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[upbeat music] Welcome back to Tasteland. I am your co-host, Francis Zehrer. And I'm Daisy Alioto. And this is part two of our episode with Maya Bakai from a couple weeks ago.

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Uh, Daisy, remind the listeners who Maya is. Yeah. In case you guys forgot, 'cause you're so busy and stuff- [laughs]...

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successful, 'cause you listen to this podcast, Maya is the solo GP of Spice Capital, which is an early-stage investment fund.

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She's an investor in Dirt, as well as being one of my close friends, and she has a great perspective on the intersection of culture and technology, and how it's funded right now.

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So we started a conversation with her about the state of venture, and, uh, we couldn't shut up, so this ended up- [laughs]... being a two-parter. [laughs] Um- This is an impromptu two-parter. Yeah. [laughs] We...

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Yeah, Maya, Maya kinda went off, uh, in the se- [laughs] in the second hour. She had a lot to say. Uh, we got into- I learned a lot... I mean, it... Yeah, no, it was good.

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We got into anti-social wealth dynamics, we got into asset class creep and small business wealth, the evolution of family businesses as, uh, as they relate to, to the, to the larger economy, the rise of women in wealth management, geopolitics and how that affects her perspective as an investor, crypto in Manhattan versus Brooklyn, there are important differences there, infrastructure grift in crypto, and the inherent speculative nature of crypto investments.

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Um, yeah- Yeah... very detailed second part. Men are dying earlier because of the male loneliness epidemic, so that's why there's so many female- [laughs]... wealth managers. [laughs] Make it go faster. Make it earlier.

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I'd love for it to be earlier. [laughs] Oh, okay. [laughs] Well, we can work on that. Uh, okay, work at it. I'll go smoke some cigarettes.

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Um, anyways, right bef- right after we finished podcasting last week for our episode with Cole, which was really nice, uh, we both went to the Vision Summit, which was fun.

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I was- Yeah, Francis had the podcast with me, and then listened to me speak on a panel, which- Mm-hmm. Well, but thank God I, myself, did not also have to speak on the panel. I was mentioned. This podcast was mentioned.

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Um- Yeah... you know- You had a shout-out... with, great shout-out by, by Ben Dietz. Friend of the pod, Ben Dietz. Um, it was a great panel.

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I think it was, im- I mean, for me, one of the most popular panels at the, at the conference, but... Yeah, it was a little bit of, like, a who's who of the Tasteland podcast.

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[laughs] Um, uh, Ben Dietz was leading the panel. Former guest Casey Lewis was also on the panel. Former guest Katherine Dee was in the audience and did tell me she took copious notes on our panel, so- Mm...

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and it was put on by Future Commerce, of course. Former guests... previous guests of Tasteland. Mm. So I mean- There was also former Creative Spotlight podcast guest Andrew Wong- Yeah...

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did the, the keynote I mean- It was kind of a regular- We try not to commit too much podcest. [laughs] We try to bring you new voices, but there is a little bit of a demimonde happening, and, like- Mm...

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who am I to stop it? You know, [sighs] there are friends of the pod everywhere for those with ears to listen. That's pretty good. I like that. [laughs] It was, it w- it was not that good.

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Um, anyways, let's just get right to it. Let's get into it. [upbeat music] I mean, you have to force yourself to think dumber- Yes... is basically, like, what it is.

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I remember when I was freelancing and I was writing about culture and cultural trends, like, you know, New York Times, a lot of these companies, you know, media companies, they get a bad rap for, like, using the three's a trend rule, and you see, like, something happen three times, and you're like, "This is happening."

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Right. I remember pitching a story about, um, how upstate New York became a brand, and the editor who responded to me from the style section, not gonna name names, basically said, like, "Well, if you have to...

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If you wanna write about how upstate New York is becoming a brand," and mind you, this is 2018, "you need to write the Brooklyn's over piece." And I was like, "Like hell"...

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I had never had a, a byline in The New York Times, but I didn't want it bad enough to get strung up on that petard. I was like, "Like hell am I gonna get strung up- Oh, my God... on the Brooklyn's over trend piece."

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Like, I was like, "You know, never mind." Um- [laughs] And, you know, come COVID, right? Upstate New York, which was already becoming such a thing, Weekend in Hudson, whatever, blows up, takes off.

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Millions of articles to this effect, right? Mm-hmm. And so, you know, like, what's happening with the Hamptons now, if I had to guess where it's gonna be, what's gonna be the next thing, it's the Finger Lakes.

