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Speaker 1: When does the debt matter? My answer is it has been mattering. The Fed's tools are just not

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Speaker 1: geared toward this type of inflation. Being bearish on stocks basically means you're

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Speaker 1: bullish on fiat. I write sci -fi because it feels more normal than reality.

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Speaker 2: Hey Lynn, great to see you. Thanks so much for joining us today.

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Speaker 1: Thanks for having me. Happy to be here.

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Speaker 2: Part of your core thesis right now is that commodities and scarce assets are in a bull

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Speaker 2: market, are the place to be.

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Speaker 1: Yeah, I think so. I've been bullish on gold. That's somewhat separate from commodities

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Speaker 1: because that's more of like a competing store of value with the treasury primarily. But I

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Speaker 1: think that bull market is – I mean, I think it got ahead of its skis for a period of time,

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Speaker 1: but I think it's still over the longer term on track.

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Speaker 1: I think silver is a long -term beneficiary from these trends, potentially platinum, copper,

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Speaker 1: and I'm a long -term energy bull, and also just energy assets, even just assets that

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Speaker 1: transfer energy, for example, I think are going to be in demand for a very long period of

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Speaker 1: time. i invest in in places like brazil for example uh and sometimes it's not even a

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Speaker 1: commodity trade it's like you know one of the best like my favorite trade in brazil has

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Speaker 1: been owning their biggest bank and it outperforms the index um uh and uh so like there's

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Speaker 1: kind of associated ways to kind of be adjacent to that that whole trend uh but it's the

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Speaker 1: idea that capital was primarily going to like non -resource things and now it is going

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Speaker 1: toward resource things and there's a broad way of playing it. And I do think that that need

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Speaker 1: will exist for a long period of time.

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Speaker 2: We ask the experts closest to the real economy to make sense of it. The people who build,

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Speaker 2: mine, and power real assets and put their own capital behind them. Then we connect the dots

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Speaker 2: and tell you what it means for your money. Wealthion. So let's talk about that

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Speaker 2: macroeconomic backdrop. So we have CPI, PPI readings coming out. I mean, we've been above

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Speaker 2: the Fed's target rate for like 66 months, right? Should the Fed officially abandon this?

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Speaker 2: What is the new norm for inflation? How are you thinking about that?

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Speaker 1: I don't think they should abandon it, but I think the challenge is that the Fed's tools are

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Speaker 1: just not geared toward this type of inflation. And so, I mean, the point that I've made a

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Speaker 1: lot in macro is that we're in fiscal dominance now, not monetary dominance. And basically

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Speaker 1: what that means is, so the Fed's primary tools, especially interest rates, but also to some

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Speaker 1: extent, the balance sheet, are meant to encourage more bank lending or discourage bank

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Speaker 1: lending and make it tighter. So, I mean, the obvious example is if interest rates get super

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Speaker 1: high, fewer people are likely going to, you know, take out a really big mortgage and

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Speaker 1: overpay for the next house, right? They're going to be more conservative with their housing

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Speaker 1: decisions. And also that just throughout the economy, that'll trickle out in various ways.

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Speaker 1: So their tools are primarily saying, okay, if things are running hot, if a lot of fractions

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Speaker 1: are bank lending is happening, inflation is above target, Let's try to slow down that bank

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Speaker 1: lending and that broad money creation or vice versa. If you're in kind of a stagnation, in

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Speaker 1: theory, they try to lower rates and say, go borrow more. Go take out that bigger mortgage,

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Speaker 1: buy that bigger house, which will take more resources and labor and do all that.

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Speaker 1: And that can be effective in, for example, Paul Volcker's era where bank lending was the

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Speaker 1: key driver of the rate of money supply growth. it works far less

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Speaker 1: when fiscal deficits are a bigger source of kind of just new money entering the economy

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Speaker 1: than bank lending and we've actually kind of reached a phase where annual deficits so

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Speaker 1: basically the amount of net new treasuries created in a given 12 -month period is now

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Speaker 1: bigger than the sum of net new bank loans and net new corporate bond issuance and so the

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Speaker 1: fed can kind of focus all they want on trying to slow down that bank lending channel. But

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Speaker 1: it's a smaller factor than the deficits. And then ironically, higher rates makes the

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Speaker 1: deficits higher now. So it actually, in some ways, every time the Fed raises rates, I get

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Speaker 1: a raise. Any investor that has as much cash as if you have a locked -in mortgage, you've

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Speaker 1: got a money market fund, you get a raise every time the fed raises interest rates even at

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Speaker 1: orange juice when we when we raised our capital you know it's it's in uh interest bearing

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Speaker 1: like fiat and we actually get the fed gave us a raise on a on a pretty large pool of

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Speaker 1: capital which actually slightly allows us to go out and buy slightly more companies or hire

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Speaker 1: slightly more people around the margins obviously um and so interest rates at when you're

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Speaker 1: at 100 of debt to gdp just and the problem is more that deficit than the bank lending

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Speaker 1: they're just kind of solving a different problem and so it's not that i would say okay

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Speaker 1: here's what the fed should do it's more just like how should they communicate that it's not

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Speaker 1: really their purview uh in some sense and yet the whole the whole structure of a central

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Speaker 1: bank is designed around the idea that they can solve this and it's just it's kind of an

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Speaker 1: illusion that we have that we've created for ourselves which is just kind of ultimately not

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Speaker 1: the case

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Speaker 2: yeah it's it's a sort of 800 -pound gorilla that no one seems to be able to say anything

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Speaker 2: about, whether it's the Fed or Treasury. But you have this other narrative, and again, this

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Speaker 2: goes back to what people hear, that we've got the president up every day saying, when the

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Speaker 2: midterms are over, the war is going to be over, fuel prices are going to go down, inflation

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Speaker 2: is going to be solved, the affordability crisis will improve drastically. And there are a

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Speaker 2: lot of people, and sometimes when you look at the markets. It looks like they're pricing

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Speaker 2: for the end of the war, and we're going to get the energy shock to go away. And inflation

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Speaker 2: will sort of reign back in. But you're saying this is all coming from fiscal. So that is

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Speaker 2: not the case. We might get energy prices lower, but will that do anything to resolve the

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Speaker 2: inflation problem?

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Speaker 1: I mean, it'll do some. I mean, there's always more factors involved. For example, in the

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Speaker 1: 70s, there was that combination of high levels of bank lending and then crisis in the

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Speaker 1: middle east which gave us a real world constraint uh and likewise now on one hand we have

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Speaker 1: that the fiscal uh dominance that the fiscal deficits that are structural and then we have

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Speaker 1: real world constraints um right now one of the biggest ones is energy and more specifically

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Speaker 1: refined products um uh and so it is absolutely true that if you know if if the war is over

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Speaker 1: and if refinery stop being hit and all the all the transportation bottlenecks ease uh that

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Speaker 1: will contribute to lower energy prices which then can contribute to mildly lower uh

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Speaker 1: inflation that that part is true the problem is that's that's one factor among many we all

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Speaker 1: you know we already had a two -speed economy or k -shaped economy and above target

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Speaker 1: inflation before the war uh this just kind of added you know the next layer of it uh from

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Speaker 1: what otherwise might have slowly kind of not necessarily go down but just kind of stopped

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Speaker 1: getting worse for a period of time as they got got mildly worse for a period of time um and

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Speaker 1: so it's a factor i mean policies matter you know wars matter um uh but the other factors is

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Speaker 1: that that fiscal side uh and then of course even things like just ai when you're trying to

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Speaker 1: you know you're building out power you're building you're using these resources um it takes

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Speaker 1: away from for example building new homes which makes it harder for home prices to go down

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Speaker 1: despite higher rates um and so a lot of these factors come together but a lot of is still

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Speaker 1: driven by that fiscal side, which is not going to be addressed in any sort of investable

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Speaker 1: time horizon.

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Speaker 2: Yeah. And, you know, that's a lot of folks will say, you know, Besson's got his back up

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Speaker 2: against the wall. What do you make of, he's been appointing some interesting counselors to

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Speaker 2: Treasury. Judy Shelton's one of them, sort of known sound money, gold person. And there's,

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Speaker 2: it's fueled a lot of speculation that maybe Treasury's planning some sort of huge policy

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Speaker 2: move to kind of try to address these high rates, high debt levels that just stretch out and

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Speaker 2: seem to be kind of unsolvable, maybe revaluing U .S. gold holdings. Do you give any merit

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Speaker 2: to that? Have you thought about that?

