# Winning the Degenerate Economy with StockTwits CEO Howard Lindzon

An episode of [Masters in Business](https://invisiblenetwork.ai/podcast/730188152), 8 May 2026, 1 h 27 min.

Audio: https://podtrac.com/pts/redirect.mp3/traffic.omny.fm/d/clips/e73c998e-6e60-432f-8610-ae210140c5b1/4e4cd910-40a1-4619-a5f3-ae2b0012ffff/f04b68e0-7fbf-4a3f-ba10-b444016f98a6/audio.mp3?utm_source=Podcast&in_playlist=5873a3cb-298f-40bc-b71f-ae2b0013000d

Barry speaks with Howard Lindzon, co-founder and CEO of StockTwits, and founder and managing partner at Social Leverage. They discuss his outlook for venture capital investing including what he sees as potentially profitable from human behavior. See omnystudio.com/listener for privacy information.

## Transcript

[0:02] Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. This is Masters in
[0:11] Speaker 1: Business with Barry Ritholts on Bloomberg Radio.
[0:16] Speaker 2: This week on the podcast Strap Yourself In for a Banger,
[0:20] Speaker 2: I welcome back my old friend, degenerate gambler Howard Linsen.
[0:24] Speaker 2: We talk about stock twits, about social leverage, about his
[0:28] Speaker 2: early investment in robin Hood, about why he's concerned about
[0:33] Speaker 2: the degeneracy economy, between meme coins and end of day
[0:39] Speaker 2: options and parlays. He's concerned about what the next generation
[0:43] Speaker 2: is doing. I thought this conversation was hilarious and I
[0:47] Speaker 2: think you will also, with no further ado, my sit
[0:50] Speaker 2: down with the one and only Howard Lenzen.
[0:53] Speaker 3: Wow, if only my kids could hear that.
[0:56] Speaker 2: I know they think you're just an old man. They
[0:58] Speaker 2: have they wins, show, use the finger and ask for pity.
[1:03] Speaker 2: Surgically reattached.
[1:05] Speaker 3: Surgically reattached is a lesson of how lucky we are.
[1:09] Speaker 3: What I've lived without a cute pain. Like first of all,
[1:15] Speaker 3: when I when I cut it off, It's amazing how
[1:18] Speaker 3: many people do.
[1:18] Speaker 2: Do Was it still dangling on or was it severed completely?
[1:22] Speaker 3: You pick it up? You call nine one one and
[1:25] Speaker 3: as a jew. I wasn't sure if I boil it
[1:27] Speaker 3: or freeze it. So that was the question I asked.
[1:31] Speaker 3: It happened, Well, it's a jew.
[1:32] Speaker 2: You're only supposed to take the tip on.
[1:33] Speaker 3: I don't know if you'll cook it. I don't know
[1:35] Speaker 3: if you freeze it. It's like lobster. So uh, the
[1:39] Speaker 3: woman said, please don't bleed out. I go, that is
[1:43] Speaker 3: not helpful right now, As luck would have it, I
[1:47] Speaker 3: live on corn Good advice, Yeah, good advice. I'm like
[1:50] Speaker 3: the one I got to call nine one one. I go,
[1:53] Speaker 3: let's not talk, get me a machine over to my house,
[1:56] Speaker 3: give me a robot. So living in Cornat, it was
[1:59] Speaker 3: a magical place. You've been there, and the great news
[2:02] Speaker 3: about Corners and Navy baysed Navy seals are there. It's
[2:04] Speaker 3: like it's the greatest place.
[2:06] Speaker 2: They have a hospital right there.
[2:07] Speaker 3: They do. But I'm saying, there's cops and firemen everywhere.
[2:12] Speaker 3: So literally, as I'm dialing nine one one, it's like
[2:15] Speaker 3: they knew I cut my finger off. So so as
[2:17] Speaker 3: a miracle would have it, the young I've never really
[2:23] Speaker 3: had to be in an ambulance. Again, I'm lucky, and
[2:26] Speaker 3: they took me off island because they've found a hand surgeon.
[2:29] Speaker 3: It turned out to be thirty years old, which freaked
[2:31] Speaker 3: me out because I thought he'd sew it on backwards
[2:33] Speaker 3: or whatever. Anyways, long story short, you know I was
[2:36] Speaker 3: at peace once you realize you're going to live, Yeah,
[2:39] Speaker 3: because I've never had that happen, like something like that happened.
[2:41] Speaker 2: Were you gushing blood? Yeah?
[2:43] Speaker 3: Yeah. As a favorite of my wife, I went to
[2:46] Speaker 3: the neighbors to bleed. So it was like the next
[2:49] Speaker 3: day it was spotless in front of our house. But
[2:53] Speaker 3: as luck had, everybody did a great job. The amazing
[2:56] Speaker 3: thing we make fun of so many things in America
[2:58] Speaker 3: these days, the emergency system. I needed it. I don't
[3:03] Speaker 3: care what I pay in taxes.
[3:04] Speaker 2: It was. It was amazing right now, yet you still
[3:07] Speaker 2: have ten fingers?
[3:08] Speaker 3: Yeah, I have ten fingers for now. The joke in
[3:11] Speaker 3: the families, I don't want it because it's kind of
[3:13] Speaker 3: like a dead finger at this point.
[3:14] Speaker 2: Oh really, will it be functional? Will you regain function?
[3:17] Speaker 3: It feels like if I'm using it, it just feels
[3:19] Speaker 3: like a wet skin, right, and so I'm not happy.
[3:24] Speaker 3: But the doctor was like, you can decide later. It
[3:28] Speaker 3: was if you want a prosthetic or no, not prosthetic.
[3:31] Speaker 3: If you just want to work with a nub, it's
[3:33] Speaker 3: only a third of the finger, right, So anyways, it
[3:36] Speaker 3: was traumatic, but here we are. Yeah, there's great stories.
[3:40] Speaker 3: If you're a storyteller. Cut a finger off. I mean,
[3:44] Speaker 3: if you want traffic on Twitter bleed out. Yeah, you
[3:49] Speaker 3: can get traffic, but no engagement. That's the problem. I
[3:51] Speaker 3: want to go viral. I got nine chances.
[3:55] Speaker 2: Twenty one if you want to be accurate, toes.
[3:57] Speaker 3: Are not good in the fingers are.
[4:00] Speaker 2: Good and twenty one the twenty first.
[4:02] Speaker 3: No go the twenty first. You could be president.
[4:07] Speaker 2: So let's roll back a little bit and start with
[4:11] Speaker 2: your early education. Bachelors from Commerce University, Bachelor's in Commerce
[4:20] Speaker 2: from the University at Western Ontario.
[4:24] Speaker 3: It's a famous business school for Ana Arizona State and
[4:27] Speaker 3: famous for bumbs as on state business school. What does
[4:31] Speaker 3: that even mean? And then masters at Thunderbird School of
[4:34] Speaker 3: Global Management, which was a great school now owned by
[4:36] Speaker 3: a great animated cartoon. And this is correct, So what
[4:42] Speaker 3: given all that? What was the original career plan? Comedy? Yeah,
[4:46] Speaker 3: I grew up you.
[4:48] Speaker 2: And Martin Short right out of Canada, right.
[4:50] Speaker 3: No mine? He was already older. But I grew up
[4:53] Speaker 3: in Toronto and that was when I was seventy five
[4:56] Speaker 3: watching Johnny Cerson my first TV. You saw everybody and
[5:02] Speaker 3: it was like your living room, and so it's Toronto
[5:04] Speaker 3: had Second City, Yeah, John Candy, Martin Short, Eugene Levy.
[5:08] Speaker 3: Second City was before Saturday Night Live. And so I
[5:11] Speaker 3: grew up.
[5:11] Speaker 2: To Surround around the same time little earlier.
[5:14] Speaker 3: Yeah. Yeah, so I'm like twelve years old giggling, you know,
[5:18] Speaker 3: and there was no Internet, so you were like go
[5:21] Speaker 3: to the comedy clubs with your friends. Toronto had this
[5:23] Speaker 3: clubs called Yak Yaks, which was a famous chain like
[5:27] Speaker 3: the Improv but of Canada. And you had Mike Myers.
[5:31] Speaker 2: Another Canadian.
[5:32] Speaker 3: Yeah, everybody exploding onto the scene at the same time.
[5:37] Speaker 3: And so I was doing stand up in high school
[5:39] Speaker 3: get out but not good obviously, but Mike Myers would
[5:43] Speaker 3: come up. Mike Myers would come up and kill He
[5:45] Speaker 3: was like seventeen years old. Jim Carrey fourteen years old,
[5:48] Speaker 3: r killing right, And so everybody wanted to be a comic,
[5:52] Speaker 3: no different than like the web two point everybody went
[5:54] Speaker 3: to Stanford to be an engineer's certain in nineties it
[5:58] Speaker 3: was investment banking. Right now, it'll be robots in AI.
[6:02] Speaker 3: It's just what's in the water. And I grew up
[6:04] Speaker 3: with comedy in the water, and so that was the goal.
[6:08] Speaker 3: And obviously, you know with Jewish parents at the time,
[6:11] Speaker 3: that ain't flying. Especially I wasn't good, right, and so
[6:14] Speaker 3: I went to school.
[6:15] Speaker 2: You drop that you weren't good as like an after thought.
[6:19] Speaker 2: I think if you're successful and earning a living, well,
[6:23] Speaker 2: it was even a Jewish parent will put up with
[6:26] Speaker 2: you now like Jerry Steinfeld's mom is fine with you.