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I'm all in Zillow. I'm looking for where there's still affordable homes. Um, I can't even afford those homes, but I'm looking. Mm-hmm. And I'm like, Finger Lakes.

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Like, Francis, you weren't in the Finger Lakes, so you weren't- I can't help but think about the SNL skit. [laughs] Right. You were more in the Catskills region.

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I was upstate, but this same winemaker- They have vineyards... makes wine from the Finger Lakes. They have vineyards, right? Like- Mm... people are like, "Oh, Rolling Hills Vineyard.

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Oh, this kinda looks like some other expensive areas that I know about, but why are the homes only $250,000?" You're like the Jeffrey Katzenberg of extra urban New York. [laughs] I'm just saying. That's funny.

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So I don't know. It's like, the problem is, what is the, what is the saying? Like, if you're right too soon, you're wrong. Mm. It's just, you'll run out of money. Quibi. My thing... Quibi.

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Quibi's been a good way to save a harping on this. Quibi's been a while. [laughs] But my thing is, I can be right for longer than you're wrong. Mm.

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I will hold, I will hold onto that little shiny thing in the log for longer than you can be wrong, and I will simply outlast you. Um, we don't know how that's gonna work out for, for old Daisy, but, um...

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[laughs] Well, one, one thing I wanna say quick, Maya, about what you were saying about, like, the scale versus the, the businesses that don't scale.

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This is, this is one of my favorite things to harp on, is more pe- like, this is... and this is a problem with, like, venture becoming too popular, is most businesses shouldn't scale, and- Yeah...

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like, most businesses should be small scale. They should- Huge if true. Huge. Yeah. Is, but- [laughs]... huge, huge if true. Um, huge if scale- Small if true... uh, small if true. [laughs] But, but no, I...

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and I think this is-I, I mean, I, I feel like I can't talk about this without sounding kind of like old man, like, you know, waving a fist to the cloud. Like, I always think of my hometown and small businesses there.

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Like, my parents are small business owners, right? Mm-hmm. My, my older sister, she has a wedding flower business. Her husband owns a pawn shop. They're all small business owners.

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Um, but the, the generation there in my, you know, my one tiny town in northern California, a lot of these businesses were founded in the '80s by people who moved there. And, like, j- these are...

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I'm specifically talking about, like, local businesses like restaurants- Yeah... and stuff like that, right? Yeah.

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Um, but all of these businesses aren't really being replaced as these people get, like, turn, like, 70, 80 and, and retire. Mm-hmm.

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Uh, there's not really new businesses stepping in to take their place, or if they are, like, the level of quality and care just isn't there as much, right? Um, and it's the same thing when you, you see, like, any,

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any, like, restaurant TV show or YouTube show and it's like, oh, uh, like Rob Martinez, who we talked, uh, about him with Matt Rudbar the other day. Mm-hmm. He was at Great New York Noodle Town.

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He was talking to the guy there. He was like, "Yeah, I've been doing this for a long time. I don't know if anybody's gonna take it over for me. This restaurant will probably shut down," right? Mm-hmm.

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Um, it's just- Because their kids don't wanna take over. Yeah. Look at me. I, I'm not taking over my parents' farm. I wanted to move to- [laughs] Fuck that. Oh...

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New York and get some kind of, like, tech job that paid me more, and I- where I could, like- Oh, congrats on that... not work seven days a week, right? Mm. So it's like this...

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I, I too am, like, more incentivized by, like, the- But when I-... the media drip of VC cash... AI takes your job, the farm will still be there. The farm [laughs] will maybe not. The farm will still be there.

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They're trying to sell it. Uh, but, uh, I don't know. I guess what I'm ranting here is, like, yeah, I don't know. This... Our, our [laughs], our society is just not incentivized for small businesses to thrive.

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Like, even a restaurant, it's like, "Okay, well, how do we bottle our sauce and get it into stores? And how do we turn the, turn our concept into, like, a slop chain," et cetera, et cetera. Um, which...

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And all of this I think is, like, greatly antisocial- Not the slop chain... is I guess my point. Yeah.

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Wait, Maya, can you talk about asset class creep as it pertains to the sort of millionaire next door, small business owner? And, like, when I think about this, I think about car dealership owners.

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Like, this is, I, I mean, this is a source of wealth where I'm from. Um- Mm-hmm... in Massachusetts, there were, like, you know, whole corridors that was just, like, car dealership, car dealership, car dealership.