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Speaker 1: I mean, I think it's worth monitoring. Revaluing gold holdings is kind of like one of the

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Speaker 1: break the glass mechanisms that they have, where it's one of the few ways where you can

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Speaker 1: create, like the government can create new money without creating an associated amount of

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Speaker 1: debt. So if they increase the official holdings of gold, it basically fills up their

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Speaker 1: treasury general account with cash, which they can then spend,

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Speaker 1: which is kind of an interesting effect in the economy. Now that would be inflationary. That

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Speaker 1: would be a very pro -liquidity move. So if the intention is to weaken the dollar, for

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Speaker 1: example, that's a mechanism that they have, but they have to balance that with the concerns

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Speaker 1: around inflation because that that weakens people's wages that weakens um a lot of things

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Speaker 1: like that so the problem is when when when we're this far along into the dollar system

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Speaker 1: into debts and things like that all these decisions have trade -offs and there's some that

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Speaker 1: might be better than others but they all kind of in some ways screw one group and benefit

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Speaker 1: another group and so they have to kind of do a calculation to say in our term is this is

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Speaker 1: this a lever we want to pull hard, or do you want to kick it to the next people to maybe

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Speaker 1: consider doing that move?

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Speaker 2: And even though kick the can is really popular in Washington, you do have Besson, who's,

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Speaker 2: you know, everyone's thinking about legacy, and one would think, based on recent comments,

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Speaker 2: he cares a lot about that. And you just had Hank Paulson say, like, this is a break the

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Speaker 2: glass moment, right? So there is some support, perhaps, for some sort of extraordinary

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Speaker 2: measure. Who gets do gold who who get who wins and and who suffers in the immediate

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Speaker 2: aftermath of that i mean if you hold gold are you super happy if they do that and and who

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Speaker 2: comes out on the losing end of that the average worker

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Speaker 1: um i think it's more complicated than that so if they if they revalue gold they're

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Speaker 1: basically just it's mostly an accounting trick at first so they're not necessarily changing

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Speaker 1: the price of gold relative to oil or gold relative to houses or things like that they're

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Speaker 1: saying that the official bookkeeping for what the treasury holds their gold at is, is, is,

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Speaker 1: you know, instead of, you know, 40 something an ounce, it'll be the current price called,

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Speaker 1: you know, for 4 ,000 something an ounce. Uh, and that, that basically fills up their

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Speaker 1: treasury general account, which means they're able to then spend without issuing bonds to

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Speaker 1: spend, at least until they use up that, that amount. Uh, and in theory, I mean, they could

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Speaker 1: revalue gold even higher and give themselves even more cash uh and the more they do that

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Speaker 1: the more that money flows out into the economy which then can find itself into assets like

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Speaker 1: gold for example so it can influence the gold price uh it would be a shock uh and generally

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Speaker 1: shocks around that nature likely are to lead people to buy something like gold so i i think

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Speaker 1: as a gold holder i certainly would wouldn't mind that day um same thing for equity holders

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Speaker 1: or bitcoin holders or you kind of scarce asset holders in general probably would find that

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Speaker 1: day interesting uh but because you're creating more fiat uh that is spendable without

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Speaker 1: debt issuance uh you are you know that that is like a surge for uh inflation to

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Speaker 1: some extent or it's a surge in money creation it'd be comparable to some of the post -covid

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Speaker 1: or during covid stimulus that they did

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Speaker 2: uh

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Speaker 1: and of course it depends on magnitude where uh it can feel good in the moment

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Speaker 1: but then your wages have trouble keeping up years later. So in general, that would be

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Speaker 1: probably good for asset holders and probably bad for wage holders, but that has to be tied

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Speaker 1: with what they're doing in terms of fiscal policy. For example, if they're doing policies

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Speaker 1: that are beneficial to wage earners, then you could offset that in theory. So it's kind of

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Speaker 1: the full mix of policies rather than any one policy.

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Speaker 2: Yeah. And again, I'm going to venture a guess that that's where people get concerned, like

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Speaker 2: how well has this been thought out? And are they using that opportunity wisely since it's

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Speaker 2: going to come with costs? I mean, I think that's where we have to take a really hard look.

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Speaker 2: When it comes to AI itself, another big risk I hear people talking about is, and, you know,

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Speaker 2: there are sort of pieces circulating on this, is that, you know, we're facing this, this

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Speaker 2: reckoning coming. You mentioned before about the capital, you know, the inflationary impact

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Speaker 2: of all of the capital that's being spent in the build out and the data centers. And there's

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Speaker 2: a lot of concern that there's going to be a reckoning when it comes to the way the AI

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Speaker 2: companies have accounted for sales and that some of the obligations, the economic

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Speaker 2: obligations that are not showing up as debt, but they're kind of these contractual

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Speaker 2: obligations, sort of the outstanding

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Speaker 2: rival or are greater than subprime crisis, that there's this reset, except it's not

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Speaker 2: mortgages, It's these contracts when it actually comes to delivery. Is that something that

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Speaker 2: you are concerned about in terms of systemic risk?

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Speaker 1: Longer term, potentially. I don't think we're there yet. I think the people are right to

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Speaker 1: bring that up. I just think we're still kind of in early to mid innings of this. And

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Speaker 1: generally speaking, things that are less so in the banking system tend to be less

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Speaker 1: catastrophic than something like subprime. um uh and so i i wouldn't put it quite in that

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Speaker 1: camp um but it is true that for example the hyperscalers are taking on increasing lease

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Speaker 1: obligations uh because if you're building a if you're doing all this capex for a data

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Speaker 1: center you're looking for a client that's willing to sign you know a very long -term uh

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Speaker 1: lease um uh and uh so that's all happening and then you have even some of the semiconductor

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Speaker 1: companies have kind of incestuous financing where it's like vendor financing like they're

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Speaker 1: they'll like help help funds be raised to build out data centers and buy chips and they'll

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Speaker 1: backstop some of that as the chip maker right so you you get kind of a circular um

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Speaker 1: complexity there and then of course a lot of venture capital went into the the the the

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Speaker 1: models themselves open ai anthropic and and they're being kind of chased by the open weight

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Speaker 1: models uh it's very hard to justify a trillion or two trillion dollar valuation when you're

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Speaker 1: aggressively unprofitable and you're only months ahead of of like your kind of your closest

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Speaker 1: copiers um uh and so i do think a lot of this will run into a pretty big drawdown

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Speaker 1: at certain points um but i i think we're still we're still in the build -out phase we still

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Speaker 1: have massive bottlenecks and semi -connectors,

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Speaker 1: we still have a key thing I watch is just kind of like, are businesses spending more on AI

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Speaker 1: or less than they were months ago? And we always see the occasional headline, like this

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Speaker 1: business spends so much, they're pulling back and they were spending so much and now

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Speaker 1: they're putting more safeguards in. And those keep happening and yet the overall spend

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Speaker 1: keeps going up because we're kind of, again, my earlier point when a new technology

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Speaker 1: unlocks, there's like a kind of a zero to one moment where everyone has to kind of get from

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Speaker 1: not using it to some baseline of using it. And there are tons of studies that show, for

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Speaker 1: example, that just companies that are just higher adopters of AI

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Speaker 1: tend to be winning and taking market share versus ones in their field that are not, and

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Speaker 1: ironically tend to increase headcount. Because you have this idea that it's like a zero

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Speaker 1: sum, like if you use AI, it means you're firing your employees. Sometimes it means that

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Speaker 1: you're making each of your employees just do twice as much effectiveness with their time.

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Speaker 1: and so your company is able to run on better margins and better pricing and so you take

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Speaker 1: market share from competitors and you can actually grow headcount despite using more AI. So

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Speaker 1: I still think that this has room to run even though like on any given thing

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Speaker 1: that gets brought up, the vendor financing, the massive AI capex, the shifting things from

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Speaker 1: the corporate bond side to lease obligations,

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Speaker 1: questions around depreciation, What is the true useful life of a leading -edge GPU, for

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Speaker 1: example? These are all very valid questions, and I think it'll probably take more time

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Speaker 1: before we kind of run into a little bit of a reckoning about them.

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Speaker 2: Everything we do on this channel has one goal, to make you a sharper, better -informed

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Speaker 2: investor, someone who understands the macro forces shaping your money before the mainstream

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Speaker 2: catches on. But information is only half of it. The other half is acting on it, and that's

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Speaker 2: what Wealthion Membership is for. It's how you go from watching these conversations to

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Speaker 2: putting them to work in your own portfolio. Membership opens three doors, access to

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Speaker 2: advisors, helping build real assets into your portfolio, and for accredited investors,

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Speaker 2: access to specialized funds. To learn more, the link to become a member is in the

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Speaker 2: description box below.

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Speaker 2: So commodities have been the safe way to play the AI trade for a lot of people, or the

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Speaker 2: desired way to play it, given some of the questions. But if AI

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Speaker 2: slows down, does that kill the demand for commodities? How much of that trade is related?