[6:30] Speaker 3: Yes, But I'm saying now, if my son came in
[6:32] Speaker 3: and said, I'm gonna go hit the comedy tour, I'd
[6:33] Speaker 3: warn them how dark it is. But I'd say go
[6:36] Speaker 3: make it go on YouTube. Right. You know a ten
[6:39] Speaker 3: thousand hours you don't have to live in ten thousand hours. Yeah,
[6:42] Speaker 3: get the faster you get those ten thousand hours in the.
[6:44] Speaker 2: Better, That's right. So you grew up in Canada, you
[6:47] Speaker 2: start your career in Phoenix and San Diego and New
[6:51] Speaker 2: York City. I'm curious, that's an interesting you know, Toronto, Phoenix,
[6:57] Speaker 2: San Diego, New York. How did that geographical upbringing affect
[7:04] Speaker 2: your perspective as an investor.
[7:07] Speaker 3: Who is an investor? I don't know, because as you
[7:09] Speaker 3: as a kid, I was lucky because if you're Jewish
[7:12] Speaker 3: in Toronto or New York at that area, you go
[7:14] Speaker 3: to Florida, you know, the original Del Boca Vista. But
[7:20] Speaker 3: my dad was different and he discovered Phoenix and so
[7:24] Speaker 3: in the eighties, like Phoenix was like swamp coolers, and
[7:27] Speaker 3: he just liked the weather.
[7:28] Speaker 2: And I don't know, I'll let you know a little secret.
[7:31] Speaker 2: The weather in Florida ain't great. It's humid.
[7:34] Speaker 3: To my dad, obviously, that's the way he thought. Yeah,
[7:37] Speaker 3: so that's why he discovered Phoenix and bought a home.
[7:39] Speaker 3: And I like golf and backing, and so lucky for me,
[7:42] Speaker 3: we had I went instead of going to Florida, we
[7:45] Speaker 3: were going to Arizona and so I would go to
[7:48] Speaker 3: the football games as a kid, and I was like, hey,
[7:51] Speaker 3: it's you. That was my dream. Just just go to
[7:54] Speaker 3: Arizona State University, which I ended up, you know, doing
[7:57] Speaker 3: for grad school, which isn't a great grad school, but
[7:59] Speaker 3: it was part of school. But that was my dream
[8:02] Speaker 3: get out of Canada, right, So I got lucky. You know,
[8:05] Speaker 3: my parents exposed me to you know, Arizona, and I
[8:09] Speaker 3: went tass you had the time. It was amazing. And
[8:12] Speaker 3: then if you're Jewish in Phoenix because the summers, it's
[8:18] Speaker 3: like New York goes to Flora in the winter. Jewish
[8:21] Speaker 3: people in Phoenix go to this. Go to San Diego
[8:23] Speaker 3: in the summer to get.
[8:24] Speaker 2: Out of there right the ocean. It's a nice weather.
[8:27] Speaker 3: Six hour drive and it's seventy degrees.
[8:29] Speaker 2: And I love La Jolla and that it's called.
[8:32] Speaker 3: Zoni's So Arizona flood San Diego to Del Mar. I
[8:38] Speaker 3: wish so we grew up Coronado. I'm not grew up, Sorry,
[8:41] Speaker 3: I I my in laws had a place in Coronado,
[8:45] Speaker 3: and so when we had kids, I'm like, get out
[8:47] Speaker 3: of the heat. You're yeah, we were not summer but
[8:50] Speaker 3: a week here, a week there.
[8:51] Speaker 2: I wish California wasn't six hours away. If it was
[8:55] Speaker 2: two hours away. One we were just in San Francisco.
[9:00] Speaker 3: It's fun again.
[9:01] Speaker 2: It's a boomtown. Tales of an apocalyptic healthscape have been.
[9:05] Speaker 3: It's still not my favorite, but it's cool.
[9:07] Speaker 2: It's less homeless than New York.
[9:09] Speaker 3: You know, I'm not just talking about homeless that people
[9:11] Speaker 3: are still.
[9:13] Speaker 2: They're educated, they're intelligent. I mean, if you're if you lose.
[9:17] Speaker 3: If you're not in New York City, it's not New York.
[9:19] Speaker 2: You know, when you leave New York, I don't know
[9:25] Speaker 2: about you. I make a conscious effort to not be
[9:29] Speaker 2: that New York abroad, even out of fun, out of town. Yeah, California,
[9:35] Speaker 2: especially San Francisco, it doesn't feel like you've left town.
[9:41] Speaker 3: God love it. Yeah, I mean, I just have the
[9:43] Speaker 3: California bug. The coast to coast is a dream and
[9:46] Speaker 3: I get to live it.
[9:47] Speaker 2: It's just a lot of travel, the.
[9:49] Speaker 3: Thing about it. And I do like Florida a lot,
[9:52] Speaker 3: but same as you six hours like Phoenix or San Diego.
[9:55] Speaker 3: Florida is like not on the no brain, it's no
[9:57] Speaker 3: no one does it like it's not a thing.
[9:59] Speaker 2: Right, No, it's Phoenix to San Diego makes sense. It
[10:02] Speaker 2: nexs to Florida, just like New York to Florida makes sense.
[10:06] Speaker 2: Correct New York too.
[10:07] Speaker 3: So you asked, So you ask how that happened. That's
[10:10] Speaker 3: the right of passions. Instead of Toronto, Florida my whole life.
[10:13] Speaker 3: I jumped to the West coast and then I discovered
[10:16] Speaker 3: San Diego through my in laws and my wife and yeah,
[10:20] Speaker 3: well you've been to Cornado.
[10:21] Speaker 2: Oh yeah yeah, So let's let me let me wrestle
[10:24] Speaker 2: this back into submission. So you've worn a lot of hats.
[10:28] Speaker 2: You're a hedge fund manager, a founder, a CEO, a
[10:31] Speaker 2: seed investor, a media personality. How do you describe to
[10:35] Speaker 2: people who don't know you what you do?
[10:38] Speaker 3: It's a great question. My in laws are in their
[10:40] Speaker 3: eighties and they still ask me what do we tell
[10:42] Speaker 3: people you do? And I'm like, who the hell cares well?
[10:45] Speaker 3: And the world now decided that for you? No one cares, right?
[10:49] Speaker 2: So what do you do?
[10:50] Speaker 3: Right? Like, I think we're getting back into like where
[10:53] Speaker 3: it's you should be proud to have like a what
[10:56] Speaker 3: you call profession. I don't have a profession. So you
[10:59] Speaker 3: asked how I got started. It wasn't investing. I got
[11:01] Speaker 3: started as investing because I failed at everything else. And
[11:05] Speaker 3: which is kind of the Larry David part of it,
[11:07] Speaker 3: is like I stumbled into it because the Internet is
[11:11] Speaker 3: like water. It'd be like discovering California. Like internet was
[11:16] Speaker 3: like tech. So the nineties were like I didn't understand
[11:19] Speaker 3: semiconductors were full circle, right, I'm not a code. I
[11:23] Speaker 3: don't even know how things work. I never did radio
[11:25] Speaker 3: shack right like, so the like walkie talkies were freaking
[11:29] Speaker 3: me out. So the odds of me being in tech
[11:32] Speaker 3: are part of the comedy. Full circle. We are now
[11:35] Speaker 3: back in a tech world, roll modes, chips like.
[11:38] Speaker 2: Real stuff, a little secret we never left it just
[11:42] Speaker 2: kind of.
[11:43] Speaker 3: I found the goofball Ara. Web two was the Goofballer
[11:47] Speaker 3: or social media. You could be the class clown and
[11:49] Speaker 3: have scale. Now that's gone again, and class clown you
[11:53] Speaker 3: now need to be a bully again. It's it's you
[11:56] Speaker 3: need to already have distribution.
[11:59] Speaker 2: It's hard to build distribution today. So I'm saying when
[12:01] Speaker 2: an early adopter is certainly an advice.
[12:04] Speaker 3: Super but now it doesn't matter. You have to have
[12:06] Speaker 3: real tech chops again. You can't pose like I am,
[12:09] Speaker 3: like I have imposter syndrome for the right reasons, right
[12:12] Speaker 3: because I'm an embossedor meaning the Internet left a little
[12:16] Speaker 3: opening in two thousand and six for goofballs, and we
[12:20] Speaker 3: got to participate in an era of free growth. When
[12:24] Speaker 3: Facebook didn't charge you or have an AI algorithm that
[12:26] Speaker 3: blocked you. You could say whatever you want. People go
[12:29] Speaker 3: he's funny, and you could scale for free, which is
[12:33] Speaker 3: why we had an Internet boom, Web two point zero
[12:35] Speaker 3: Internet boom right after an Internet. Now we live in
[12:38] Speaker 3: an era where those people are confusing their genius for
[12:42] Speaker 3: a bull market, right, and we're all sick of those people.
[12:45] Speaker 2: Can I push back on you a little bit because
[12:48] Speaker 2: I know you for so well for so long. Hold
[12:53] Speaker 2: the imposter syndrome aside. The early inter rewarded people who
[13:03] Speaker 2: could communicate effectively, be it work your way through the media,
[13:09] Speaker 2: be it blogs or short form blogs like Twitter or
[13:15] Speaker 2: other social media, or podcasts or video and YouTube. There's
[13:21] Speaker 2: a whole run of different ways to use the Internet
[13:27] Speaker 2: to scale, so it's not an imposter. You basically just
[13:33] Speaker 2: kept tacking into what was working. Oh this works, let's
[13:36] Speaker 2: do more of it.