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I really don't know a lot about, like, how somebody ends up in that position, but some of these people are the wealthiest people in America, and they are, you know, not living in cities, not living in Silicon Valley.

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You know, also, like, HVAC is, like, the meme on finance Twitter- Right... 'cause you get the person who graduated, graduates from Wharton and is, like, thinks that- 'Cause that's true...

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they're the first person to come up with the idea of, like, bundling some family-owned HVAC companies. But is that, like, a new asset creep as well? Or has that sort of been happening for a while? Yeah, so that's...

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I mean, it's interesting. When the internet came about, it's funny, like, we think about AI, but this, there are all these things that have been happening for the last 10, 15 years already.

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So when the internet came about and a lot of the smart, savvy business owners, the family business owners, they actually sold off their business. Like, the smartest ones were like, "All right. That's a wrap.

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I have Amazon. You know, I have a convenience store. Amazon is coming to my city." Or gas stations. Like, there's a lot of wealth, at least, like, in Indian communities, a lot of gas station wealth. Mm.

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They saw Wal- when they saw Walmart coming in, this is pre-Amazon, they were like, "It's a wrap. We need to consolidate. We need less of these."

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Like, our business was, it was gas, but then we were making money on cigarettes and everything else. Like, "Oh, cigarette sales are down. Okay, we're gonna get out."

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And so this was already happening for a while, and what's happened is, like, that wealth would then turn into a family business and become family offices.

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Like, that's actually something I got to learn now fundraising for my funds, where there's a whole pocket of wealth where it's people who had physical businesses.

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To your point, nobody wanted to take it over, so they sold their business to PE, [clicks tongue]

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and the smartest ones at the top, you know, before the change came, before technology or the disruptor came, and they're now actually part of the investment ecosystem. And they're the retail investors. Like- Mm...

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that's when they're the ones spending, buying or they're the ones buying the stocks that you, you're like, "Who is buying this random, like, $100 million market cap penny stock in the HVAC system?"

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Well, it's all the HVAC owners who know exactly how this business works.

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Like, they're the ones making money, and that's where you see things like, I just saw someone or I heard a story of somebody who put a million dollars into a stock, and it became...

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It was, like, a tractor part, okay, company, and it became $80 million. Like, they knew how to price it, and they then created a family office off of that, and now they have generational wealth for all their family.

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And so I think there's a lot. You're seeing it in India, too. India had so many factory businesses. A lot of the most prominent fa- uh, business people in Bombay, they've now closed up shop.

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They've shut down the factory. They so- or they sold it off to an aggregator, [clicks tongue] and they're now in the investing business. So they, they're like, "Okay, here's our business we spent two decades building.

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It's... We get $50 million in cash. Now we have a family office. Our goal now is to fund for three generations so our kids and grandkids and one generation after don't have to work.

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So we're gonna now put it into investments that are yield generating so we can actually make passive income in other assets." And so I think there's a little bit of

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the smarte- I guess my point is the smartest investors and operators were ahead of any technology curve and sold off and converted and liquidated their business, so that's already been happening.

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I think there's a new generation. But what's interesting is there's actually, like, um, there's... Maybe this is slightly different, but there's a new, um, there...

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It's a really interesting time to be alive because women specifically are going to come into the most money that they have ever come into, so it'll be the biggest wealth transfer into women- I'm ready. We're [laughs]...

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in the next, like, in the next two decades for a few reasons. Yeah.

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One, women couldn't open their own bank accounts, so that first generation of women who started opening their own bank accounts in the '70s and '80s are now kind of at retirement age and-Have access to that capital.

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Number two, most women live outlast their spouse, right? And so American women specifically are coming into more money even just from death of their spouse- Mm... through like widow tr- uh, wealth transfer.

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And number three, more women are educated than ever, so like this is also the generation where a majority of them enter the workforce. There is better equal pay, so they have more capital all together.

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And so we're gonna have more women in control of money than men, and the women control majority of all househo- um, all household spending, consumer spending, like trillions of dollars per year.

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So I'm curious to see how that's gonna impact, um...

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I mean, there is a big wealth transfer coming, but I'm curious to see how that's gonna impact the whole world because women are known to be more, um, they're, they're meant to or s- what- whatever's been studied, they don't have a complete sample size, but they actually invest in things that are better for the world.

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Like, there's some it's not just for return, it's also for there has to be a why. Mm. They're also more risk-averse. So I wonder if that will change some of the meme stock stuff and the frenzy.