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Speaker 2: They seem like they're opposite ends, right? Like the scarce real asset crowd is suspicious

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Speaker 2: of the AI trade. And yet, are they connected in a way where that demand is what's fueling

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Speaker 2: commodities?

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Speaker 1: I mean, I think the feeling part of commodities, I mean, like on the margins, they matter.

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Speaker 1: In terms of just global commodity consumption, AI is still a very small share.

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Speaker 1: of course, certain commodities can be more in demand than others in a given area. What

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Speaker 1: makes this different than say the 2010s internet companies is they were very low on

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Speaker 1: hardware. They had to have data centers, but social media and search engines are not that

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Speaker 1: computationally intensive.

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Speaker 1: And it's more about basically putting everything into mobile, into the cloud, pretty low

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Speaker 1: physical costs. uh whereas now there are a lot there are a lot more physical costs um this

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Speaker 1: type of computation is just inherently different um you know and so i do think that the the

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Speaker 1: whole kind of structural just the need for compute does around the margins may mean we need

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Speaker 1: more power we need more um just compute materials and things like that so that's a real

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Speaker 1: trade um but like total energy use is still primarily going obviously to not ai uh total

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Speaker 1: commodity use like copper and things like that i mean it just in various types of

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Speaker 1: construction is still a massive deal elsewhere that's one thing i would consider i mean

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Speaker 1: it's also just the the increased kind of militarization of the world you know europe

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Speaker 1: spending more on defense uh the u .s uh treasury uh defense secretary asking for a 1 .5

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Speaker 1: trillion dollar defense budget in the u .s uh these things all have commodity implications

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Speaker 1: as well i mean if you're if you're building more missiles i mean sadly that is a source of

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Speaker 1: commodity demand um uh and then just other major factors i mean for example the slowdown in

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Speaker 1: china kind of china reaching peak demographics is is one of the biggest weights on

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Speaker 1: commodities because they have all this oversupply uh not just of of buildings they've made

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Speaker 1: but also manufacturing output so they can actually output more than they are currently

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Speaker 1: without a ton of build out necessarily So there's an overhang there. So there's like,

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Speaker 1: there's, there's things that are right. AI is asking for more commodities and defense

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Speaker 1: spending is asking for more commodities. Whereas like say China is asking for, uh, maybe

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Speaker 1: not less, but like less growth of commodities, for example. Um, and those have to be

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Speaker 1: considered as, as competing things whenever, whenever someone wants to have a macro

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Speaker 1: argument for, for their commodity position.

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Speaker 2: I get this question a lot. I just got this in my inbox, listening to you talk about gold

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Speaker 2: and silver and the hard assets. And this was from someone, I wonder your thoughts on this,

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Speaker 2: from someone called Peter. And he wrote, I find it fascinating that just about every other

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Speaker 2: financial podcast has guests, one after the other, predicting doom and gloom for the stock

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Speaker 2: market and gold is the savior. And yet markets continue to climb the wall of worry while

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Speaker 2: gold struggles. Is this sensationalism to get the public to watch or listen? Listen, like,

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Speaker 2: what do you think is going on? And we get a version of that a lot. I wonder sort of

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Speaker 2: when you're a bull on gold or hard assets, what do you say to folks like that who hear

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Speaker 2: the argument, it makes sense to them, but they just watch that stock market and they're so

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Speaker 2: conditioned to look at their 401 in equity positions and have a hard time kind of pulling

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Speaker 2: away and think about diversifying out of it?

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Speaker 1: I say yes and, which is basically to say that one can be bullish on gold and stocks. And

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Speaker 1: if one looks at the S &P 500 to gold ratio, we are in kind of the fourth major

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Speaker 1: bear market in stocks relative to gold over the past century, even though it's been pretty

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Speaker 1: mild. So you can pick a point years ago and gold has outperformed stocks in that time.

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Speaker 1: But of course, there are years where the opposite happens. And I mean, I like to own both

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Speaker 1: assets. And this goes back to my whole kind of view on the fiscal dominance. And that's why

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Speaker 1: I keep fading the equity bears, which is to say when we're running 7 % of GDP deficits, as

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Speaker 1: far as the eye can see,

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Speaker 1: you know, being bearish on stocks basically means you're bullish on fiat because you're

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Speaker 1: seeing what stocks are going to go down versus the dollar. And, you know, certainly in a

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Speaker 1: year they can. I mean, that's the stocks are volatile. I mean, they went down in 2022, for

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Speaker 1: example. They can get over their skis for a period of time. Gold can go down versus the

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Speaker 1: dollar. I mean, when it goes from $2 ,000 to $5 ,000 as quickly as it did, as big of a

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Speaker 1: market as it did, that needs time to take a breather.

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Speaker 1: And so I do generally fade the doomer narratives of like sell all your stocks, just own

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Speaker 1: gold, the reckoning is just around the corner. it's more like we're identifying

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Speaker 1: that we're going to run at a hot environment which has winners and losers and and generally

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Speaker 1: speaking hard assets have been the winners so owning gold uh you know let's say since covid

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Speaker 1: so for example owning gold owning bitcoin owning high quality equities um uh owning the

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Speaker 1: best real estate with you know a fixed rate like fiat debt attached to it those of all

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Speaker 1: generally good trades to do and it's been one of the worst five or six year stretches to

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Speaker 1: hold bonds like in in our parents and grandparents lifetimes it like the the it's been a

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Speaker 1: massive bond bear market both in nominal terms and especially in real terms um and um and

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Speaker 1: you know i think that the the degree of that's probably over i mean when you go from like

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Speaker 1: almost zero rates to 5 % on the 10 -year, a lot of that move is over. But

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Speaker 1: we're still in this kind of fiscal dominance phase, which does continue to some degree

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Speaker 1: fueling equities. And so that's why I've been a long -term equity bull, despite

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Speaker 1: raising concerns around various things, because like anyone who studies emerging markets,

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Speaker 1: for example, when they have a currency crisis, I mean, their stocks go up in their local

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Speaker 1: currency terms. They might go down in dollar terms. They might go down in gold terms, but

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Speaker 1: they're often going up in their local currency terms. So I've been a bull on equities and

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Speaker 1: gold.

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Speaker 2: Yeah.

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Speaker 2: Well said, because I think that in this sort of world of FinTwit, those people get in their

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Speaker 2: tribes. And I think that's what makes it difficult when you're talking about

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Speaker 2: diversification. By the way, Lynn puts a model portfolio up on her newsletter and you're

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Speaker 2: very transparent about it, which I think is awesome when you're explaining some of these

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Speaker 2: things. You can see some of the areas that she's investing in. Profitable equities. What

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Speaker 2: in a digitized world where intelligence is going to be ubiquitous, what does a profitable

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Speaker 2: moat look like? Is that still what we're looking for? Because it seems like

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Speaker 2: it's hard to know now what that's going to be.

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Speaker 1: good question i mean for example like the the semiconductor companies are incredibly

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Speaker 1: profitable um uh and the reason i put that there and that's a phrase i've been using since

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Speaker 1: like the 2010s really there's this long stretch of just owning unprofitable companies

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Speaker 1: because in a zero rate environment people are saying you know i don't care when you have a

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Speaker 1: profit just keep just focus everything on growth there's the cost of capital is almost zero

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Speaker 1: anyway uh and but now we live in world where there is a cost of capital those kind of like

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Speaker 1: unprofitable grow at all cost things are that's not where like that's not how you optimize

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Speaker 1: things anymore that's not where i think most of the value add is uh instead it's more like

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Speaker 1: profitable growth obviously there's i mean in venture for example you know we're investing

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Speaker 1: in usually non -profitable growth that's that's the whole point of a venture fund you're

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Speaker 1: getting scale before you profit but in public markets uh i generally want to see profitable

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Speaker 1: companies you know if i want to get unprofitable that's what i do venture for uh i'll go

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Speaker 1: into private markets whereas you know once a company's large up to be public um i generally

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Speaker 1: think that that at least most of them should be optimizing toward being being profitable

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Speaker 1: enterprises

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Speaker 2: yeah balance sheets matter again uh i i just want to kind of finish up and and reference

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Speaker 2: back to that conversation the conversations you've had with Jock Dorsey about open source.