[13:37] Speaker 3: Of course, but the era was free, so you had
[13:41] Speaker 3: that great financial crisis that was going to happen, So
[13:44] Speaker 3: meaning Uber couldn't be possible without Google Maps. Like people
[13:49] Speaker 3: say Uber is great, it wasn't possible unless there was
[13:51] Speaker 3: an iPhone the cloud. People will be typing, I want
[13:56] Speaker 3: a taxi without Google Maps, I don't know where to go.
[13:58] Speaker 2: That's right, And all of that only worked because of
[14:01] Speaker 2: the bubble and the build out of Global Gross and
[14:05] Speaker 2: Metromedia fiber. So I'm saying one thousand dollars a mile
[14:08] Speaker 2: bought for pennies.
[14:09] Speaker 3: My impostor syndrome is born. Of of course I have
[14:12] Speaker 3: an ego, but my imposter syndrome is surrounded by crazy
[14:15] Speaker 3: people who are mistaking. As I was talking to Tim O'Brien,
[14:19] Speaker 3: if this was we went from a World war. Strength
[14:22] Speaker 3: mattered not that long ago. This matters right, And I'm
[14:27] Speaker 3: like people, just the humility is gone, and I feel
[14:31] Speaker 3: it's with my kids and everything. It's with the injury
[14:34] Speaker 3: and everything. You have to have some humilion. We need
[14:37] Speaker 3: to get back to having some humilion and laughing at
[14:39] Speaker 3: our success and going mait a minute. It was a bullmark,
[14:42] Speaker 3: a zero interest, the RESERP. There was the free internet aws,
[14:47] Speaker 3: you had, YouTube, you had if you here's my question.
[14:50] Speaker 3: If you aren't successful, that'd be more interesting. I want
[14:55] Speaker 3: to talk to the guy like the Larry Davi commercial
[14:57] Speaker 3: with ftx I, when he was like, oh the circle,
[15:00] Speaker 3: who fire?
[15:01] Speaker 2: Who needs who needs fire?
[15:02] Speaker 3: That was such a great commercial because only Larry David
[15:05] Speaker 3: or you know, I know the guys the commercial that
[15:09] Speaker 3: what made that commercial. Great is Larry David gets the
[15:12] Speaker 3: joke you're in on the fact that, of course you
[15:16] Speaker 3: made money. You worked at Facebook. It grew because the
[15:20] Speaker 3: product was genius and tricked people into signing up. You
[15:24] Speaker 3: did nothing except ride the train. Now I'm not saying
[15:28] Speaker 3: smart people didn't work there, but let's remember Game of
[15:30] Speaker 3: Thrones were all dead. The people that are successful today
[15:33] Speaker 3: are Mark Unries and Chamont. The people that I can't
[15:36] Speaker 3: like are hilarious to me. They have no humility. Is
[15:39] Speaker 3: that Game of Thrones there were all dead first second,
[15:42] Speaker 3: first scene there's a hammer in our heads and you
[15:45] Speaker 3: and I might have a chance because we're the court
[15:48] Speaker 3: just right, and if we dance well enough, dance with me,
[15:51] Speaker 3: Monkey Andreas and dead Jama dead there's just a pitchfork
[15:56] Speaker 3: in their foreheads on the first scene of Gladiator.
[15:58] Speaker 2: Well, if you you know that's see you have people
[16:01] Speaker 2: like da Vinci that were consultants to the king to
[16:04] Speaker 2: help build weapons and things. So unless you can you
[16:08] Speaker 2: know early days of palent here, unless you can say, sure,
[16:12] Speaker 2: hey here's how to make a better catapults. Sure you know,
[16:15] Speaker 2: those guys survive.
[16:16] Speaker 3: So I'm saying I come along with like tweeting stock
[16:19] Speaker 3: twigs like it was just enabling communication. Listen, I'm very
[16:23] Speaker 3: proud of this stuff, and I also can laugh about
[16:26] Speaker 3: how stupid it is, Like I don't have another trick. Right,
[16:30] Speaker 3: The Internet left this opening, kind of like discovering California,
[16:33] Speaker 3: if you're early to discover California, made to pass the
[16:36] Speaker 3: Indians in the mountains. Right, it didn't get robbed by
[16:39] Speaker 3: like murdered, stampeded cash, Like, let's carry all our money
[16:43] Speaker 3: in a stagecoast pulled by horses at three miles an hour.
[16:46] Speaker 3: What are the odds we get killed? Right, It's impossible.
[16:49] Speaker 3: So the Internet left this opening, and I snuck through it,
[16:53] Speaker 3: and it's fun to look back with some humor at
[16:55] Speaker 3: the whole thing. I think the holes closed up like pipes.
[17:00] Speaker 3: Zuckerberg owns the pipes. True Social owns their version of
[17:04] Speaker 3: a pipe. TikTok has an algorithm. How do you break through?
[17:08] Speaker 2: Because those things get tired and the next gen says,
[17:11] Speaker 2: just the way fate, just the way Facebook became. Oh
[17:15] Speaker 2: my parents are on Facebook. I'm out. I'm going to
[17:18] Speaker 2: go to Insta and then I'm going to go to TikTok,
[17:20] Speaker 2: and so there'll be something.
[17:21] Speaker 3: New questioning that I'm just questioning. It'll never have been
[17:25] Speaker 3: It'll never be easier than when I made money, And
[17:29] Speaker 3: I'm cool with that. That's the imposters.
[17:30] Speaker 2: I don't completely disagree with you, and you're touching on
[17:34] Speaker 2: a pet thesis. I love to ask what would have
[17:38] Speaker 2: happened to you had you been born one hundred years earlier,
[17:42] Speaker 2: or even or even twenty five years earlier. Right, if
[17:46] Speaker 2: you're born in nineteen forty, what happened?
[17:49] Speaker 3: I'm a furrier, look at my yes, most all these
[17:58] Speaker 3: beaver have a cafe that has so many dishes on
[18:01] Speaker 3: it that make no sense. And I'm selling first. I mean,
[18:05] Speaker 3: I have no shot, I have no strength.
[18:07] Speaker 2: Right, Just think about how fortunate finger off? Right? So
[18:11] Speaker 2: if you didn't bleed out your nine figures, no, you
[18:14] Speaker 2: should have shown you stick. You stick your finger into
[18:17] Speaker 2: the fire and you quarterize it. That's what the old
[18:20] Speaker 2: timers would tell you. Get a get a piece of
[18:22] Speaker 2: steel in the in the fire. They'll heat up the iron.
[18:25] Speaker 2: You just burn it. And that's your thought.
[18:29] Speaker 3: Howie, what's the what's the is the ambulance going to
[18:32] Speaker 3: charge too much? And should I bleed at the neighbor's house?
[18:35] Speaker 3: Those were my first My wife will kill me that
[18:38] Speaker 3: I'm bleeding in our yard.
[18:39] Speaker 2: Coming up, we continue our conversation with Howard Lindzen, co
[18:43] Speaker 2: founder of Social Leverage, discussing what he calls the degenerate economy.
[18:50] Speaker 2: I'm Barry Ridults. You're listening to Masters in Business on
[18:54] Speaker 2: Bloomberg Radio. I'm Barry Ridults. You're listening to Masters in
[19:08] Speaker 2: Business on Petberg Radio. My extra special guest is someone
[19:11] Speaker 2: I've known for too long, Howard Lindzen, co founder of
[19:15] Speaker 2: Social Leverage, one of the earliest seed investors in Robin Hood,
[19:20] Speaker 2: which is a chapter in my book. Oh, let's do
[19:22] Speaker 2: segment two, and I have to start by asking about
[19:27] Speaker 2: social leverage. You've been doing this for twenty years, so
[19:32] Speaker 2: from the first seed fund you did to today where
[19:35] Speaker 2: you have a portfolio of one hundred and fifty plus companies,
[19:39] Speaker 2: how has this evolved? First of all, what was the
[19:40] Speaker 2: first company you invested in?
[19:42] Speaker 3: So, the first company I invested in was so Dumb
[19:48] Speaker 3: Cars Direct nineteen ninety eight. The tippy top as my
[19:51] Speaker 3: wire left digitally my fingertips or wherever bank it was
[19:57] Speaker 3: coming from, it was worthless right, meaning like the the.
[20:00] Speaker 2: Series Q right, you were just early pets dot com eventually,
[20:05] Speaker 2: but I was later because would have.
[20:09] Speaker 3: Been Yes, that was your retail idiot. So I grew up,
[20:12] Speaker 3: like I said, I went to a su You're going
[20:14] Speaker 3: to be a fur year, right, that's your chance and
[20:18] Speaker 3: a bad one because you know, so the Internet comes along.
[20:21] Speaker 3: I fall in love with stock market because I had
[20:25] Speaker 3: made some money at my at my first startup and
[20:28] Speaker 3: I had to be my own broker and so yeahoo
[20:30] Speaker 3: finance Jim Kramer, Street dot com like they're still around, right,
[20:34] Speaker 3: So so those were my onboarding are you for the
[20:37] Speaker 3: Street dot com?
[20:38] Speaker 2: They were the dominant Like people who were younger don't realize.
[20:41] Speaker 3: Way that was still massive frame still.
[20:45] Speaker 2: I think the Street dot com doesn't get the Cramer. Yeah,
[20:48] Speaker 2: well he's on TV twice a day saying.
[20:51] Speaker 3: This is thirty years Yeah. So that was that's my
[20:54] Speaker 3: introduction to retail investing because I couldn't afford a Bloomberg
[20:58] Speaker 3: still can so I can afford.
[21:01] Speaker 2: I think you could afford a Bloomberg.
[21:02] Speaker 3: Posts I wouldn't. I wouldn't know how to use it.