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Um, so there's like all these little micro changes happening in different asset classes across the world. I do think that- But can those... Sorry to interrupt. Mm-hmm.

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But can those micro changes really counteract the shock changes? Like, and when I say shock change, I mean, oh, the federal government's just gonna say like California can't subsidize EV vehicles. Mm-hmm.

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So if you're like a woman and you're like,

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"I'm gonna fund EV 'cause that's good for the environment, and I can make bank," like, does it really matter if you have like this, you know, sort of anti-DEI, traditional American manufacturing pilled administration just really determined to,

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like- Right... whatever. They're anti-DEI, but they're not anti-capitalism. Mm-hmm. And the thing is, like, women do control the spending. And so like- Yeah... for example, I guarantee you there'll be incentive.

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There will always be incentives for beauty brands, always. Because re- regardless of the administration, 'cause that is driving so much of consumer spending.

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It's like beauty, the, the Walmarts, the Targets of the world, like those businesses will always be safe regardless of DEI. It's nothing to do with DEI. Like, they're just cash cows.

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They're, they're making so much, they're making up so much of the economy, and they're controlling so much of the spend.

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So I think even the current gov- the government, they're capitalist to the extreme, and so regardless of in- yeah, certain companies, their, their margins might change over time.

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But the actual, like the dollars will go where the spend is always. Like, that always happens.

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I mean, I also, like, um, I really like never bet against rich people to protect their own interests, and I think that that's- [laughs]... like a pretty good way to see where the wind is blowing.

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But if you're dealing with, like, truly irrational actors, like I just don't know, 'cause like, you know, you're talking about traditional venture capital having a 10 to 15-year lockup.

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How many geopolitical events can happen in that time window- Mm-hmm... th- to, that your original thesis can accommodate?

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And when you were talking before about like these funds that, these just like mega funds where it's like the purpose of the investor becomes fundraising- Mm-hmm...

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way more than investing and then just enjoying their management fee. Yeah.

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Like, it's no wonder they, they get into geopolitics, 'cause it's like people are like, "Well, Technology Brothers is like what Acquired could've been if like these guys didn't get obsessed with politics."

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And it's like, well, they got, they were consumed by the nihilism of how meaningless their financial moves were. Mm-hmm.

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So of course they're gonna start drifting into trying to make policy just to try to like eke out like a little bit more meaning. Feel something. Yeah, to feel something.

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But then the other part of me is like, well, an investor should always be paying attention to geopolitics, of course, because of the number of geopolitical events and climate events and, um, you know, government turnover, like, that you just simply couldn't predict.

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Mm.

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And because capitalism is such an efficient machine, like you said, like, you know, capital protecting itself, I think the American economy has been like really insulated from this idea that any one massive geopolitical event, even a global pandemic, could destroy the American economy.

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But, uh, sorry. I'm like s- No, no, no, no. I love Margin Call. I love the Margin Call. Does music stop? Does the music stop- Yeah... at some point? Well, so I think- Like, really stop. Yeah. Um,

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I think if you believe that there's like a doom... S- someone told me this. What was the exact phrase? I think they said, "If you're always waiting for the doomsday, like there's only one doomsday that happens."

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So if you're, if you go short, you'll never make money.

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So if you're bearish on society, like there's only one time when everything crashes, and the world i- implodes, and there's like a nuclear war, and we all go to zero. You don't really recover from that. Mm.

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So it's a one-time event versus 99% of the time it's optimism. Mm. So I think like generally to participate in society, you have to have a optimist look, and to be even an investor you have to be an optimist.

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What's a black swan, though? Isn't that something in between? That's, that's like a... But it's a blip in the... If you zoom out on any stock market- Yeah... on just human progress, like it's up and to the right.

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There is wars, society changes, but we as humans are fighters, right? Like, we have this instinct to fight, to grow, to build.

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So I think you have to be optimistic long term, or else you, you will be like waiting for the doomsday, which statistically happens less than the optimistic outcome.

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So even like- Most people ha- have faith in like the existing systems and the existing- Yeah. Yeah... because like- I think so...

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the, uh, the, the alternative is like so- The alternative is then you don't participate in society, right? Yeah. Yeah.

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'Cause like then you're saying you're bearish on humanity, which like at that point I don't think you should be raising money or like you shouldn't be in that, you shouldn't be controlling or trying to command money or being an investor to begin with.