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Speaker 2: And, you know, in this kind of when we're looking at profit models and revenue,

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Speaker 2: is there tension between equity investors who want to benefit from

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Speaker 2: profits and walls and moats and then sort of citizens who maybe benefit from networks that

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Speaker 2: are open? And it seems to be playing out very much in the AI space where, you know, open AI

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Speaker 2: philanthropic want their models closed and their investors likely want them to be able to

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Speaker 2: monetize that and then the all the other conversations we're having about open source and

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Speaker 2: should this be used differently well

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Speaker 1: there's a couple phases there there's this one is from your own company perspective should

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Speaker 1: your model be open or closed and then there's the the somewhat more nefarious one which is

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Speaker 1: should you try to get government to ban your open competitors to to preserve your closed

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Speaker 1: decision right that that's where some of these companies i think i've gotten to and that

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Speaker 1: that's the that's the you know companies can do with themselves what they want to do with

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Speaker 1: their own code or their their own you know systems the question is to what extent they want

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Speaker 1: to lock that in with a regulatory moat um uh and uh and but i think the long -term arc here

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Speaker 1: is it's a losing game uh i think just open weight models exist um and and trying to to put

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Speaker 1: out those fires is just kind of like slowing down the inevitable um and i think open weight

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Speaker 1: models just some degree have to be understood as existing now uh it's like whack -a -mole

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Speaker 1: trying to make them not exist uh and they make it so that more than just a small number of

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Speaker 1: companies you know can control the tech that we're all using and people can customize and

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Speaker 1: run locally uh and run more privately and i think all of that is is valuable

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Speaker 2: what what economic trend worries you the most um

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Speaker 1: i would say it's a it's a couple coming together it's not one thing because these these

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Speaker 1: things tend to come in clusters so one is just the really big demographic trend right so

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Speaker 1: things are easier when you have six workers per retiree than three workers per retiree for

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Speaker 1: example so as the world has aged uh that is just a that's just a really big challenge i

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Speaker 1: mean all of our kind of systems are kind of designed with the theory that every generation

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Speaker 1: is going to be bigger than the prior one and you know when that stopped happening and then

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Speaker 1: decades pass we're kind of in the paying for it moment now. So we have really big

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Speaker 1: challenges ahead of like Social Security, Medicare in the U .S. And obviously Japan's going

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Speaker 1: through it. Europe's going through it. These are very real challenges. China's going

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Speaker 1: through it. So that's like a, that's one, just, that's kind of the massive kind of like

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Speaker 1: background thing that's happening. And then when you add, obviously, like breakdowns

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Speaker 1: in international law compared to a kind of a we kind of went through this like you know

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Speaker 1: multipolar stage toward a unipolar stage and then kind of going back toward a multipolar

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Speaker 1: stage in terms of geopolitics which is really the more natural stage of things uh but that

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Speaker 1: that transition can be uh tumultuous um and then there's like the this the as we deal with

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Speaker 1: the demographics and as we have these fiscal things locked in I think the two -speed

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Speaker 1: economy that we have in the U .S. is, I mean, to your point, that's a huge factor in

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Speaker 1: trust,

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Speaker 2: right?

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Speaker 1: So people will ask me, like, when do fiscal deficits matter? When does the debt matter? My

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Speaker 1: answer is it has been mattering, right? It's not the moment a bond auction fails or

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Speaker 1: something crazy because that's not the point here. The point is that when you have these

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Speaker 1: really structural fiscal deficits, there are recipients on some sides of them. and then

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Speaker 1: there are others that are not on recipients, but they're kind of paying the cost. For

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Speaker 1: example, higher rates and a new family looking to buy their first home,

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Speaker 2: they're

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Speaker 1: kind of indirectly paying the cost or some of the costs for these deficits.

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Speaker 1: That's where you get, for example, record high stock prices and record low consumer

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Speaker 1: sentiment, which we touched on for a period of time. Now we're off the ultimate lows, but

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Speaker 1: you still have this unusually big divide between asset holders, deficit recipients,

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Speaker 1: And non -asset holders and, you know, not deficit recipients. And I think that's, it's

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Speaker 1: just, it's a mess, I think. And it does concern me.

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Speaker 2: Yeah, it's a mess. And I feel like this is, you know, back to your point about sort of the

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Speaker 2: lack of information. We're kind of going back down in information because if you

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Speaker 2: are, have any young people in your life, like this is incredibly apparent to you. You know,

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Speaker 2: I have college age kids and it's the level. And people like to say they're sort of anxious.

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Speaker 2: No, they're not. They're accurately looking at what's going on and the fact that they're

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Speaker 2: getting screwed and they're very concerned about the future. But you talk to other people

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Speaker 2: and depending on what space you're in, the media that they're getting directed at them and

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Speaker 2: the messaging, the campaign ads, this is not reality. And I talked to Mike Green one time

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Speaker 2: and one of his concerns was that rich people aren't even in shared spaces with other folks

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Speaker 2: now. Like that's a big change, you know, that sort of, you're not even crossing over and

374
00:30:41,930 --> 00:30:47,070
Speaker 2: seeing anyone else's reality. So I think that, you know, pointing that out, I think is

375
00:30:47,070 --> 00:30:52,790
Speaker 2: really concerning, but it's kind of like out there. It's like right underneath. And I'm

376
00:30:52,790 --> 00:30:58,050
Speaker 2: wondering and worrying when that flips to anger, when that anxiety flips to anger. I think

377
00:30:58,050 --> 00:31:02,590
Speaker 2: the midterms are going to be really interesting to see whether folks decide to vote on that

378
00:31:02,590 --> 00:31:07,530
Speaker 2: or whether they just have given up on the systems and the process altogether, which carries

379
00:31:07,530 --> 00:31:14,510
Speaker 2: its own risk, I think. You're doing something really interesting. um so can we remain on

380
00:31:14,510 --> 00:31:18,390
Speaker 2: that path first of all before i ask you about this can we remain on a path where the

381
00:31:18,390 --> 00:31:25,250
Speaker 2: economy the consumer generationally things are so bifurcated um is that sustainable

382
00:31:25,250 --> 00:31:32,090
Speaker 2: can we live in this like sort of two two -tier economy for a long period of time or does

383
00:31:32,090 --> 00:31:35,250
Speaker 2: this necessarily come to a head somewhere yeah

384
00:31:35,250 --> 00:31:39,070
Speaker 1: it's a good question i mean i think it can go on longer than people think i mean the kind

385
00:31:39,070 --> 00:31:44,050
Speaker 1: of entire political structure of aristocracy for example was able to sustain something like

386
00:31:44,050 --> 00:31:49,250
Speaker 1: that for a very long period of time uh obviously that's a different era uh you know

387
00:31:49,250 --> 00:31:54,830
Speaker 1: different different uh time and space um but you can absolutely have just just very

388
00:31:54,830 --> 00:32:01,090
Speaker 1: different um economic realities uh obviously political structures matter differently so for

389
00:32:01,090 --> 00:32:07,030
Speaker 1: example people vote and and and things like that um but it you know i the risk is that it

390
00:32:07,030 --> 00:32:12,070
Speaker 1: breaks one way or the other. You get the two kind of the horseshoe theory, kind of the

391
00:32:12,070 --> 00:32:16,290
Speaker 1: polls, the radical polls start to kind of gain power because people say, well, if the

392
00:32:16,290 --> 00:32:19,450
Speaker 1: status quo is not working, they're going to shift away from kind of anywhere near the

393
00:32:19,450 --> 00:32:23,050
Speaker 1: center. And they're going to either go hard right or hard left. And that means different

394
00:32:23,050 --> 00:32:26,430
Speaker 1: things to different people. But basically, you get these more extreme decision making

395
00:32:26,430 --> 00:32:30,690
Speaker 1: points at some points or more extreme election outcomes and things like that. And that can

396
00:32:30,690 --> 00:32:36,730
Speaker 1: start kind of fraying certain things. But I think it can often take a lot longer than

397
00:32:36,730 --> 00:32:40,870
Speaker 1: people think. And I also think that the algorithms are a really big deal. Like you

398
00:32:40,870 --> 00:32:46,930
Speaker 1: mentioned the anxiety that people have. Like in social media, like just from a kind of a

399
00:32:46,930 --> 00:32:50,930
Speaker 1: natural standpoint, you know, people being able to communicate with each other over long

400
00:32:50,930 --> 00:32:57,070
Speaker 1: distances and find their own groups and tribes is in theory kind of a pretty good thing. uh

401
00:32:57,070 --> 00:33:03,490
Speaker 1: and one of the one of the kind of the the risks here is just that the the there's a handful

402
00:33:03,490 --> 00:33:08,430
Speaker 1: of really big platforms and they have algorithms uh and they can tune how those algorithms

403
00:33:08,430 --> 00:33:14,450
Speaker 1: work uh and their incentives are not necessarily to promote virtue among society or promote

404
00:33:14,450 --> 00:33:20,570
Speaker 1: truth among society they're either to profit maximize uh or they're to kind of like be a