[21:05] Speaker 2: Well, there's a phone church, especially with nine fingers, how
[21:10] Speaker 2: you need all ten fingers for the so.
[21:12] Speaker 3: I was inspired by you did street dot Com had
[21:15] Speaker 3: Murder's row of writers. It's a new investor, yeh. I
[21:20] Speaker 3: just would sit and wait for articles to come out
[21:22] Speaker 3: and yeah, who finance? So on the message where it's Pearlman,
[21:25] Speaker 3: you like, we were almost first the message.
[21:27] Speaker 2: So cars Direct was your first investment.
[21:29] Speaker 3: And ten years later I got ten percent of my
[21:32] Speaker 3: money back after it being successful. So so my first
[21:35] Speaker 3: thing was a disaster.
[21:37] Speaker 2: What was your first successful investment?
[21:38] Speaker 3: So my first successful investment was a cold call that
[21:41] Speaker 3: I made pre Internet in a company I probably talked
[21:44] Speaker 3: about the leash called the Grip. It was the so
[21:47] Speaker 3: so I had the good fortune of being an hour
[21:51] Speaker 3: before the Internet, before the Internet, an hour before the
[21:54] Speaker 3: Innit the thing before the thing was QBC. I recall, okay,
[21:58] Speaker 3: so before the interstill on PBC was the interest right,
[22:02] Speaker 3: meaning there was the whole of Philadelphia was just old
[22:04] Speaker 3: people on the phone saying yes, yes, we'll take your
[22:07] Speaker 3: order and your credit card. And if you were on
[22:10] Speaker 3: QBC was a studio.
[22:11] Speaker 2: Like this, what was it?
[22:12] Speaker 3: We had a product called the Grit and it's in
[22:14] Speaker 3: the QBC Hall of Fame. So I made a cold
[22:17] Speaker 3: call while I was a stockbroker to this kid, I
[22:19] Speaker 3: thinking he was rich because back in the nineties.
[22:23] Speaker 2: It was just like the movie was on brad Streets.
[22:25] Speaker 3: You would get a newspaper and decide who you're going
[22:27] Speaker 3: to cold call that, right, So I hated my job.
[22:30] Speaker 3: That was my first job out of college, and I
[22:31] Speaker 3: was cold calling to get rich clients. And I called
[22:34] Speaker 3: this kid and he ended up needing money like he
[22:38] Speaker 3: was just promoting them.
[22:38] Speaker 2: He reverse pitched you.
[22:40] Speaker 3: He he reversed pitched me, and I had a cobble
[22:44] Speaker 3: up twenty five grand from my mom and friends, and
[22:47] Speaker 3: I hated and I'm like, I'm in, And then he
[22:50] Speaker 3: paid off his AMEX with that twenty By the way.
[22:52] Speaker 2: Every stockbroker and salesperson appreciates a good sales pitch. The
[22:57] Speaker 2: soccer for a good sales panch.
[22:58] Speaker 3: Well, he was promoting himself and I was trying to
[23:01] Speaker 3: sell him something, and he sold me on his company.
[23:03] Speaker 3: So it turned out to be a home run company.
[23:04] Speaker 2: Well it was.
[23:06] Speaker 3: He was a dropout Mark Scatteday, unbelievable entrepreneur and he
[23:10] Speaker 3: had he made this product with five balloons wrapped around
[23:14] Speaker 3: this Siberian millet, and we were the largest Siberian millet
[23:19] Speaker 3: orderers in the world in the nineties because we were
[23:22] Speaker 3: making millions of balls a month by hand and selling
[23:25] Speaker 3: them with corporate logos on them. During the whole nineties pharmacies.
[23:29] Speaker 2: And on the desk toy Squeaze story, but.
[23:31] Speaker 3: Our genius was putting corporate logos on it.
[23:34] Speaker 2: Nobody had done that before.
[23:35] Speaker 3: Well, that industry was huge in the nineties, corporate giveaways
[23:39] Speaker 3: right with trade shows and whatever. And we just got
[23:41] Speaker 3: the right product at the right time, and it was,
[23:44] Speaker 3: oh my god. We were just how many were the
[23:46] Speaker 3: ball There's so many ball jokes, but they'd all get deleted.
[23:50] Speaker 3: Here we were the ball boys of the nineties.
[23:52] Speaker 2: How many did we We did sixty.
[23:54] Speaker 3: Seventy million in, said Wout. And the margins were crazy
[23:57] Speaker 3: because unlike retail, if you put bed, Bath and Beyond
[24:00] Speaker 3: or Compact on the ball, they own it. There's no returns.
[24:05] Speaker 3: And so so we just had this pet rock business
[24:08] Speaker 3: where like Compact would call them we need a million
[24:10] Speaker 3: balls for Condex and we'd just hire people illegal aliens
[24:14] Speaker 3: and they would come into Phoenix and they would all
[24:16] Speaker 3: cut their fingers off like making these things.
[24:18] Speaker 2: But you made it in the stakes.
[24:20] Speaker 3: We made it in the States. We spent all our
[24:23] Speaker 3: money was trying to figure out how to machine make
[24:25] Speaker 3: these in the nineties, and we wasted so much money
[24:28] Speaker 3: trying to like get humans out of the process. Compact
[24:31] Speaker 3: would order a million pay you in advance to start,
[24:35] Speaker 3: so we'd be buying cars. It was just two person company,
[24:39] Speaker 3: like a bunch of like staff, and so we'd go
[24:41] Speaker 3: out to lunch and buy cars because we were paid
[24:44] Speaker 3: before we even started making the product. And so we
[24:49] Speaker 3: were like, that's how I learned business.
[24:50] Speaker 2: Kind of like you started this on QVC.
[24:53] Speaker 3: No QVC picked us up, and Mark used to go
[24:56] Speaker 3: on TV and back back in the nineties and KVC
[24:59] Speaker 3: if it was sell they just kept you out there
[25:01] Speaker 3: like a cartoon character. They didn't they hadn't scientifically gone
[25:05] Speaker 3: to the profit per second model because they were surprised
[25:09] Speaker 3: at their success. So the Grip appealed to like seventy
[25:13] Speaker 3: year old women who had carpet like they just like
[25:15] Speaker 3: squeezing the So we created this nineteen dollars three pack
[25:20] Speaker 3: that had soft medium and I swear to God, you
[25:22] Speaker 3: can't make this up and soft medium and firm, and
[25:26] Speaker 3: KBC just kept Mark on stage all day and the
[25:28] Speaker 3: numbers would go and it was a miracle. That was
[25:34] Speaker 3: our first success. So that was so I was very
[25:37] Speaker 3: much that was my first Internet success. So sorry, that
[25:41] Speaker 3: was my first success.
[25:42] Speaker 2: When did social leverage launch?
[25:44] Speaker 3: So so you you and I both lived through this,
[25:48] Speaker 3: the Great Financial Crisis, and that was an era of
[25:51] Speaker 3: so up until two thousand and seven, two thousand and six,
[25:55] Speaker 3: we lived in a world of financial leverage, meaning and
[25:59] Speaker 3: we know what happened to the end of that stacking
[26:02] Speaker 3: you know, Excel came out. People didn't have to my
[26:06] Speaker 3: dad when I grew up with my dad in Toronto,
[26:08] Speaker 3: if you did an acquisition, it was like seven hundred
[26:10] Speaker 3: pieces of paper with pencil taped together. Then Excel comes out, which,
[26:16] Speaker 3: of course nothing, you know, everything's made up at that
[26:19] Speaker 3: point and on one sell off can change the world.
[26:23] Speaker 3: But we became a world the stacking things financial leverage, right,
[26:28] Speaker 3: that was the banking era, and the end of financial
[26:31] Speaker 3: leverage era came in two thousand and six, two thousand
[26:33] Speaker 3: and seven at the same time that social media came out.
[26:37] Speaker 3: So the play on words was I wanted to do.
[26:40] Speaker 3: As an early adopter of social media, I was like
[26:43] Speaker 3: an idiot, like me, So the idea was social leverage.
[26:47] Speaker 3: You can't implode with social leverage where this financial level,
[26:51] Speaker 3: of course, well that was pre canceled. So I'm saying
[26:53] Speaker 3: my thesis was, oh my god, an idiot like me
[26:56] Speaker 3: who knows the right three people can just grow their
[27:00] Speaker 3: network for free forever. And so that was the birth
[27:04] Speaker 3: of the name social leverage.
[27:06] Speaker 2: It makes a lot of sense.
[27:07] Speaker 3: Yeah. It was just like a play on where some
[27:09] Speaker 3: people will call me and go, oh, you guys do
[27:11] Speaker 3: social investing. Oh, it's the last thing I do, meaning
[27:14] Speaker 3: I'm not, there's no impact. It was just the play
[27:17] Speaker 3: on words of financial.
[27:17] Speaker 2: Leverage to social level. I like it, but good point.
[27:20] Speaker 3: You can blow up on social leverage.
[27:22] Speaker 2: So now you're up to fund four, fun six, fund six. Wow,
[27:26] Speaker 2: I have the I and the VE good news.
[27:28] Speaker 3: You pass on all of them. We continue to do
[27:31] Speaker 3: well until you come in.
[27:32] Speaker 2: As soon as I come in, it's over.
[27:33] Speaker 3: Well that's when we shut down.
[27:34] Speaker 2: And and I famously, more infamously was an investor in
[27:40] Speaker 2: stock to Its and then when you pitched me on
[27:43] Speaker 2: robin Hood it's a line in the book, how that's
[27:46] Speaker 2: the dumbest FN idea I've ever heard of my life.
[27:48] Speaker 2: You weren't the only one, and it was it was
[27:51] Speaker 2: I will, I will, I.