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But something, um, sidebar that I, I don't think I said clearly about this whole VC going into PE that I was thinking about.And I only learned this... You know, you get consumed by your asset class.

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So I went to the Milken, uh, what is it called? Milken Conference, which is like a think tank, um- That sounds fake. That sounds something like something from The Simpsons. [laughs] I'm sorry. I know.

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It's called Mil- yeah. Um, but it's this guy, I think he was known for, like, junk bonds or something, and now he's trying to give back and has this think tank, and- Amazing...

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it was this big finance conference- There truly are second acts in American lives. Yes. Yes, yes, yes. For sure. Um, and they h- there's this, like, big event in LA every year. It's the Milken Conference.

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They, like, bring in all the big leaders, blah, blah, blah, blah, blah. Um, there's, like, activists and hedge funds and everything, and it showed me and it reminded me how small VC is, but how big of a stage it has.

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Like- Mm... from dollars, it's probably... If, so if you go to any allocator, if you go to a sovereign wealth fund, you say, "How much are you putting into VC?" It's, like, not even 1%. It's, like, maybe 1%. Mm-hmm.

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Maximum, if you're really, like, an aggressive person, it's 5%. So majority of the money is not even touching VC.

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And when I went to this conference, it really put me in my place, because all the PE guys were like, "Oh, you do VC," laughing. Like, they're managing 50 billion, 100 billion routinely, right?

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It's like a joke to be managing $5 million. Mm. They don't even take it seriously. They make fun- It's like a $10 bill. Yes. They make fun of VCs, 'cause they're like, "You guys do no diligence and YOLO into companies."

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And they're like... It's a really interesting cultural shift. And so when you see these mega VC funds trying to enter PE, it's because they want to get more of that slice.

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So when someone who is a, who, you know, runs the money of a government or runs a sovereign wealth fund or runs a big institution or an insurance company is building their portfolio, they're saying, "Okay, you know, X percent goes into equities.

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X percent goes into private equity." Private equity is cash flowing, meaning you are getting a quarterly distribution back. It is like... It's equivalent...

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Or private credit is another area where you're getting money back constantly. You're not waiting for an exit longterm.

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You're, you're buying into cash flows, or you're, you're lending to somebody private credit and getting interest, right, every month or every quarter.

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And so this is a, what, what these VC funds are trying to do is say, okay, let... They're trying to get the best of both worlds. They're like, "We have this amazing structure where we get, we earn 2%.

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Let's kind of convince everyone that these hardware non-scalable businesses are actually gonna give us real scale," and like, you know, like ser- service-based software, essentially.

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Service businesses that we, we've wrapped in software. And then let's try to get into the bucket of allocation that's for PE, 'cause the PE bucket, they don't write billion-dollar checks. They give us $5 billion checks.

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Mm. And, like, how do we play in this game? And so they're actually competing head-to-head with private equity now, and so it's a totally different ballgame from them, for them.

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I think it hurts short-term when people don't realize, the allocators who aren't sophisticated don't realize, and they think that they're still investing in the same Andreessen Horowitz they were 15, 20 years ago.

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That's when it gets difficult for someone like me, because I'm getting compared to that investment opportunity, and it's wildly different. Like, one is modeled...

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You know, and people like Andreessen will invest in folks like me, right? Because they're, they know that, no, this is still pure venture. Like, they understand that's, that that ecosystem is still happening.

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Um, I think it's important to put that into perspective, 'cause when we go on Twitter, when we say, when we see TVPN, it's like Peter Thiel is God. And people just in that world might not even know who he is. Mm-hmm.

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Maya, I, we didn't talk about cryptocurrency, like, at all, but it was a part of your early fund- Mm-hmm... was investing in- Yeah... Web3 companies.

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I'm interested in what you think about this, this claim that there's, like, a Manhattan crypto and there's a Brooklyn crypto, and, like, Brooklyn crypto scene is all going to zero.

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And it kind of, it reminds me of this article, a trend piece that was written about, like, the literary community when there was, like, a sort of Dime Square versus Brooklyn- Mm...

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um, like edgelords verse, like, liberals thing happening, or socialists. Um- [laughs] And the, the- Wait, which one in that scenario was the edgelords? I'm curious how they- Dime Square. They were saying Dime Square?

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Interesting.

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[laughs] Yeah, but for the crypto thing it's like the idea is, like, the Manhattan crypto is the people who are just creating purely financial products, and the Brooklyn crypto is people who thought cryptocurrency could be adopted to, um, all of these other sort of creative applications and ultimately were, like, proven wrong.