405
00:33:20,570 --> 00:33:26,150
Speaker 1: funnel for something else um uh like to kind of change discourse around something that that

406
00:33:26,150 --> 00:33:31,710
Speaker 1: that that might make profits in a kind of a jason area and actually i did an interview with

407
00:33:31,710 --> 00:33:37,130
Speaker 1: jack dorsey about this a couple years ago uh uh you know the the the founder of twitter

408
00:33:37,130 --> 00:33:43,710
Speaker 1: because we were kind of looking at decentralized social media's uh market like um that let

409
00:33:43,710 --> 00:33:46,310
Speaker 1: you choose your own algorithm and stuff like that

410
00:33:46,310 --> 00:33:46,890
Speaker 2: because

411
00:33:46,890 --> 00:33:50,070
Speaker 1: he was arguing that it's not just because that was a whole like topic of obviously like

412
00:33:50,070 --> 00:33:54,590
Speaker 1: social media censorship and things like that and he was arguing i agreed with him that it's

413
00:33:54,590 --> 00:33:59,170
Speaker 1: not just about censorship it's about what the algorithm even has you look at in the first

414
00:33:59,170 --> 00:34:05,570
Speaker 1: place so i've i've you know because i'm pretty active online um i see i've seen specific

415
00:34:05,570 --> 00:34:09,670
Speaker 1: cases people just kind of gradually fall into these like rabbit holes that are not not very

416
00:34:09,670 --> 00:34:14,990
Speaker 1: not very healthy and it's kind of i can just see like this the step by step by step by step

417
00:34:14,990 --> 00:34:20,750
Speaker 1: where them it seems normal but i can just see that person's like in a bubble now like that

418
00:34:20,750 --> 00:34:24,450
Speaker 1: person used to be talking about this it's on now they just they're in a deep bubble and i

419
00:34:24,450 --> 00:34:28,330
Speaker 1: think the algorithm feeds into that and going back to sci -fi for example that was one of

420
00:34:28,330 --> 00:34:31,870
Speaker 1: the things i thought about a lot is like what does the internet structure even look like

421
00:34:31,870 --> 00:34:37,530
Speaker 1: decades out and i kind of envision is almost like a two like one is like a very centralized

422
00:34:37,530 --> 00:34:44,090
Speaker 1: um censored geolocated kind of just fully wrapped up

423
00:34:44,090 --> 00:34:49,850
Speaker 1: system. And then there's all this stuff happening on the edges. And I think that's kind of

424
00:34:49,850 --> 00:34:53,250
Speaker 1: the direction we're going in. But it's something I think about a lot, that centralized

425
00:34:53,250 --> 00:34:57,830
Speaker 1: algorithm feature. And it's quietly one of the most powerful things in society and in our

426
00:34:57,830 --> 00:34:58,170
Speaker 1: lives.

427
00:34:58,430 --> 00:35:04,510
Speaker 2: Yeah. And I think the stakes are getting higher with AI in the picture now too. We're sort

428
00:35:04,510 --> 00:35:06,390
Speaker 2: of seeing that.

429
00:35:08,210 --> 00:35:13,170
Speaker 2: You're doing a very interesting thing. So on this two -tier, and correct me if I'm wrong,

430
00:35:13,290 --> 00:35:19,410
Speaker 2: but on this two -tier economy, we've been talking about age and demographics, but it's also

431
00:35:19,410 --> 00:35:25,230
Speaker 2: sort of like so much money being centralized and directed toward the AI trade or big

432
00:35:25,230 --> 00:35:30,990
Speaker 2: companies or mega cap tech, and then everything else seeming to struggle. And we have

433
00:35:30,990 --> 00:35:37,890
Speaker 2: interest rates right now. Have we just reoriented our economy around mega that

434
00:35:37,890 --> 00:35:44,810
Speaker 2: they are now the driver? Or do we need those smaller, medium -sized businesses, those

435
00:35:44,810 --> 00:35:49,170
Speaker 2: sort of startups in order to have a healthy economy? Well,

436
00:35:49,250 --> 00:35:52,830
Speaker 1: I do think we need the startups and the smaller companies to have a healthy economy. And

437
00:35:52,830 --> 00:35:57,630
Speaker 1: still, like most employment is disproportionately smaller and medium -sized businesses.

438
00:35:58,870 --> 00:36:05,570
Speaker 1: I think I would separate the current kind of rapid wave of AI capex from other

439
00:36:05,570 --> 00:36:10,450
Speaker 1: things because whenever you have a new technology unlock, naturally there's like a surge

440
00:36:10,450 --> 00:36:14,910
Speaker 1: toward that area. it doesn't mean that that that rate is going to continue forever uh it

441
00:36:14,910 --> 00:36:19,670
Speaker 1: just kind of means you're going from zero to one because some low -hanging fruit or some

442
00:36:19,670 --> 00:36:24,190
Speaker 1: some unlock has happened uh whether it's for example the tech finally coming into place to

443
00:36:24,190 --> 00:36:29,590
Speaker 1: make real railroads work or you know once they had both aluminum and hydrocarbons suddenly

444
00:36:29,590 --> 00:36:35,670
Speaker 1: the entire field of of aviation just opens up uh whereas like you spent thousands of years

445
00:36:35,670 --> 00:36:39,230
Speaker 1: going practically nowhere on flight you know we made a little progress with balloons and

446
00:36:39,230 --> 00:36:44,350
Speaker 1: then but once you have hydrocarbons and aluminum you know this the the the runner weight

447
00:36:44,350 --> 00:36:50,110
Speaker 1: for for years and decades is really big but then it levels out um once you kind of get the

448
00:36:50,110 --> 00:36:54,410
Speaker 1: benefits of that unlock or get good and and so i think that you know obviously the

449
00:36:54,410 --> 00:36:59,130
Speaker 1: combination of hardware and software has gotten good enough now it has this new unlock and

450
00:36:59,130 --> 00:37:03,370
Speaker 1: it can do things that it couldn't do a few years ago and so there's a there's a massive

451
00:37:03,370 --> 00:37:09,410
Speaker 1: temporary reorganization around where we put our resources um now the good news is like so

452
00:37:09,410 --> 00:37:16,310
Speaker 1: so for example in the 2010s a lot of the the rising tech companies um like a lot of that

453
00:37:16,310 --> 00:37:22,510
Speaker 1: kind of value concentrated in them uh and the i think the good news about ai is that even

454
00:37:22,510 --> 00:37:28,970
Speaker 1: though obviously the the winners of that get very large uh the end users still are a

455
00:37:28,970 --> 00:37:35,330
Speaker 1: major benefit if they use it correctly. I mean, in some ways it's never been an easier time

456
00:37:35,330 --> 00:37:40,510
Speaker 1: or better time to start a small business because instead of asking someone else for

457
00:37:40,510 --> 00:37:46,310
Speaker 1: capital, now some businesses still need capital, but just the amount of resources and

458
00:37:46,310 --> 00:37:51,550
Speaker 1: things you can do with a very small team has never been better. So it's more like it

459
00:37:51,550 --> 00:37:58,110
Speaker 1: separates people that are willing and able to use those tools and understand how to get the

460
00:37:58,110 --> 00:38:01,690
Speaker 1: benefits out of the tools without the drawbacks of those tools. Obviously, one of the

461
00:38:01,690 --> 00:38:06,490
Speaker 1: drawbacks might be kind of like just AI brain, where you just don't think about anything.

462
00:38:06,510 --> 00:38:13,270
Speaker 1: You just ask AI. But if someone is just using it kind of to solve problems,

463
00:38:13,450 --> 00:38:16,170
Speaker 1: I think it's actually in some ways an equalizer.

464
00:38:16,570 --> 00:38:21,850
Speaker 2: Yeah. So you're doing this interesting thing with Orange Juice, you and the team at

465
00:38:21,850 --> 00:38:26,310
Speaker 2: EgoDeath Capital. It's really fascinating because it seems to me that it's solving for a

466
00:38:26,310 --> 00:38:32,830
Speaker 2: problem that not a lot of other people are addressing. So you're acquiring small to mid

467
00:38:32,830 --> 00:38:38,030
Speaker 2: -sized businesses and then transitioning them into a Bitcoin treasury company.

468
00:38:39,830 --> 00:38:45,310
Speaker 2: How does that solve for the challenge? Talk to me a little bit about why this idea came up,

469
00:38:45,370 --> 00:38:46,630
Speaker 2: because it seems really unique to me.

