58

have like one hundred person orchestra. Uh

55:00

to get a one hundred percent works to Vinyl was a big

55:02

deal. And then Vinyl to CD and then eventually now

55:04

we have a thousand on our phone. And so

55:07

we saw like music, movies and books

55:09

got digitized pretty quickly, and and

55:12

and that was that was a hard fought battle. I mean, the music

55:14

labels and music industry and movie industry,

55:16

they're big and they fought hard,

55:19

but yet they were still put out right, because when

55:21

the idea is a thousand times better, the

55:23

problem is now is we have the government, and

55:25

the government doesn't move and

55:28

not not not easy. And so the

55:30

big problem that I see with the payment piece

55:32

is this tax complication. Now going

55:35

backshot out for your company Node forty, you're trying

55:37

to make this tax compliance piece easier,

55:40

but like, no way am I going

55:42

to try to figure out what my tax is owed

55:44

on a cup of coffee? Like I ain't gonna

55:47

happen. Like what's the point of trying to figure

55:49

out that for a cup of coffee? Even

55:51

if the soft even if your software works really good,

55:53

I still don't care, right, And

55:56

I think that is probably something really big

55:58

and it's wait, now we have game theory we got I'm

56:00

sorry El Salvador and potentially other countries,

56:03

but do you think that's like one massive

56:05

obstacle sitting in the way for actually

56:07

going to payments.

56:12

You're assuming that

56:15

visa Massacard aren't state

56:17

owned companies pretending to be public.

56:21

But I have no history

56:23

in my entire capability

56:26

of reading history books where you

56:29

had organizations turning

56:31

off entire countries access

56:33

to credit cards, yet

56:36

they're public and their stock

56:38

price goes up. It's a

56:40

very odd thing to me, Okay. I think there's

56:42

so much inner

56:47

wiggling between Visa, MasterCard

56:49

and the US government. It's frightening.

56:52

It's the only way that you

56:54

can show

56:57

me why Visa Massacard, forty year old

56:59

come companies have a net operating

57:01

margin so significantly over

57:04

the Googles of the world, or

57:06

the or any

57:08

company, and because including

57:11

Exonobile. Okay, like, I do not

57:14

think that if the credit card industry

57:16

failed tomorrow morning that anyone's going to

57:18

lose any sleep over it. The system's

57:21

not going to stop. We'll

57:23

go to checks in cash.

57:26

If energy stop flowing tomorrow morning,

57:29

we would be freaking out. People would be

57:31

dying, okay, in hospitals.

57:35

So why does Exon traded a ten percent

57:37

net operating margin and everyone thinks

57:39

they're evil. Yet Visa operates

57:42

at a fifty one percent

57:44

net operating margin, zero

57:46

competition forum and they own seventy

57:49

two percent them in MasterCard owned seventy

57:51

two percent of the entire plastic market.

57:55

That I think you are dealing with already

57:58

a government. They're just pretending

58:00

to be public So that's

58:03

the world we live in. This

58:07

technology is so cool

58:10

that it's going to put another

58:13

I mean, American Express has not

58:15

been able to tap this thing. Nobody

58:17

did. And financial tried to come to

58:19

Europe, uh with

58:22

with Ali Baba, and they

58:24

did not could not penetrate this market.

58:26

You're not going to get a piece

58:28

of plastic in a human consumer's

58:31

hand without that consumer protection.

58:34

Okay, that no chance without

58:36

the chargeback mechanism. So it's a way to

58:38

block people from coming

58:41

in the space. The cool

58:43

thing is it's such a large number

58:45

that and it keeps going

58:48

up. There is no stopping

58:50

these friction problems. The only

58:52

way you stop me is you start over. Okay,

58:55

Like, you can't fix this. There

58:57

are seven vendors in

58:59

every transaction. Man, there's

59:02

a decline rate. Have you ever had a decline

59:04

on a bitcoin transaction? No?

59:06

Ever happened thirteen

59:09

percent in the United States, dude, thirteen

59:11

percent decline rate. After all these refunds

59:14

and after all the charge back, the entire system

59:16

is broken. We don't really need

59:18

to even compete with them, Okay. What

59:20

we need to do is make sure

59:22

we understand how long adoption takes and

59:25

that we're not being

59:27

stupid, like you're not going to get

59:30

adoption from the consumer in America

59:33

on scale with bitcoin. You

59:35

might do it with a CBDC

59:38

initially okay and

59:40

get them educated, But

59:43

you got to decide is it first an investment

59:45

vehicle or is it a spending tool? To

59:47

your point, you don't want to spend bitcoin for coffee,

59:50

and you probably shouldn't right now. It's probably

59:52

not ready for that level of

59:54

its evolution. What if that needs to be in five

59:56

years? What if yeah,

59:59

I BELI the case that bitcoin needs

1:00:01

to be at about half a million to a million dollars

1:00:03

each, so

1:00:06

that we stopped talking about bitcoin and

1:00:08

we start talking about ohi's okay,

1:00:11

And then by that time you could differentiate

1:00:14

and go, hey, look these like this is going to

1:00:16

be a regulatory problem once they validated

1:00:19

it is a commodity. Why are you spending

1:00:21

it, you know, on orange hues?