[27:53] Speaker 3: Will you the majority. You were in the majority.
[27:55] Speaker 2: I own it in the book, and between you and me,
[27:58] Speaker 2: I'll say a it was off brands and be no
[28:02] Speaker 2: doubt that the pandemic lockdown helped them dramatically.
[28:07] Speaker 3: No, no, no. The thing about Rominhood because I was there
[28:09] Speaker 3: from day one and by day one, I mean there
[28:13] Speaker 3: was another company, Kronos Research before they were like high
[28:17] Speaker 3: frequency guys and math guys, but you could only this
[28:21] Speaker 3: is about you ask about investing. It's you know, the
[28:24] Speaker 3: life I've led boots on, like just curiosity, your eyes, nose, ears, feet.
[28:32] Speaker 3: You become a great investor by like touching, feeling right.
[28:36] Speaker 3: You got to be on street level. The best investors
[28:38] Speaker 3: are street level. I'm talking about private markets. Public markets
[28:41] Speaker 3: are different thing.
[28:42] Speaker 2: So let's talk about private We were talking.
[28:45] Speaker 3: About Robin Hoood. So so the great thing about Robinhood
[28:48] Speaker 3: is it's not that I got it right. It's like
[28:51] Speaker 3: I was. If I didn't get that right, I'm nobody,
[28:53] Speaker 3: meaning I had to get that right. Yaho Finance user
[28:56] Speaker 3: street dot com guy E trade baby, you know what
[29:00] Speaker 3: I mean. Twitter user Stark twits founder, and I if
[29:06] Speaker 3: I had any nerve or any text skills or any
[29:08] Speaker 3: like real balls or whatever we're going to call it,
[29:11] Speaker 3: I build my own brokeer it like I was there
[29:14] Speaker 3: to do all that. But in twenty ten, even until
[29:17] Speaker 3: till robin Hood started, no one wanted to start it.
[29:20] Speaker 3: Brokerage ideas are terrible idea, So you have to understand
[29:23] Speaker 3: that in twenty thirteen when I saw Robinhood, no one
[29:26] Speaker 3: in America. That's shocking that no one wanted to build
[29:29] Speaker 3: each trade two point zero. But what the venture capitalists
[29:32] Speaker 3: were doing, they were enamored. And this is where venture capitalists.
[29:36] Speaker 3: I always goof on venture capitalists. They were enameled with
[29:39] Speaker 3: the wrong thing that at the time it was like
[29:41] Speaker 3: wealth Front Betterment. The vcs were enamored with Assets under
[29:45] Speaker 3: Management AUM. They felt like Vanguard was the one to disrupt.
[29:50] Speaker 3: So everybody wanted to be the next. If you're a
[29:52] Speaker 3: venture capitalists, you want to be the next Vanguard. No
[29:54] Speaker 3: one needs and I thought that was flawed. I thought
[29:57] Speaker 3: that was flawed. Margins are tiny and and you're never
[30:00] Speaker 3: going to build something ten times better than Vanguard, Meaning
[30:03] Speaker 3: wait a minute, what's wrong with Vanguard? And versus E trade.
[30:06] Speaker 3: I'm like, it's interface trade, you know, it's just ripping
[30:10] Speaker 3: me off. And I was I was the right guy
[30:14] Speaker 3: to get that pitch at the right time, so of
[30:17] Speaker 3: course I had to do that deal. It would have
[30:19] Speaker 3: been That's what. That's why the podcast with the guy
[30:22] Speaker 3: who passed. If I passed on Rabbit, I'd be a
[30:25] Speaker 3: more interesting guest.
[30:26] Speaker 2: Like, so, how much did you put into.
[30:29] Speaker 3: What we did? One hundred? Like we had it was
[30:31] Speaker 3: our first fun so we were writing one hundred thousand
[30:34] Speaker 3: dollars checks, so it was one hundred thousand dollars at
[30:36] Speaker 3: eight million. I thought it was expensive and an eight
[30:39] Speaker 3: million valuation, like at the time we were doing three
[30:41] Speaker 3: million valuations, so you know, Like I met them by
[30:47] Speaker 3: jew and Vlade. I flew up because they called me
[30:49] Speaker 3: because of stock Twitch. So they called me and said
[30:51] Speaker 3: we have this app they were they were at they
[30:53] Speaker 3: were out of money, and I flew up to Silicon
[30:57] Speaker 3: Valley and they showed up wearing Google glass two idiots
[31:02] Speaker 3: like I'm like, immediately am I like, no one? You
[31:05] Speaker 3: know what I mean? I remember that era. I don't
[31:08] Speaker 3: know what it was, but I was immediately like what
[31:11] Speaker 3: And two dorks, but they showed me the app. They
[31:15] Speaker 3: had this guy Joe who was their designer, who had
[31:19] Speaker 3: been at Facebook, and he showed me the app. And
[31:21] Speaker 3: that's when I knew it wasn't live. They didn't have
[31:23] Speaker 3: their finra, they didn't have their brokers, so it was
[31:26] Speaker 3: really early. But because of stock Twits and Twitter, I
[31:29] Speaker 3: knew that if you build it, they will come. If
[31:31] Speaker 3: you build a design like Uber, if you build Uber
[31:34] Speaker 3: for trading. Okay, what people didn't get again was they
[31:39] Speaker 3: were all betting. Hundreds of millions have been invested in
[31:42] Speaker 3: Betterment and wealth friend at the time, so the Silicon
[31:44] Speaker 3: Valley was leaning into the vanguard model. So no one
[31:48] Speaker 3: wanted to do the deal because who needs another brokerage
[31:52] Speaker 3: And by the way, building a brokerage getting SEC approval
[31:55] Speaker 3: VC's not like doing work, like waiting at you. Vcs
[31:59] Speaker 3: do not like doing investment. Now they do because there's
[32:02] Speaker 3: so much money in sovereign. You know, you can get
[32:05] Speaker 3: so much money in charge two percent. But back in
[32:07] Speaker 3: twenty thirteen, it was like, so, mamny, something that's working,
[32:09] Speaker 3: I want to be the over of that. So to
[32:11] Speaker 3: take a year off and go get SEC approval to
[32:13] Speaker 3: go do those things they deserved, and you had to weight.
[32:18] Speaker 3: You couldn't just go launch it and get sued.
[32:20] Speaker 2: This is in hindsight, if you want to be the
[32:23] Speaker 2: next vanguard. Wait, their secret sauce is that they have
[32:28] Speaker 2: such scale they could charge four BIPs and still make money.
[32:31] Speaker 2: You're losing money at twenty five bits.
[32:33] Speaker 3: And if you switch, you switch, but they have so
[32:35] Speaker 3: much assets, so switching costs. So I could we could
[32:38] Speaker 3: talk about this forever. I was in the right place,
[32:39] Speaker 3: right time, right people pitch me right valuation, everything worked.
[32:44] Speaker 3: I could tell you one hundred stories of like everything
[32:46] Speaker 3: lined up and it doesn't work. Robin Hood would have
[32:49] Speaker 3: worked whether I showed up or not. So we did
[32:51] Speaker 3: one hundred thousand. Now, obviously we helped them tremendously with
[32:55] Speaker 3: Stock to It. We were like responsible over hundreds of
[32:57] Speaker 3: thousands of early sign ups because Stocked with the user
[33:00] Speaker 3: loved the idea of course free trading, free trade, but
[33:02] Speaker 3: also the API hooking in that you could slide right
[33:05] Speaker 3: on right over and trade. Yeah, it's pretty funny now,
[33:09] Speaker 3: that idea. In O seven when I had it Jack
[33:11] Speaker 3: and Ev, like as a Twitter guy, I went to
[33:14] Speaker 3: Jack and ab yeah, and AV and Fred Wilson put
[33:16] Speaker 3: me in the room with them, and I'm like, guys,
[33:19] Speaker 3: what are you talking about Kim Kardashian taking a poop
[33:21] Speaker 3: on Kanye West. That's not interesting. You know what's interesting
[33:25] Speaker 3: The President's going to tweet one day and the markets
[33:28] Speaker 3: are gonna move. Like this is literally my pitch to
[33:31] Speaker 3: Jack and Ev set up my friend Wilson, who was
[33:33] Speaker 3: just they were like Kumbaya plane lands on a Hudson right, Uh,
[33:37] Speaker 3: you know, we're growing our beards. No, you know, like
[33:41] Speaker 3: I mean, they were just the darlings up. They didn't
[33:44] Speaker 3: need it.
[33:44] Speaker 2: Well, they were like it was the town, the town.
[33:48] Speaker 3: They weren't massive, they weren't the guys. They were Kumbaya guys.
[33:52] Speaker 3: They were builders. So my pitch fell on like who
[33:55] Speaker 3: are you They didn't.
[33:57] Speaker 2: Get monetizing Twitter through.