470
00:38:46,910 --> 00:38:51,970
Speaker 1: Good question. It kind of came up because some of us are both Bitcoin bulls and value

471
00:38:51,970 --> 00:38:57,690
Speaker 1: investors. And so the way we look at it is it's not a Bitcoin treasury company. It's a

472
00:38:57,690 --> 00:39:02,290
Speaker 1: company that happens to have a Bitcoin treasury as part of its strategy. I think that the

473
00:39:02,290 --> 00:39:09,110
Speaker 1: primary thing is that for – if you back up for a second, private equity solves a problem,

474
00:39:09,150 --> 00:39:13,770
Speaker 1: which is that one of the hardest things you can sell is a business because it's large,

475
00:39:13,890 --> 00:39:19,070
Speaker 1: illiquid, and everyone's unique, right? So that's inherently a very challenging, illiquid

476
00:39:19,070 --> 00:39:22,850
Speaker 1: market. And private equity comes in and says, well, we're willing to buy and sell

477
00:39:22,850 --> 00:39:29,090
Speaker 1: businesses. And so for decades, that has been a useful service. The problem is, especially

478
00:39:29,090 --> 00:39:34,810
Speaker 1: during this like 40 -year period of declining interest rates that is now over, really the

479
00:39:34,810 --> 00:39:41,290
Speaker 1: process there was buy a business, lever it up on ever cheaper debt. You have better

480
00:39:41,290 --> 00:39:47,590
Speaker 1: cost of capital than the seller did, fire half the staff, and then flip the company in a

481
00:39:47,590 --> 00:39:53,270
Speaker 1: few years. And, you know, you've maximized near -term profits and you've made money. but

482
00:39:53,270 --> 00:39:58,090
Speaker 1: you kind of set that business up to not really be successful 10, 20 years down the line.

483
00:39:58,330 --> 00:40:05,010
Speaker 1: You kind of pulled forward some of the profits. And so there's a, you kind of rip the soul

484
00:40:05,010 --> 00:40:09,070
Speaker 1: out of a company or the quality out of the company or the, and like you'll see all the time

485
00:40:09,070 --> 00:40:12,790
Speaker 1: people are like, Oh, I love this veterinary clinic in my area before private equity took it

486
00:40:12,790 --> 00:40:16,530
Speaker 1: over. Now they're just kind of trying to cross sell products and they're cutting services

487
00:40:16,530 --> 00:40:20,550
Speaker 1: and raising prices. And it's just, it's, you know, it's run by someone with a spreadsheet

488
00:40:20,550 --> 00:40:24,390
Speaker 1: rather than someone who loves animals, for example. And obviously, you have to balance

489
00:40:24,390 --> 00:40:31,190
Speaker 1: business with the true passion of what you're doing. But a lot of private equity businesses

490
00:40:31,190 --> 00:40:35,230
Speaker 1: have that outcome, whereas it's geared more toward the spreadsheet. And private equity

491
00:40:35,230 --> 00:40:40,710
Speaker 1: companies have a larger than average failure rate because they get loaded up with debt and

492
00:40:40,710 --> 00:40:46,530
Speaker 1: have some of their kind of soul ripped out. And so structurally, a permanent capital

493
00:40:46,530 --> 00:40:51,110
Speaker 1: vehicle is interesting. And that's just a jargony way of saying a company. So private

494
00:40:51,110 --> 00:40:55,090
Speaker 1: equity investors, I mean, managers are not like evil. They have an incentive structure.

495
00:40:55,250 --> 00:40:59,890
Speaker 1: They have like a, you know, say a 10 -year fund life. And their mandate is to go buy

496
00:40:59,890 --> 00:41:05,270
Speaker 1: businesses, quote unquote, fix them up and then flip them out and build a return cash to

497
00:41:05,270 --> 00:41:05,990
Speaker 1: investors.

498
00:41:06,290 --> 00:41:06,690
Speaker 2: And they

499
00:41:06,690 --> 00:41:06,830
Speaker 1: kind

500
00:41:06,830 --> 00:41:08,830
Speaker 2: of use the same blueprint, right? Right. Like they

501
00:41:08,830 --> 00:41:09,050
Speaker 1: kind

502
00:41:09,050 --> 00:41:13,510
Speaker 2: of like like take on debt, fire some people, squeeze the hell out of the rest of them that

503
00:41:13,510 --> 00:41:17,710
Speaker 2: are left. Because, I mean, I know some folks who work, you know, end up working for

504
00:41:17,710 --> 00:41:20,990
Speaker 2: something that's been acquired by private equity. And like it's impossible. You know, the

505
00:41:20,990 --> 00:41:24,070
Speaker 2: quotas are so much harder. They're running. They feel like they're running on a treadmill.

506
00:41:24,310 --> 00:41:28,410
Speaker 1: Yeah, because all the incentive is basically the next few years. It's not about how do we

507
00:41:28,410 --> 00:41:34,050
Speaker 1: build a foundation 10 years out? And so but with a permanent capital vehicle, with the most

508
00:41:34,050 --> 00:41:39,590
Speaker 1: with the most famous example being Berkshire Hathaway. They buy companies and they just

509
00:41:39,590 --> 00:41:44,110
Speaker 1: hold them for decades. And so the incentive structure, obviously, they want that company to

510
00:41:44,110 --> 00:41:49,910
Speaker 1: be successful, competitive, to trim areas that need to be trimming and to do well. But it's

511
00:41:49,910 --> 00:41:55,950
Speaker 1: all incentivized toward being an indefinite holder that wants the decades of cash flows and

512
00:41:55,950 --> 00:42:01,070
Speaker 1: growth from that company, not short -term maximization. So Orange Juice is a permanent

513
00:42:01,070 --> 00:42:05,710
Speaker 1: capital company that seeks to buy companies and then hold them indefinitely. So decisions

514
00:42:05,710 --> 00:42:10,710
Speaker 1: are geared toward that longer term rather than how can we maximize profit three years out.

515
00:42:11,070 --> 00:42:14,910
Speaker 1: And then permanent capital companies in general, because they're not just flipping in near

516
00:42:14,910 --> 00:42:19,270
Speaker 1: -term optimizing thing, they need a kicker that kind of makes that long -term strategy work

517
00:42:19,270 --> 00:42:24,410
Speaker 1: well. For Berkshire Hathaway, it's insurance. Berkshire Hathaway base has the lowest cost

518
00:42:24,410 --> 00:42:29,690
Speaker 1: of capital in the world, more or less, the most stable source of capital. So that gives

519
00:42:29,690 --> 00:42:36,110
Speaker 1: them a huge disadvantage. manage. For people that are bullish on Bitcoin, having Bitcoin on

520
00:42:36,110 --> 00:42:41,590
Speaker 1: the balance sheet can be rocket fuel as long as you manage it appropriately. And it helps

521
00:42:41,590 --> 00:42:47,510
Speaker 1: you build up a kind of a fortress of assets that are volatile, but can't be debased.

522
00:42:48,550 --> 00:42:53,650
Speaker 1: And so we've generally found that that synergy is interesting. And also there's a market of

523
00:42:53,650 --> 00:43:00,610
Speaker 1: just people that own businesses and like Bitcoin and they'd rather sell their company to

524
00:43:00,610 --> 00:43:04,930
Speaker 1: something with like you know for legacy in mind versus like something that'll flip it and

525
00:43:04,930 --> 00:43:08,850
Speaker 1: rip it apart and then there's also a really big market of people that want to keep working

526
00:43:08,850 --> 00:43:13,850
Speaker 1: for the business but for example you know they're they want more liquidity you know they

527
00:43:13,850 --> 00:43:18,450
Speaker 1: might have be wealthy on paper but it's 95 percent in one business and they want to keep

528
00:43:18,450 --> 00:43:24,950
Speaker 1: working on the business but they also could use liquidity uh de -risking uh and or just

529
00:43:24,950 --> 00:43:31,370
Speaker 1: help with backend for example we hired a cto from nvidia uh uh you know our new cto is from

530
00:43:31,370 --> 00:43:36,090
Speaker 1: nvidia and and so we can come in with to these companies that wouldn't really have

531
00:43:36,090 --> 00:43:38,030
Speaker 1: necessarily the best ai advice in the world

532
00:43:38,030 --> 00:43:38,650
Speaker 2: and

533
00:43:38,650 --> 00:43:43,050
Speaker 1: we can give them world -class ai advice not to come in and say okay we're going to fire all

534
00:43:43,050 --> 00:43:47,210
Speaker 1: your backend staff and and and just automate it but it's basically saying okay here's

535
00:43:47,210 --> 00:43:53,330
Speaker 1: here's how we can help uh so that and it's not again it's not geared toward three -year

536
00:43:53,330 --> 00:43:57,990
Speaker 1: outcome is saying, how can we make your competitive as streamlined as possible and reduce

537
00:43:57,990 --> 00:44:02,350
Speaker 1: the busy work as much as possible so that you can get back to treating animals or whatever,

538
00:44:02,350 --> 00:44:04,030
Speaker 1: whatever the business might be, for example.