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I think it's an interesting, um... It is a really interesting schism, and I can't say that I disagree, even though I've met really cool people who are curious of, about crypto and have other areas of expertise in

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a creative field. Mm-hmm. I guess the weird, the weird thing about it for me, and maybe this is always the case, is like, um, this is a very crypto-friendly presidency.

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This is a presidency that is grifting off of crypto, and we are now seeing, okay, banks are allowing investment in crypto. Mm-hmm. They are banding together to create their own stablecoins as a hedge against the dollar.

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Um, I think that's correct. Mm-hmm. Yes, yes, yeah. Um, so it, it's like, okay, well, wouldn't, wouldn't that be a good thing for the creative early adopters? But it is really...

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It, they have nothing to do with each other. It's like all these- Yeah... creative people were like, "I'm willing to experiment in crypto."

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You know, crypto goes up and down, up and down, up and down, and, you know, it goes up, and now there's still, there's kind of still no place for this other stuff.

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It, it mainstreamed in one specific way, which is financial products. And maybe that was always the case, but it's hard to kind of square these two realities. Like, one of the realities is, like, everything is digital.

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People are consuming all, the majority of their culture online, with the fact that these digital assets that were tied to culture, um-Just could not succeed.

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And part of it, I mean, the majority of it is because they were cringe and stupid and relied too much on, um, Ponzi-nomics.

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But this idea that, like, there's value in an asset class that can be purely digital and help people, like, pay and reward and create culture, I don't know. I think it's like the pipe dream of a lot- Yeah...

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of different people. Yeah. I have a lot of thoughts here. I mean, so you can't deny that crypto is really good for financialization, and it's, and

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it's like adding fuel to an already really speculative world that we live in where narrative gets a premium. So, like, that I think we all agree on. And so I think the first mistake of...

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'Cause now we're almost, like, looking backwards at, like, what went wrong- Mm-hmm...

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with some of the folks that were interested in the ideology behind crypto and how it could, you know, relate to creators and new forms of monetization.

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The first mistake was not acknowledging, going back to, like, being in your own bubble, not acknowledging what most people wanted from money, what they want from culture. So you can't fight what...

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You know, the customer is always right. You can't fight what the customer wants. And- Status. [laughs] Yes. Whatever, whatever it may be, right? Like- Yeah... you can't fight it. And that was the first, um, mistake.

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I think the, like, Brooklyn... I, I don't even know if it's Brooklyn, Manhattan, but whatever.

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The Brooklyn archetype of crypto made, which was they stayed in their own bubble as they saw that other forms of speculation were doing the best. Um, that's number one.

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Number two, I think it's the fault a little bit of the investors as well, who over-funded.

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So if you're building, if you're, if you're trying to create a new behavior and you're subsidizing it with money, you're doing the Clubhouse effect. It's exactly the same thing where people h- Like,

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I passed on every single Clubhouse round, and, like, there was so much social pressure to do it. But fundamentally, I couldn't get behind it because they were paying, they were trying to pay their way.

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It's the same thing as the creator brands, pay their way into a new behavior.

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I think- This is, this is also like the same thing as, like, Uber or Lyft or something like that, but it just costs millions, millions, billions of dollars to force that behavior.

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Like, Uber wasn't profitable until, like, a few years ago, right? It took, like, a decade of paying to create this new behavior. Correct. Correct. Yeah, you're right. But it was something that was a...

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Like, you have to, you have to hit on... You have to solve something, right? So here, like, they were creating convenience. Here you're saying, "This is not...

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We're not paying you to do something that will ultimately be more convenient for you. We're paying you to do something that will presumably give you status?" Question mark. "But we don't have the...

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I guess we don't have the, um, platform, or we don't have enough eyeballs to actually give you status." So there was no why crypto. Like, the why crypto wasn't strong enough.

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But I guess my point is, I think the reason why so much... Like, what I was disappointed with is there were so many people that were over-capitalized by people who got rich off of crypto.

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So, like, a lot of the crypto investors and even the crypto VCs, they, like, randomly accidentally bought Bitcoin and then made a bunch of money and then started their own crypto funds.

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And now they were kind of dictating. They were the ones writing blog posts.

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They were kind of pretending to be these wise folks who knew where the future was going, and they kind of put themselves on a pedestal, and they, they found founders to look up to them. They put out these thought pieces.