[33:59] Speaker 3: They didn't. It's not about monet they didn't understand what
[34:04] Speaker 3: they had, meaning selling ads against something that Goldman Sachs
[34:09] Speaker 3: will pay Infinity for, meaning a new pipe where Bloomberg's
[34:13] Speaker 3: charging two thousand dollars to get real time information now
[34:18] Speaker 3: like Osama bin Lana and getting killed the futures like
[34:21] Speaker 3: in oh wait, whenever Osama was finally killed. I know
[34:24] Speaker 3: where I was because immediately I checked the futures and
[34:27] Speaker 3: they had already moved. And that's because of Twitter, right,
[34:30] Speaker 3: because some guy in Pakistan saw it in the futures
[34:32] Speaker 3: move Like that's when I should have clicked. Is like,
[34:36] Speaker 3: shut down everything, delay the feed thirty seconds and you
[34:39] Speaker 3: know what's going to happen. Goldman will call you Reuters, Bloomberg,
[34:43] Speaker 3: They'll see that you're off by thirty seconds, and they'll
[34:45] Speaker 3: pay you fortunes to get the real time feed. You
[34:48] Speaker 3: and me Schmucke don't need real time one seconds. So
[34:53] Speaker 3: my pitch to Jack and Ev with Fred Wilson was like,
[34:56] Speaker 3: slow down the feed because ninety nine percent of the
[34:59] Speaker 3: populace and then we're there anyways with AI knowing they
[35:02] Speaker 3: don't one gets the real time feed. Right, slow down
[35:05] Speaker 3: the feed. Your phone will ring for the people that
[35:08] Speaker 3: know that the feeds are not in real time, and
[35:10] Speaker 3: they will pay you infinity to get the pipe. And
[35:13] Speaker 3: they were like, no, let's sell ads. So here we are.
[35:17] Speaker 2: So so you haven't talked about the cash tag, which
[35:19] Speaker 2: I really want to talk about something stock Twits invented, yes,
[35:23] Speaker 2: a dollar sign and then AAPL is the symbol for appsle.
[35:27] Speaker 3: So this is the Jack and out stores. So again
[35:29] Speaker 3: I didn't want to start a company. I just sold
[35:32] Speaker 3: wall Strip, which you know, which was my best work.
[35:36] Speaker 3: But again stupid. But no, personally, I'm most proud of it.
[35:39] Speaker 3: You sell a company to CBS when you are literally
[35:42] Speaker 3: an idiot, is the dream?
[35:45] Speaker 2: It's a fair disclosure.
[35:46] Speaker 3: Yeah, yeah, they said. By the way, as they wrote
[35:48] Speaker 3: as less, Moondez wrote to CHETI goes, I can't believe
[35:51] Speaker 3: we're writing an idiot like this. A check that was
[35:53] Speaker 3: like quote. I said, please write that like you and
[35:56] Speaker 3: your book. Please write that. You're so angry. So anyways,
[36:01] Speaker 3: they had just bought my company and literally a month later,
[36:05] Speaker 3: I'm like, you made the wrong acquisition. You need to
[36:08] Speaker 3: buy Twitter like Twitter is to Quincy At who had
[36:12] Speaker 3: bought my company at CBS, and I remember there was
[36:15] Speaker 3: no iPhone yet and Twitter came out and I thought
[36:18] Speaker 3: it was stupid. You thought it was stupid.
[36:20] Speaker 2: We all thought it was just annoying.
[36:22] Speaker 3: Andy Swan, an old friend, was like, I get this,
[36:25] Speaker 3: this is financial because you know, at the beginning, I'm on,
[36:27] Speaker 3: we all had our BlackBerry. It wasn't even it wasn't
[36:30] Speaker 3: even a native mobile app. It was just the web
[36:33] Speaker 3: and it was all venture capitals. And my shtick in
[36:36] Speaker 3: two thousand and six two thousand and seven was I
[36:38] Speaker 3: just peeed at the grammar cy like. So the vcs
[36:41] Speaker 3: loved me. They were like, who's this idiot talking about?
[36:43] Speaker 3: Was Bowel movements And and then Andy Swan said, you
[36:47] Speaker 3: know this is like financial this is like a new Bloomberg, right,
[36:50] Speaker 3: And I said, and I just so. So the hashtag
[36:53] Speaker 3: was a thing, and I'm like, it was all spam,
[36:55] Speaker 3: like if you went to Apple, like hashtag aapl or
[36:58] Speaker 3: hashtag apples, like I went to the store and bought
[37:00] Speaker 3: a green apple, right, Like that's literally what people were saying.
[37:03] Speaker 3: It was so now it would be lots of new apples,
[37:06] Speaker 3: but like at the beginning, it was like I bought
[37:07] Speaker 3: a green apple and I'm like that spam. So I
[37:10] Speaker 3: sent Fred Wilson the first message, and I'm saying like
[37:13] Speaker 3: and back then BlackBerry was the hot stuck and I'm like,
[37:15] Speaker 3: I just bought dollar sign ri imm And Fred Wilson
[37:19] Speaker 3: is the godfather of all this and was an investor
[37:21] Speaker 3: in Twitter sent me back at Texacos, this is a genius.
[37:23] Speaker 3: You need to start a company, and that's what set
[37:26] Speaker 3: me down.
[37:26] Speaker 2: The stock Twits past was Wilson, an investor in stock.
[37:29] Speaker 3: Twits, No, because he was an investor in Twitter and
[37:31] Speaker 3: he thought there would be a conflict.
[37:32] Speaker 2: It's no conflict.
[37:33] Speaker 3: I agree, but Fred is a Fred is zero g
[37:36] Speaker 3: Why Fred's the OG? So Fred's strategy is if he
[37:40] Speaker 3: bets on one, he does, and I follow Fred's strategy.
[37:44] Speaker 3: There's other people who spray and prey and don't care
[37:46] Speaker 3: who they are, and ninety percent do that. But Fred
[37:49] Speaker 3: was of the opinion back then it's like, I work
[37:51] Speaker 3: with you, there's going to be conflicts. Are a thing
[37:56] Speaker 3: like no conflict, no interest. That's He's very cool that way.
[37:59] Speaker 3: But don't create conflicts just to create conflict. So in
[38:02] Speaker 3: his wisdom, he was like, you know what's going to
[38:05] Speaker 3: happen if you guys get in a fight and YadA
[38:07] Speaker 3: YadA yadas. So he politely backed out, but we were
[38:10] Speaker 3: backed by good VC is. Raising money was not my problem.
[38:14] Speaker 3: My VC should have said, Harry, you know it's not
[38:17] Speaker 3: a good enough idea.
[38:18] Speaker 2: So as an investor in stock twits, I always wondered
[38:22] Speaker 2: why the hell in Twitter buy stock to its?
[38:24] Speaker 3: Well, they don't understand finance is that should have bought it.
[38:26] Speaker 3: You remember the last scene in Raiders was a the lostart.
[38:29] Speaker 3: The whole movie it was about getting and then the
[38:33] Speaker 3: last scene is this is a very important and it's
[38:38] Speaker 3: just a black hole forever whatever, never to be seen again.
[38:43] Speaker 3: The best tech companies like Salesforce, he understands corporate death.
[38:48] Speaker 3: Sometimes you buy something.
[38:50] Speaker 2: To kill it.
[38:51] Speaker 3: To say, and by the way, they're like my newman.
[38:56] Speaker 3: Twitter's like my newman from sipos.
[38:58] Speaker 2: It's like Twitter, like, you know, now who's dating themselves?
[39:02] Speaker 3: So no, but what I'm saying is they're Minuman like
[39:05] Speaker 3: in Seinfeldt, meaning these people. It was a clown car,
[39:09] Speaker 3: as Zuckerberg said, there's so many people that got rich
[39:12] Speaker 3: executing I love the line it was posts, but Zuckerberg
[39:17] Speaker 3: said it first, which was a clown car.
[39:20] Speaker 2: I don't know that crashed into a gold mine.
[39:22] Speaker 3: Yeah, And so Twitter, And the real problem with Twitter
[39:25] Speaker 3: was it was a financial product. And Elan knows that
[39:29] Speaker 3: better than anybody in the end because although he just
[39:32] Speaker 3: well he monetized it by stuffing it in a shell company,
[39:35] Speaker 3: it's still like it's an asset. He's made tremendous mistakes
[39:39] Speaker 3: to think that Trump end arounded the whole thing, meaning
[39:43] Speaker 3: Twitter is supposed to be a real time network they
[39:47] Speaker 3: have to pull. True social is worthless other than one
[39:51] Speaker 3: guy who sits on top of Twitter and you have
[39:54] Speaker 3: to copy paste his tweet.
[39:56] Speaker 2: Like so Twitter on a different plat forgetting.
[39:59] Speaker 3: How bungled the the fact that they owned real time
[40:02] Speaker 3: and do not own real time, and that I'm the
[40:05] Speaker 3: schmock that came up with the original, like Trump is
[40:08] Speaker 3: going to tweet now, obviously Obama was president when I
[40:11] Speaker 3: had this idea, but like that, the pipe matters, and
[40:15] Speaker 3: who is king of the pipe. To think that Trump
[40:17] Speaker 3: beat Elon at his own game is pretty insane.
[40:20] Speaker 2: He is savvy in ways that people don't appreciate.
[40:23] Speaker 3: Insane. The truth social exists, it's worthless, but for one
[40:26] Speaker 3: guy tweeting right, unbelievable. So it's inconceivable to bring best
[40:32] Speaker 3: in my man of Orange. So the poison cannot be
[40:35] Speaker 3: in front of you.
[40:36] Speaker 2: So now twenty twenty four, you come back to Stock
[40:41] Speaker 2: to its as CEO. What motivated that? Are the early
[40:45] Speaker 2: investors going to see an exit? What's going on?
[40:47] Speaker 3: That's inside information?
[40:49] Speaker 2: No, it's not public, No, So it's it's non public information,
[40:54] Speaker 2: but it's not a legal inside information.
[40:56] Speaker 3: Yeah, stuctures is like a corn on your foot.
[41:00] Speaker 2: I mean, listen, can't go.
[41:01] Speaker 3: Here's the thing about venture capital is here's the thing
[41:04] Speaker 3: about venture capital. Not everything should be venture capital.
[41:07] Speaker 2: True.