539
00:44:04,290 --> 00:44:08,050
Speaker 2: Yeah. It's fascinating you said that because when I was reading about it, I was like, this

540
00:44:08,050 --> 00:44:14,270
Speaker 2: sounds like Berkshire Hathaway, but with a, with a different twist and maybe in an

541
00:44:14,270 --> 00:44:19,510
Speaker 2: environment, you know, that requires something different than what Warren Buffett did, you

542
00:44:19,510 --> 00:44:24,990
Speaker 2: know, for the modern day. So it's fascinating to hear you bring that up um what is their

543
00:44:24,990 --> 00:44:29,990
Speaker 2: pushback is there pushback from small companies because this solves for a problem i think a

544
00:44:29,990 --> 00:44:34,390
Speaker 2: lot of them based on the experience that they're hearing about seeing about uh private

545
00:44:34,390 --> 00:44:40,550
Speaker 2: equity is not the fit for them for that reason um but but on the bitcoin part is there sort

546
00:44:40,550 --> 00:44:46,130
Speaker 2: of a what's the biggest kind of hurdle is there explaining do you do you look for companies

547
00:44:46,130 --> 00:44:51,790
Speaker 2: that already have a leaning toward bitcoin or do you find a good value company um And then

548
00:44:51,790 --> 00:44:55,610
Speaker 2: say, like, hear me out, listen to why this might work and be a better option.

549
00:44:56,010 --> 00:44:59,830
Speaker 1: Yeah, good question. So our early batch of companies, we've had hundreds of companies reach

550
00:44:59,830 --> 00:45:06,470
Speaker 1: out and the funnel in this early stage tend to be company owners that like

551
00:45:06,470 --> 00:45:06,850
Speaker 1: Bitcoin.

552
00:45:07,050 --> 00:45:07,330
Speaker 2: Yeah.

553
00:45:07,450 --> 00:45:13,090
Speaker 1: Right. Because they've those of us that founded Orange Juice, some of us have pretty large

554
00:45:13,090 --> 00:45:19,910
Speaker 1: audiences and people hear about it through us and then they come to it. Now, our view is

555
00:45:19,910 --> 00:45:26,870
Speaker 1: that if we execute the early acquisitions well, and if we grow larger, then probably some

556
00:45:26,870 --> 00:45:32,210
Speaker 1: of the later acquisitions will be founders that don't care about Bitcoin, don't know about

557
00:45:32,210 --> 00:45:36,870
Speaker 1: Bitcoin, just they like the permanent capital structure. Kind of like how if you're selling

558
00:45:36,870 --> 00:45:40,470
Speaker 1: your company to Berkshire Hathaway, you don't really care about insurance necessarily.

559
00:45:42,130 --> 00:45:47,470
Speaker 1: And so that's kind of the way we're approaching it. and basically it gives us just more

560
00:45:47,470 --> 00:45:52,810
Speaker 1: avenues of things to do right so so we can ideally do things in a counter cyclical way

561
00:45:52,810 --> 00:45:57,430
Speaker 1: they're pure bitcoin treasury companies like strategy for example they investors tend to

562
00:45:57,430 --> 00:46:01,170
Speaker 1: want to give them more capital during bitcoin bull markets so they go out and buy more

563
00:46:01,170 --> 00:46:06,110
Speaker 1: bitcoin when it's high and then when bitcoin's in a bear market all the capital pulls away

564
00:46:06,110 --> 00:46:10,850
Speaker 1: and then the company can't buy as much bitcoin so they end up often having pro cyclical

565
00:46:10,850 --> 00:46:16,750
Speaker 1: accumulation whereas with orange juice if we primarily focus on you know acquiring cash

566
00:46:16,750 --> 00:46:22,690
Speaker 1: flow producing businesses that's our main focus and if our funnel is really good uh we can

567
00:46:22,690 --> 00:46:27,650
Speaker 1: buy more businesses if at any given time we have a softer funnel uh we have this whole

568
00:46:27,650 --> 00:46:33,650
Speaker 1: other avenue of what is bitcoin doing is it in a bear market is it surging you know um and

569
00:46:33,650 --> 00:46:37,930
Speaker 1: you know so it gives us that whole second avenue of things that we can be doing with our

570
00:46:37,930 --> 00:46:43,550
Speaker 1: capital uh in what is historically a volatile but strongly performing asset.

571
00:46:43,870 --> 00:46:49,350
Speaker 2: Yeah. And at the same time, giving small businesses, which are struggling and are facing an

572
00:46:49,350 --> 00:46:52,170
Speaker 2: environment, which is going to be really tough, if you look at interest rates or you look

573
00:46:52,170 --> 00:46:56,990
Speaker 2: at devaluation, and giving them an option other than private equity, which for many people

574
00:46:56,990 --> 00:47:02,510
Speaker 2: is not the answer. So really fascinating stuff. It certainly feels that we're kind of

575
00:47:02,510 --> 00:47:06,310
Speaker 2: living in a sci -fi movie right now. I mean, I just was reading all these headlines about

576
00:47:06,310 --> 00:47:11,830
Speaker 2: AI agents. And I think we all have this weird sensation when you were writing your novel,

577
00:47:12,010 --> 00:47:17,070
Speaker 2: because as most people know, you are a published author of a sci -fi novel. Uh, if, if you

578
00:47:17,070 --> 00:47:21,370
Speaker 2: describe it as that, you tell us, um, when you were writing the Stolgard incident, did your

579
00:47:21,370 --> 00:47:25,990
Speaker 2: macro view influence the book or did the process of writing the book and sort of thinking

580
00:47:25,990 --> 00:47:29,430
Speaker 2: about living in the future impact your macro thinking at all?

581
00:47:29,670 --> 00:47:34,730
Speaker 1: Uh, good question. I would say both to some degree. So when I do investing, because I come

582
00:47:34,730 --> 00:47:38,970
Speaker 1: from a background that blends engineering and finance. And so naturally, when I think about

583
00:47:38,970 --> 00:47:43,350
Speaker 1: the future, I think about the path of tech adoption in addition to all the financial

584
00:47:43,350 --> 00:47:44,530
Speaker 1: considerations I'm doing.

585
00:47:45,990 --> 00:47:51,110
Speaker 1: But from an investing standpoint, really kind of like three to five -year time horizons or

586
00:47:51,110 --> 00:47:55,950
Speaker 1: 10 -year time horizons if you're doing venture or buying a whole business, that's about as

587
00:47:55,950 --> 00:47:59,650
Speaker 1: far as someone can realistically look out and have a thesis. And that's really when the

588
00:47:59,650 --> 00:48:01,730
Speaker 1: investment should should really have worked out or not.

589
00:48:03,990 --> 00:48:08,710
Speaker 1: And whereas when you want to think about much farther ahead, I've definitely found that

590
00:48:08,710 --> 00:48:11,850
Speaker 1: that fiction is just a more interesting way to express that.

591
00:48:13,210 --> 00:48:18,750
Speaker 1: And that can eventually come back and feed into the present, which is, OK, if the world

592
00:48:18,750 --> 00:48:22,610
Speaker 1: might look like this in 50 years, what is it likely going to look like at the halfway

593
00:48:22,610 --> 00:48:27,230
Speaker 1: point? What is it going to look like a quarter of the way there? And that starts to inform

594
00:48:27,230 --> 00:48:31,910
Speaker 1: certain things. um and you know i i would separate i mean part of it is just entertainment

595
00:48:31,910 --> 00:48:38,550
Speaker 1: right so i i previously wrote broken money that's non -fiction um uh and in this case i for

596
00:48:38,550 --> 00:48:42,030
Speaker 1: a long time i just had a separate interest you know we all need hobbies and i had a

597
00:48:42,030 --> 00:48:47,910
Speaker 1: separate interest and just certain uh narratives certain um concepts that i thought would

598
00:48:47,910 --> 00:48:53,590
Speaker 1: just be fun to explore uh and so unlike a lot of like sci -fi sometimes is uh described as

599
00:48:53,590 --> 00:48:59,050
Speaker 1: kind of like tech focused or idea focused and is usually weaker on character whereas i i

600
00:48:59,050 --> 00:49:02,730
Speaker 1: generally actually wrote more toward character driven sci -fi so it's more about the

601
00:49:02,730 --> 00:49:08,150
Speaker 1: characters and what they're going through than the tech um and so it's more like it was a

602
00:49:08,150 --> 00:49:13,250
Speaker 1: fun thing to work on but in that world i did i did try to put realism as okay what is what

603
00:49:13,250 --> 00:49:18,290
Speaker 1: is tech going to look like and call it you know 45 or 50 years what what are political

604
00:49:18,290 --> 00:49:23,730
Speaker 1: structures are likely going to still be relevant or have changed um and then of course i

605
00:49:23,730 --> 00:49:28,410
Speaker 1: threw in some fantastical elements that are just, you know, on their own. But outside of

606
00:49:28,410 --> 00:49:33,190
Speaker 1: like those specific categories for the plot and for fun, I did try to make that background

607
00:49:33,190 --> 00:49:39,330
Speaker 1: context what I think is somewhat reasonable and to go from there.