1:00:24

Right? Because it's

1:00:31

you're gonna pay capital gains on that. How we

1:00:33

get that fix? What we don't want them

1:00:35

to do is go, okay, now it's a security. No,

1:00:38

it's a commodity.

1:00:42

So I don't know the answer. I know that

1:00:44

anyone spending money on coffee

1:00:46

you know, literally, you have a you're

1:00:49

exposed to capital gains. I don't think

1:00:51

anyone's going to come after you for it, but

1:00:57

but it's clearly something that needs

1:00:59

to get addressed. Okay, because I don't spend my dollar.

1:01:01

Somebody said the other night, Hey, every time you spend your

1:01:03

dollars your tax. No that's not true. I

1:01:06

don't get a capital gains every time I spend

1:01:08

a dollar a unit of a paper.

1:01:11

So I don't know the answer. On the retail, I would

1:01:14

say that it doesn't make sense today to

1:01:16

spend any of that on

1:01:18

coffee. And maybe if

1:01:21

you're an El Salvador and it's prominent,

1:01:23

well it's now since Salvador, it's

1:01:26

El Salvador, nobody's going to see it. So

1:01:31

I don't know the specific answer

1:01:33

to how we get there when the scaling happens,

1:01:35

but we will underestimate

1:01:38

how long it takes, and then we will

1:01:40

overestimate how long it takes, you

1:01:43

know, like it just happens all at

1:01:45

one time. There

1:01:47

are a lot of people coming in this space, though, and

1:01:50

the plumbing on plastic is

1:01:52

so bad Mark that it's

1:01:55

just going to take off the tops. And that's to me.

1:01:58

If you look at it from gaming, gambling,

1:02:00

adult, whatever you think about

1:02:02

those industries, their micro transactions

1:02:04

and plastic won't work with micro okay,

1:02:08

less than a dollar. Plastic really

1:02:10

is problematic. You and I, you know, you

1:02:13

and I are going to have robots. In

1:02:15

a year and a half, we will have robots. I think my

1:02:17

robot will send you money and it's

1:02:19

going to send micro transactions, and we're

1:02:21

going to be at least economy and plastic

1:02:24

is not set up for lease. Look what's happening with

1:02:26

your subscriptions. One of the

1:02:28

reasons they have so much friction

1:02:30

and chargebacks is the subscription model.

1:02:33

Well, the industry wasn't

1:02:36

built for subscription. So

1:02:39

anyway, that's that's my answer. And

1:02:42

you look, Visa Massacart are going to invest heavily

1:02:44

in this space. Man, as

1:02:46

long as the regulator.

1:02:47

The problem is, I think to your point, the plumbing,

1:02:50

the plumbing is all messed up. And you

1:02:53

know this is sort of what you know

1:02:55

Strike hits that they wanted to do. Now we see

1:02:58

Ice, which is the parent company of the NYS, has

1:03:00

a company called Backed, and what Backed is

1:03:02

doing is something similar where they want to use

1:03:04

the bitcoin rails to transact the

1:03:06

payment, but you don't actually work with bitcoin,

1:03:08

So I send you paysos you receive

1:03:11

in the end, that transaction moved

1:03:13

over a bitcoin rail. Neither of us know

1:03:15

that, and it doesn't matter. So

1:03:17

they're doing that. I think they rolled that out a

1:03:20

couple months two months ago maybe, and

1:03:23

then they're trying to create what

1:03:25

do they call them, l u ur ls or whatever where

1:03:27

basically we could have like Gary at

1:03:29

Lightning dot com, right, and I could just send you transactions

1:03:32

that way. But getting to the point

1:03:34

where you said, no one's talking about bitcoin,

1:03:36

they're talking about SATs, but where you

1:03:38

could use this or you could benefit from the technology

1:03:40

without having to know it's about bitcoin. Right when you

1:03:42

turn on your light switch and you don't know how that light came on, You

1:03:44

just turn the light switch on. Right, I

1:03:46

FaceTime my wife and I don't know how the

1:03:48

Hecker face shows up on screen. Doesn't matter. I just use

1:03:51

it. And so you know that is

1:03:53

here. It's starting to take

1:03:55

hold right now.

1:03:57

You know, back is enabling banks to send dollar

1:04:00

and receive en and this happens to go over bitcoin.

1:04:02

They don't need to know that, and so it's

1:04:04

happening, and I would agree we'll kind

1:04:06

of wrap this up. I agree. I've talked

1:04:08

about sort of an adoption over like a forty

1:04:11

year period, and uh, we're about

1:04:13

a quarter of the way through that. If

1:04:16

we look at at VENMO, I was looking up earlier

1:04:18

when you were talking and we saw

1:04:21

that I had it in front of me here.