[41:07] Speaker 3: Okay, So I joke about this with with my finger,
[41:12] Speaker 3: like whose fault is it? Okay, I think Stoctor was
[41:16] Speaker 3: a great idea. The cashag was a great idea. I'm
[41:18] Speaker 3: very proud of that. I'm not proud of having to
[41:21] Speaker 3: run a company seventeen years later, not that it wasn't
[41:24] Speaker 3: my dream when I started as stock to this is
[41:26] Speaker 3: to be sitting here answering questions about how am I
[41:28] Speaker 3: going to make money?
[41:29] Speaker 2: Let me buy You are a very right to do this.
[41:31] Speaker 3: So what I'm saying is I and young kids need
[41:34] Speaker 3: to know this, like math, Not everybody gets to have
[41:37] Speaker 3: a startup of course. Okay, Well, my venture capitalist, if
[41:42] Speaker 3: they're as good as they say, and they are great,
[41:44] Speaker 3: should have stopped me and said this isn't quite a venture.
[41:48] Speaker 2: Let me push back on that, because I knew you.
[41:50] Speaker 2: I know that I am and your venture capitalists, and
[41:53] Speaker 2: we know a lot of the same people said hey,
[41:57] Speaker 2: there was a window to get out. You wouldn't have
[41:59] Speaker 2: gotten an f you number, but you would have gotten
[42:02] Speaker 2: a pretty good No, I never got a number. There
[42:04] Speaker 2: was never I thought there were discussions that just never
[42:07] Speaker 2: came to discussion. Yeah, I thought you guys were on
[42:10] Speaker 2: the one yard.
[42:11] Speaker 3: I'm discussing it right now openly. There's always a price
[42:14] Speaker 3: which camera camera two? No, listen, we have never Some
[42:19] Speaker 3: things are only fairly valued for a second, right, and
[42:23] Speaker 3: somethings stay overvalued or undervalued forever as well. From the
[42:26] Speaker 3: sure and I think stock twits. I'll take full responsibility.
[42:31] Speaker 3: We've always missed a window of positioning, right. But the
[42:36] Speaker 3: goodness is stock is thriving right, Well, this is the
[42:40] Speaker 3: perfect So I'm saying, like Robin Hood, we were ten
[42:43] Speaker 3: years ahead of our time. If you think about where
[42:46] Speaker 3: public when when I started Stock to its retail investing
[42:49] Speaker 3: was a laughing stock, and it still is the most institutions.
[42:53] Speaker 2: Much less so today.
[42:54] Speaker 3: Correct. So again, if you look at my portfolio.
[42:57] Speaker 2: By the way, the private equity, private credit, it wouldn't
[43:01] Speaker 2: be so hungry for retail investors. It was, truly.
[43:05] Speaker 3: Yes, they call me every day, right, So there's two
[43:07] Speaker 3: worlds that I live in the world where retail doesn't
[43:11] Speaker 3: take itself seriously enough, and private equity guys call me
[43:15] Speaker 3: CEOs of public companies called me to take like I'm
[43:17] Speaker 3: in a crazy seat because I'm a goofball. But I
[43:21] Speaker 3: am serious, you know, like I am serious, Like I'm
[43:23] Speaker 3: trying to be serious.
[43:24] Speaker 2: You used to be sixty forty goofball serious, Now you're
[43:27] Speaker 2: forty sixty. Yeah, it switches, You're the new sixty forty.
[43:31] Speaker 3: Yeah, I'm I'm I can laugh at myself, but I'm
[43:34] Speaker 3: trying to run a serious business, right because because it's
[43:38] Speaker 3: been a long time and we were just way ahead
[43:41] Speaker 3: of the curve. Like Jack and Ev didn't understand what
[43:43] Speaker 3: we have. Fred Wilson understood it right. There are very
[43:47] Speaker 3: few people that understood. Very few people liked Robinhood until
[43:51] Speaker 3: twenty twenty in GameStop. Then they like it for the
[43:53] Speaker 3: wrong reasons. By the way, I don't like the Robinhood
[43:57] Speaker 3: that became, like I'm not. I call it the degenerate economy.
[44:00] Speaker 3: But when I invested in Robinhood, I didn't know the
[44:02] Speaker 3: degenerate economy we exist. I didn't know the prediction markets
[44:05] Speaker 3: it would exist. I didn't know options would be their
[44:07] Speaker 3: biggest product. I was just wanting to see.
[44:10] Speaker 2: Options are bigger than crypto for robin Hood.
[44:12] Speaker 3: Crypto tiny options is everything of their profits will come
[44:17] Speaker 3: from options.
[44:18] Speaker 2: Any Wow, I didn't realize that.
[44:20] Speaker 3: Why are they going to make money on zero commission
[44:22] Speaker 3: other than options.
[44:24] Speaker 2: In their order flow margin loans?
[44:26] Speaker 3: That's just that's just media being bad media.
[44:29] Speaker 2: I'm going to tell you that the big shops like
[44:32] Speaker 2: Fidelity in Schwab, the single biggest line on the line
[44:35] Speaker 2: item of profitability are credit loans.
[44:39] Speaker 3: Okay, it could be. I don't know, I'll do the
[44:42] Speaker 3: fin At.
[44:42] Speaker 2: One point in time it was over half at Schwab.
[44:44] Speaker 2: I don't know what is today.
[44:45] Speaker 3: When we invested in Robinhood, here was my thinking is,
[44:50] Speaker 3: first of all, I love the product. You got to
[44:51] Speaker 3: be a user of the product to be a good investmentator.
[44:53] Speaker 3: I'm not the guy who's like, here's space check and
[44:56] Speaker 3: here's a biotect. What do I know? So the odds
[44:59] Speaker 3: have to be stacked to my favor first of all.
[45:01] Speaker 3: But second of all, and they were I was Yahoo,
[45:03] Speaker 3: I was Yahoo Finance, I was you, I was blogging,
[45:06] Speaker 3: I was doing everything. And they came along at the
[45:09] Speaker 3: right time. When Robin the pitch for me with Robinhood
[45:12] Speaker 3: was not that they were going to make money. It
[45:14] Speaker 3: was an eight million valuation. Like you know, at my event,
[45:17] Speaker 3: people were like, how are they going to make money?
[45:18] Speaker 3: I'm like, chill the hell out. They haven't even launched
[45:21] Speaker 3: a thing. The point was, Schwab was paying one hundred
[45:24] Speaker 3: and fifty dollars to get a customer.
[45:25] Speaker 2: Too, a choir customers position, and.
[45:28] Speaker 3: My thesis was like uber Robinhood would pay zero. So
[45:31] Speaker 3: if you get a million people, even if they're four
[45:34] Speaker 3: dollars in their capas it's one hundred, that's a good ARB.
[45:37] Speaker 3: Those don't come along very right. Well, did I think
[45:39] Speaker 3: it could be a thirty billion dollars. I'm not so
[45:42] Speaker 3: psycho that I thought I was investing in a thirty
[45:44] Speaker 3: forty million dollar company billions billion, So of course I'm
[45:48] Speaker 3: not that smart. But what I'm saying is I saw
[45:51] Speaker 3: the ARB and all they had to do was deliver
[45:53] Speaker 3: the product. Now it went way beyond my expectations. That's
[45:56] Speaker 3: the Larry Davis, the.
[45:57] Speaker 2: Way you didn't give me that pitch.
[45:58] Speaker 3: The pitch was, I'm sure I did it.
[46:00] Speaker 2: The pitch was free trading millennials. The whole next generation.
[46:04] Speaker 2: You're going to capture them before anybody else.
[46:05] Speaker 3: Well I knew that from structors. I knew i'd capture them.
[46:08] Speaker 3: But if I say, if I mentioned the ARB trade,
[46:11] Speaker 3: people are like, oh, they're gonna have to raise so
[46:12] Speaker 3: much money.
[46:13] Speaker 2: There was a lot of trade. In hindsight, yeah, the
[46:16] Speaker 2: AR trade would why I invested? What would have been compelling?
[46:19] Speaker 2: And again it's a chapion. I'll tell you a grade.
[46:23] Speaker 2: It's so off rand one great story go ahead.
[46:25] Speaker 3: Because because this is just an investing story. So we're
[46:28] Speaker 3: very small fund The first one was six million. We've
[46:31] Speaker 3: done now we run one hundred million dollar funds and
[46:34] Speaker 3: cap it at a hundred or Yeah, I don't think.
[46:36] Speaker 3: I don't think our returns would be good. We like
[46:38] Speaker 3: writing one to two million dollar checks. That stay in
[46:41] Speaker 3: your lane is something everybody hates saying, but I think
[46:43] Speaker 3: in my world, unless your fee gathering, stay in your lane.
[46:46] Speaker 3: Like people know what we do.
[46:48] Speaker 2: You can laugh.
[46:49] Speaker 3: I believe in that, and I hate when people say it,
[46:52] Speaker 3: but I practice.
[46:53] Speaker 2: That's an annoying way to say. I disagree with what
[46:56] Speaker 2: you're saying, but right, but what you're saying is story
[47:00] Speaker 2: berteas here's my skill set. I'm a good one to
[47:02] Speaker 2: apply the area I know better.
[47:04] Speaker 3: So with Robin so occasionally and again, and I had
[47:08] Speaker 3: breakfast with Fred this morning. We're talking about like your
[47:10] Speaker 3: a legend, Josh is alleged, Like I'm around surrounded by
[47:14] Speaker 3: legends because I've lived long enough.
[47:16] Speaker 2: Okay, I've lived.