608
00:49:39,570 --> 00:49:45,550
Speaker 2: Yeah, that makes sense. And I find it so fascinating. It has to kind of be where your mind

609
00:49:45,550 --> 00:49:50,550
Speaker 2: goes, even if you're not really conscious of it. If you're living in that sort of decade

610
00:49:50,550 --> 00:49:56,230
Speaker 2: experience, I think that's, I think it's natural that it would be where you speculate

611
00:49:56,230 --> 00:50:00,450
Speaker 2: things might go, you know? I thought, I'm really interested in this at the moment because

612
00:50:00,450 --> 00:50:04,370
Speaker 2: I, I mean, I joked about feeling like we're all in a sci -fi movie, but I, with my friends,

613
00:50:04,530 --> 00:50:09,990
Speaker 2: have said recently, like, how did they get it so right? Like, are they just seeing the

614
00:50:09,990 --> 00:50:15,770
Speaker 2: future or, you know, folks in that genre? Or are we sort of mapping out the future based on

615
00:50:15,770 --> 00:50:19,890
Speaker 2: what we've read, you know? it's sort of a really interesting kind of chicken and egg

616
00:50:19,890 --> 00:50:24,130
Speaker 2: situation that feels very relevant right now. I don't know. Do you feel that when you see

617
00:50:24,130 --> 00:50:24,670
Speaker 2: these headlines?

618
00:50:24,950 --> 00:50:29,610
Speaker 1: I do. And one of the jokes I've made is that I write sci -fi because it feels more normal

619
00:50:29,610 --> 00:50:33,970
Speaker 1: than reality, which is not how it's supposed to be. And some things like all, you know,

620
00:50:34,190 --> 00:50:39,050
Speaker 1: because even though the book came out earlier this year, I mean, it was in the works for a

621
00:50:39,050 --> 00:50:44,170
Speaker 1: couple of years and the idea stage goes back over a decade. And it's funny because my

622
00:50:44,170 --> 00:50:48,610
Speaker 1: natural instinct is to kind of tune certain things down don't don't exaggerate things and

623
00:50:48,610 --> 00:50:52,030
Speaker 1: then you get to the present it's like if anything i'm under tuning things like i should

624
00:50:52,030 --> 00:50:57,190
Speaker 1: just i should just be more direct you know um and you know like in sci -fi for example

625
00:50:57,190 --> 00:51:02,370
Speaker 1: there will be dystopias and some more rarely there's utopias so something like star trek is

626
00:51:02,370 --> 00:51:04,210
Speaker 1: is actually closer to a utopia

627
00:51:04,210 --> 00:51:04,610
Speaker 2: uh

628
00:51:04,610 --> 00:51:08,370
Speaker 1: whereas you know obviously there's no shortage of dystopian science fiction generally

629
00:51:08,370 --> 00:51:14,050
Speaker 1: speaking conflict creates story so people are more likely to write uh something closer to a

630
00:51:14,050 --> 00:51:19,090
Speaker 1: dystopia and my world is like intentionally messy like it's it's it's our world just

631
00:51:19,090 --> 00:51:23,370
Speaker 1: extrapolated in technology and some and then by extension extrapolated some of the social

632
00:51:23,370 --> 00:51:27,870
Speaker 1: trends around technology like a world where for example people just naturally distrust

633
00:51:27,870 --> 00:51:32,430
Speaker 1: video or like they just crazy things can happen and they're just like i don't know if

634
00:51:32,430 --> 00:51:35,590
Speaker 1: that's i don't know if that actually happened or not and even in that world like there are

635
00:51:35,590 --> 00:51:40,330
Speaker 1: safeguards against it like you can you know for example you can have a device that takes a

636
00:51:40,330 --> 00:51:45,090
Speaker 1: photo and cryptographically signs the photo so you can say like you know this came from

637
00:51:45,090 --> 00:51:49,370
Speaker 1: this apple device with this serial number it'd be very hard to prove otherwise like to hack

638
00:51:49,370 --> 00:51:54,890
Speaker 1: it and make that not the case but the human brain still has just only so much kind of

639
00:51:54,890 --> 00:52:00,010
Speaker 1: bandwidth to matter for all that so like investigators might put a look through and kind of

640
00:52:00,010 --> 00:52:04,570
Speaker 1: pinpoint what happened uh but a lot of people are just kind of like there's so much noise

641
00:52:04,570 --> 00:52:08,630
Speaker 1: out there now that almost their world shrinks and one of the one of the kind of the sci -fi

642
00:52:08,630 --> 00:52:13,710
Speaker 1: things i brought into reality is this idea that technology so far given us almost like a

643
00:52:13,710 --> 00:52:19,490
Speaker 1: bell curve of of global awareness which is obviously a long time ago before we had even

644
00:52:19,490 --> 00:52:23,830
Speaker 1: like the telegraph or things like that we were obviously very confined to our communities

645
00:52:23,830 --> 00:52:29,110
Speaker 1: our local areas traveling far was like a rare thing that only a few people did and even

646
00:52:29,110 --> 00:52:33,790
Speaker 1: information arrived very slowly and then i would say kind of like in the in the 20th

647
00:52:33,790 --> 00:52:38,510
Speaker 1: century obviously when we have video and all this we're suddenly in this like really

648
00:52:38,510 --> 00:52:43,170
Speaker 1: connected world and we're in a world where it's it's much easier to capture and share video

649
00:52:43,170 --> 00:52:48,430
Speaker 1: than it is to like doctor videos like fake videos uh so we kind of had like a peak

650
00:52:48,430 --> 00:52:52,810
Speaker 1: understanding of like what what is actually happening in the world and then we also had

651
00:52:52,810 --> 00:52:56,670
Speaker 1: kind of like um we had trust in media trust institutions so for example the combination

652
00:52:56,670 --> 00:53:01,350
Speaker 1: like video and like walter cronkite saying here's things that are happening we all kind of

653
00:53:01,350 --> 00:53:05,770
Speaker 1: would agree on roughly what is happening and then disagree on on certain kind of margins

654
00:53:05,770 --> 00:53:11,570
Speaker 1: whereas we've kind of now when we get to the age of like ai and things like that video as

655
00:53:11,570 --> 00:53:17,430
Speaker 1: as proof has gone down a ton uh trust in in authorities has gone down a ton institutions

656
00:53:17,430 --> 00:53:23,090
Speaker 1: governments and all this and so when things happen people are kind of like did that happen

657
00:53:23,090 --> 00:53:28,570
Speaker 1: and like if it did happen it is is the narrative blowing it out of proportion or shrinking

658
00:53:28,570 --> 00:53:33,130
Speaker 1: it compared to what's happening why is my intent like is the out it out of 10 things that

659
00:53:33,130 --> 00:53:37,550
Speaker 1: happened why is the algorithm focusing on this one is this actually the biggest thing maybe

660
00:53:37,550 --> 00:53:41,710
Speaker 1: it is or is it just that the algorithm wants me to look at this thing because it doesn't

661
00:53:41,710 --> 00:53:46,690
Speaker 1: want me to look at this other thing and and so that clutter in some ways it shrinks our

662
00:53:46,690 --> 00:53:52,850
Speaker 1: world back down because people are just kind of like that's all crazy and messy and sad. So

663
00:53:52,850 --> 00:53:57,270
Speaker 1: I'm going to focus a little bit more locally. And I think that's actually kind of like a

664
00:53:57,270 --> 00:54:01,110
Speaker 1: kind of a trend that technology has sort of contributed to.

665
00:54:01,710 --> 00:54:05,670
Speaker 2: Fantastic stuff. Lynn, such a great, fun conversation. Thank you for wearing so many

666
00:54:05,670 --> 00:54:09,330
Speaker 2: different hats with us today. But it was great to get your thoughts on so many different

667
00:54:09,330 --> 00:54:10,670
Speaker 2: subjects. So appreciate it.

668
00:54:10,950 --> 00:54:11,970
Speaker 1: Of course. Thank you for having me.