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And they would be the ones who would fund projects.

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And so it's like somebody who made money off of luck now giving a founder com- money, probably over-capitalizing 'cause they don't know what it takes to build a business. They've never done it.

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Giving, like, ridiculous advice, freaking out every time the market goes up or down, like reacting, or being reactive instead of understanding how a business works. And so what do you expect?

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The types of people you're funding, though they might be pursuing... They might have the right why. You're funding people who are motivated by, "Oh, this seems like quick money."

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And I mean, a lot of the Brooklyn crypto friends of mine that have raised money from crypto, like, I know them.

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They only raised money, they only did crypto 'cause they're like, "Oh, it seems like there's free money out there, and I can convince one of these, like, think boys, VCs to give me money because they wanna be cool, and I can affiliate myself with being cool."

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Right? Like, that's not a real why does the customer need blockchain. If you give me a real use case, people are excited about it, right?

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So- The customer there is the investor, not anyone else The customer is the investor, correct. Correct.

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And that's what people were building for, and so when, when there was m- when it was zero interest rate and the investors had more money, it was like their payday, right? Like, they were able to raise more rounds.

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They were able to build out these big teams. When the customer, great point, Francis, pulled back, those founders panicked, right, and they shut down.

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And so I just don't think as a foundation layer, if your whole business is predicated on an investor versus actual users, you're set up to fail.

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Like, there's just no way you can c- no matter how much money you have, it doesn't work. Clubhouse is, like, the best, most recent example of that. And we have, we have many more examples of that.

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Um, so I think that's really what happened with this, like, consumer crypto, and I think even still, like I saw with Solana and meme coins, this might be going rogue, but Francis, sorry, me and Daisy always talk about meme coin [laughs] stuff.

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But, like, I saw with meme coins in 2023 winter, meme coins were taking off, and it was, they were, most of them were on Solana. And the Eth community just, like, rejected it.

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The Ethereum community completely rejected it. And as Solana was taking off even, so many of the Brooklyn investors and builders were still shitting on it. It was like cope almost. They missed out on the asset class.

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Yeah. And then immediately their reaction was, "This is too speculative." Like, "No, no, no, I wanna stay with my... I wanna keep building infrastructure for something that doesn't need infrastructure."

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And here's my other point of view on crypto, and, like, I still invest in blockchain. I'm still excited about the space.

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There's still lots of use cases that I don't think people have explored-I'm very interested in meme coins. I think that's an, a interesting model to fund culture, though it does have a very speculative, like, undertone.

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But I think that a lot of people in, um... yeah, a lot of people on crypto Twitter even, missed out on meme coins. They were in their own... I don't know how to explain it. I, I think it's because...

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Okay, there was a time, and this is when I had a lot of trouble branding myself as a crypto fund, where

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projects would raise money under the guise of infrastructure, and VCs would fund crypto projects who are building some new layer 2 Ethereum, which nobody needs. Can we get an example of what infrastructure is?

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[sighs] Well, this is a joke. Like, I don't actually think there's any infrastructure to be built. So someone will create... I don't wanna name any names of, like- Mm-hmm... blockchains or anything.

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But let's just say you take... So we all have heard maybe of, actually, I don't know if people on this podcast have heard of, of it, but we all maybe have heard of Ethereum.

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Now, there's this concept called layer 2 on top of Ethereum, which originally, like, the, the ethos for why people created a layer 2, it was because there was too much congestion on the Ethereum network.

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And so people would say, "Hey, let's actually settle these transactions elsewhere." Yeah, they'll go faster and they'll cost less to settle. Yeah. "They'll go faster. It'll cost less money to settle." Yeah.

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"And then we'll bring back the output on the Ethereum blockchain." So that was the original impetus for layer 2. Number one, there's not even enough volume in crypto for, like, the need of most layer 2s.

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But it started getting really ridiculous. So what ended up happening was people would go say, "I'm gonna build a new Ethereum layer 2."

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They would go to a bunch of VCs, raise literally $100 million, okay, to go build this. Then they would say, "Okay, we're building this layer 2," which blockchains are not even that complex to build.

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It's all, like, programmable. It's all... A lot of it's open source. So they're, like, hiring builders, okay? Now they hire these builders.

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Now they realize, "Damn, there's no users to actually build on our layer 2 that we just created." So we... It's like a AWS. We want people to code on top of our AWS.