1:04:24

It took Uh, it took from

1:04:28

twenty fifteen until

1:04:31

twenty twenty two to get to eighty

1:04:33

million users.

1:04:36

And so you know, things just take time. Most of us

1:04:38

just to just expect, expect way too much too

1:04:40

soon. So I think, give it, give it a couple of decades.

1:04:42

It's certainly coming on. And yeah,

1:04:45

no, no stopping a good idea.

1:04:47

No, when you when you when you're when you're disrupting

1:04:49

an environment, you really

1:04:51

wanted to come faster, Right, You'll

1:04:54

always I think you're everyone's

1:04:57

I'm always optimistic that it's going to happen

1:04:59

faster, but it always takes longer

1:05:01

than I think. But when it happens,

1:05:04

like I then underestimate the impact.

1:05:07

Every time I've done this now four times,

1:05:09

I'm quite certain that I

1:05:11

am overestimating how long, underestimating

1:05:14

how long this is going to take, and then I'm

1:05:16

grossly underestimating the impact,

1:05:19

which is so exciting for me. Having

1:05:21

this background and energy and payments

1:05:24

and seeing this happen again. It

1:05:26

really allows me to put on a monster,

1:05:29

monster position with a huge amount

1:05:31

of conviction. And

1:05:34

it's literally like, hey, am I

1:05:36

off bout eighteen months. It's

1:05:38

only about that really, So to

1:05:40

me, it's an awesome just starting

1:05:43

back on the venture piece. It's an awesome investment

1:05:45

thesis that quite frankly,

1:05:48

all the operating businesses, Like I've looked

1:05:50

at a few mining deals and every time I'm

1:05:52

like, damn, dude, I just like buying bitcoin

1:05:54

at forty two thousand. It's a less headache.

1:05:57

Yeah, I don't think I can do that mining

1:06:00

human area issues. I don't have a

1:06:02

CEO to deal with. I don't have his wife

1:06:04

to deal with. You know, there's issues in

1:06:07

these operating businesses. Long term,

1:06:10

I think you want some big operating businesses

1:06:13

in this ecosphere because it's gonna also

1:06:15

bring you a lot of intel as to

1:06:17

what's going on. So

1:06:19

that's my long interest is in owning

1:06:22

companies in the industry. So

1:06:25

that's just the way I look at it. The next three years, man,

1:06:27

this is a no brainer.

1:06:29

Yeah, all right,

1:06:31

Gary, Well, we went along a lot of good

1:06:33

information there. I appreciate it. It's fun,

1:06:36

fun conversation. Look forward to seeing you again in person,

1:06:38

in real life. As we say here on the interwebs,

1:06:42

what do you wanna? What do you want people to check out?

1:06:44

Where should they go to find more about what you're working on?

1:06:48

You know I do. I'm starting to do a lot of

1:06:50

stuff on YouTube and Twitter, bringing

1:06:52

on people like you. I think I

1:06:56

would like to help educate people and

1:06:59

get them out of the noise

1:07:02

and try to bridge the gap between the old

1:07:04

world and the new world. I think I'm the right

1:07:06

age for it. I communicate pretty

1:07:09

simply to your point.

1:07:11

You don't know how Facebook works, and you use it

1:07:13

every day. You don't think are

1:07:15

they stealing all my data? Yeah they are.

1:07:17

They're probably stealing all your data, but you're not. I

1:07:20

drive down the road in one hundred miles an hour in a

1:07:22

range Rover. I have no clue how that car works,

1:07:24

So I don't need to understand everything.

1:07:27

I need to understand who am I dealing with

1:07:29

on a human level and

1:07:31

who are the people against me on a human level? And

1:07:34

then I get to make investments and build

1:07:36

my life around the risk

1:07:39

I see out there, and this is a cool,

1:07:41

cool, cool opportunity. And you

1:07:43

don't have to be rich to buy bitcoin. You could

1:07:46

not buy any bitcoin. You could

1:07:48

build a career in this industry. That's

1:07:51

the cool thing. With out a resume, man, just

1:07:53

come into the industry, start learning. I

1:07:55

bet how many people could you hire tomorrow.

1:08:00

If they had the right skills. Certainly

1:08:02

we're hiring.

1:08:04

Yeah yeah, see, and and you're having a

1:08:06

hard time finding people that show up

1:08:08

on time, work long study, like

1:08:11

my my secretary. First thing she's got

1:08:13

to do. Man, Hey, dude, you need to go learn some robotics,

1:08:16

chat GBT, read the Bitcoin

1:08:18

standard. First four months

1:08:20

is just you know, dive, go

1:08:23

deep, figure out what you don't

1:08:25

know. So I just think you're gonna you're

1:08:27

gonna employ millions of people in this industry.

1:08:30

And that to me is a great story that's not told

1:08:32

very much.

1:08:33

Yeah, good, all right, Well that we're

1:08:35

going to sign it on.

1:08:37

Thank you. I've enjoyed.

1:08:38

Thanks Gary,