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So then they'll go raise another $50 million to create what you call a grant program- Grants [laughs]... to literally pay applications to build on that blockchain, which is not even on Ethereum.

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It's, like, on a layer 2 of Ethereum. #Grant And when I go to... [laughs] Yes. And then I go to all these crypto conferences, and people are like, "Yeah, man, we're really looking for these breakout apps."

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So what do you expect? You're getting weird grifters all over the world building, like, BS apps on a blockchain that nobody cares about that's built on top of Ethereum just so that they can, like...

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And those people who get those grants, they go raise VC funding. They'll pitch me, and they'll say, "We just got $50,000 grant from this layer 2 blockchain."

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And it's this huge grift, and the goal really is to show that there's activity on the, on this blockchain, to show, like, there's 500 startups building on this blockchain.

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Well, they're all paid for from the grant program, but okay. And the game really is to keep it going until you can launch a token. Mm-hmm.

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And then all the investors, all the early builders get rewarded, and it's an institutionalized pump and dump. And, like, there was no value created. There was no reason for any of this to be created.

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None of these projects are creating anything that new. There's no why crypto.

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It's literally, the why is, Francis, to your point, so that the investors and early builders make money launching something under the guise of infrastructure. Mm-hmm.

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And for so long, like, Silicon Valley has been conditioned to think that if you build infrastructure, you know, it's like picks and shovels. That's where you make all your money. Yeah.

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Consumer application, there's no money to be made there. Look at the S&P 500. It is all consumer businesses. Household names are consumer. Like, look at the top companies.

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It's brand names you would recognize that are consumer brands.

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Even NVIDIA, I was talking to someone who's on the board of, like, a very, you know, one of the Mag 7, and he was saying how NVIDIA, to stay relevant, to no longer be, like, a data arbitrage long term, is gonna try to build a consumer product, like a household on-premise compute product so that- I know them 'cause I bought graphic cards from them when I was in high school so I could play video games.

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Yeah. There you go. Like- But- I fucking- You should've invested then. But, but, so essentially, like, it's funny because there's this whole... Again, it goes back to the groupthink.

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There's this groupthink in Silicon Valley with the, with the barnacles. You know, all the barnacles think that- Shout out to barnacles. We gotta- Shout out to barnacles... come up with a better name for that, but...

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But all the barnacles think essentially that, "Okay, the only way for me to make money in crypto..." Like, this is a tried and tested playbook, right? Because they saw Bitcoin, they saw Ethereum do that.

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What they missed was there was actual... Like, people actually wanted Bitcoin. There was a narrative that people bought into. There's no narrative besides, "The investors will give me more money." Mm-hmm.

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And so when that dries up, everyone, of course, is like, "Crypto is dead," 'cause they never had a why. They never had a why to crypto. Yeah. Um, we did one in 2023. Like, I think Daisy filled it out too.

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We made a questionnaire of, like, "Why are you guys building in crypto?" Mm. 'Cause I wanted to know, why is everyone...

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If there's no money anymore in crypto, if you don't get the, the free grant program, you don't get $100 million, is there a true why? And if so, yes, you should be building in this space.

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But 99% of the people don't have a true why. It's like they like it conditionally. They like it because it's free money. The why is money, yeah. Right. The why is money.

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And so, like, that's never gonna work in any business. You don't see people... And, and I think crypto has a bad rep, but rightfully so.

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Because in other, in other, you know, arms and sleeves of venture capital, you don't see people have the right to just get money just because... You know, the customer isn't money.

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Like, at the end of the day, you do actually have to create a product, and you won't keep getting funded. Mm-hmm. Versus in crypto, they actually incentivize that behavior.

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So it's very hard for me to be excited, you know, to invest in crypto infrastructure, like some scam blockchain that has no users.

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And it's funny because, like, I'm not crypto enough to be a crypto investor, but then I'm not... Like, I, I still believe in crypto, and I buy... Like, whenever a company shuts down, we'll use some of those proceeds.

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I just buy Bitcoin, 'cause that's a way for me to give returns to my investors. Um, so, like, I'm kind of in this no man's land. I'm, I don't have my, um... What, what did you say, Daisy? What, you have to be literate?

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No, what was the word you used? Legible. Legible. I'm not legible enough. [laughs] We will end it, end it there. Maya, thank you for coming on. Thank you so much for having me.

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Always so fun to riff with you, Daisy, and Francis, welcome. Welcome to our, our brains. [laughs] To the riff. All right. Listeners- Okay... we'll see you next week.

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