[47:17] Speaker 3: Long enough, and I'm curious and I'm nice and i
[47:19] Speaker 3: call people to say hello, I'm a salesman. So who
[47:23] Speaker 3: do I see this morning? Fred Wilson, Like who did
[47:25] Speaker 3: I rend it? Tim O'Brien like I'm friends with like
[47:27] Speaker 3: people that have you have signal because you have what
[47:30] Speaker 3: you've been on the strut and you have experience, not
[47:33] Speaker 3: maybe in space, but in what you do, you have signal.
[47:36] Speaker 3: So with Robinhood and I had learned from Fred Wilson,
[47:39] Speaker 3: like if you really believe in something, and I'm not
[47:42] Speaker 3: a poker player at at all, and ball, you gotta
[47:44] Speaker 3: go in as a VC. You have to.
[47:46] Speaker 2: So Robinhood, you're convincing me to throw money into fun
[47:50] Speaker 2: seven and that'll be the end of your run.
[47:52] Speaker 3: But that's different. Every fund is like a crop of wine.
[47:55] Speaker 3: It could go riding.
[47:57] Speaker 2: How you know we're twenty four was a good Vintage.
[48:00] Speaker 3: Twenty twenty one terrible biture. So so so when Robinhood
[48:05] Speaker 3: was doing very well, but they the two guys were like,
[48:09] Speaker 3: it was not popular. Everybody. All the vcs had committed
[48:12] Speaker 3: to a better meant well front model. So now they
[48:14] Speaker 3: needed to raise another round. And I'm like, they wanted
[48:18] Speaker 3: to raise.
[48:18] Speaker 2: It think fourteen fourteen, yeah, so it was I think
[48:21] Speaker 2: that's when we spoke.
[48:22] Speaker 3: Yeah, So they were like, and I'm like inexperienced because
[48:25] Speaker 3: we write one check, we don't have more money. So
[48:28] Speaker 3: they call me up and they go, can you write
[48:29] Speaker 3: us a term sheet. It's a very sophisticated way of
[48:32] Speaker 3: saying like you won't have to like actually invest, but
[48:36] Speaker 3: if you come in like we can shop like we
[48:38] Speaker 3: can kind of shop it around. So I'm like, dude,
[48:40] Speaker 3: screw that all I want to invest. So over like
[48:44] Speaker 3: July fourth weekend, told my partner and I was two
[48:47] Speaker 3: of us at a time. I'm like, let's just write
[48:49] Speaker 3: an eleven million. They needed to raise eleven million bucks
[48:51] Speaker 3: and they wanted to raise it at some stupid valuation.
[48:54] Speaker 3: It was sixty million ish and I'm like, well, we're
[48:57] Speaker 3: never going to have to really write it. But even
[48:59] Speaker 3: if we do. I can convince my friends like this
[49:02] Speaker 3: is the one. And I called Fred Wilson and goes,
[49:04] Speaker 3: what are you calling me for? You know what to do?
[49:06] Speaker 3: Write a term sheet? I go, but we don't have
[49:08] Speaker 3: eleven million dollars and Fred goes, you'll find it. Just
[49:11] Speaker 3: just do it like a six week which is absurd
[49:14] Speaker 3: now today people write billion dollar checks in an hour.
[49:17] Speaker 3: But like goes, just ask for six weeks. Right, so
[49:20] Speaker 3: we you know, we're you know whatever, you're typing it up.
[49:24] Speaker 3: Send him a term sheet. So yeah, back then more
[49:28] Speaker 3: but you know, ten fingers more errors. So anyway, so
[49:31] Speaker 3: we write up this term sheet, we send it to him,
[49:34] Speaker 3: and they shop it as they probably index ventures. Jan Hamer,
[49:40] Speaker 3: who's like like one of the best investors, comes back
[49:43] Speaker 3: with a term sheet of eleven million on sixty five million,
[49:48] Speaker 3: Wow and like a five day close, so like, you know,
[49:54] Speaker 3: they got what they wanted. Oh and by the way,
[49:56] Speaker 3: index in their term sheet index in the terms social leverage.
[50:00] Speaker 3: That's a typical like who are they Luckily by writing
[50:04] Speaker 3: that term she bought them by jud did the right thing,
[50:06] Speaker 3: and they carved out like as much as we could.
[50:09] Speaker 3: We couldn't even raise a million. So when we so,
[50:11] Speaker 3: they carved us out. We put eight hundred grand in
[50:13] Speaker 3: the Series A. If we had done the eleven million,
[50:16] Speaker 3: I'd be a billionaire two hundred x on the Yeah,
[50:20] Speaker 3: no way bigger like at the peak. But like, but
[50:24] Speaker 3: we've had better investments.
[50:25] Speaker 2: We had better hitting with the Robin Hood shows.
[50:28] Speaker 3: A lot of my alpas we distributed the Stark. A
[50:30] Speaker 3: lot of my LPAs have not sold.
[50:33] Speaker 2: Nobody says, I don't ask.
[50:34] Speaker 3: Our job is to deliver them the cash.
[50:39] Speaker 2: I want to start with a quote of yours that
[50:41] Speaker 2: I really love. Quote. The whole world has become a casino.
[50:46] Speaker 2: Thanks to AI and prediction markets, we are all more
[50:50] Speaker 2: productive and degenerate. Now let's talk a little bit about
[50:56] Speaker 2: the degenerate economy. Explain to listeners what is the degenerate
[51:00] Speaker 2: economy or the d gen economy.
[51:03] Speaker 3: I don't like the word djen, So when I say degenerate,
[51:06] Speaker 3: I say it in the humoristic way. You and I
[51:08] Speaker 3: are degenerates, right because we'll buy a watch, we'll bet
[51:11] Speaker 3: on a game we laugh at degenerously. We don't. We
[51:16] Speaker 3: don't we appreciate the art of degeneracy versus meaning meaning
[51:21] Speaker 3: Laser eyes was dumb, right, But degeneracy is an art
[51:25] Speaker 3: form like speculation. And I live, I own, and I
[51:28] Speaker 3: joke that I own and operate two millennials. And when
[51:32] Speaker 3: you own and operate two millennials, you watch you look
[51:35] Speaker 3: over their shoulders.
[51:36] Speaker 2: Those were your first startups?
[51:37] Speaker 3: No, my kid, Yes, but these two startups the only
[51:41] Speaker 3: startups that matter.
[51:43] Speaker 2: And did either of them merge it? We have any
[51:45] Speaker 2: m and.
[51:45] Speaker 3: A activity we need, We need.
[51:50] Speaker 2: Dividends I'm talking about are they married? So no mergers yet?
[51:54] Speaker 3: My son was, My son was on the board. You
[51:57] Speaker 3: should be chairman of their booyman on the board. I'm
[52:00] Speaker 3: trying to get you see, I'm trying to get them fired.
[52:04] Speaker 3: I'm trying to get medical checks to see if anything's working.
[52:06] Speaker 3: So so degenerate economy was born of this idea that
[52:12] Speaker 3: I couldn't believe where we went, like with Game Stop.
[52:15] Speaker 3: Like I was so stressed during the Game Stop thing
[52:19] Speaker 3: because really I hadn't monetized. I hadn't monetized our investment.
[52:23] Speaker 3: I'm like, er, there was a weekend when robinhood was
[52:27] Speaker 3: worth forty billion, right, and it could have been worthless?
[52:30] Speaker 3: Do you understand? Like I wasn't rich and I'm like,
[52:34] Speaker 3: it wasn't even their blame. Whoever you want. People lost
[52:38] Speaker 3: their minds, and so let me just explain to you.
[52:41] Speaker 3: If you have your.
[52:42] Speaker 2: Phone, go ahead.
[52:43] Speaker 3: What Robinhood perfected which no one figured out, was like
[52:47] Speaker 3: when we used to play pinball. Everybody there was always
[52:51] Speaker 3: that kid who was so good at it crazy could
[52:53] Speaker 3: stump it well, he could bump it without tilting it right,
[52:56] Speaker 3: and he could just get the he could just get
[52:58] Speaker 3: the machine to dance tilt. Happened everybody. The app was
[53:04] Speaker 3: so well designed. The app was so well designed that
[53:07] Speaker 3: everybody pushed the same button at the same time.
[53:09] Speaker 2: And it couldn't carry the I remember when you.
[53:11] Speaker 3: Understand, that's literally what happened. So it was a design flaw,
[53:15] Speaker 3: it was a design flow.
[53:16] Speaker 2: It wasn't the design floor. Nobody expected it to scale
[53:20] Speaker 2: ten thousand x no.
[53:21] Speaker 3: But well, if you push everybody to one button right
[53:24] Speaker 3: or another button, yeah, and then people come on, see me,
[53:26] Speaker 3: say push this button, and everybody's like, let's see what happens,
[53:30] Speaker 3: and guess what happened. Crash not to be repeated again,
[53:32] Speaker 3: hasn't been repeated again, and that's what makes the markets great.
[53:35] Speaker 3: That hole was filled by the whole being created. We
[53:38] Speaker 3: haven't seen another thing like this, although recently with Carl Avis.
[53:41] Speaker 3: But like GameStop broke the machine and almost bankrupted the company.
[53:47] Speaker 3: And it was many lessons in there. The most important
[53:51] Speaker 3: was Robin Hood not in their hubris or anything. They
[53:55] Speaker 3: mistook success for a brand. When you build a brand
[53:59] Speaker 3: in four years, not forty years, you don't appreciate that
[54:03] Speaker 3: you have no brand value, right, And I'm like, no
[54:07] Speaker 3: one understands this, like they were one of the first
[54:09] Speaker 3: case studies, and like what it didn't deserve to be zero?
[54:12] Speaker 3: Who knows all the things that went wrong. But I'm
[54:14] Speaker 3: just some guy who's like, what the right couldn't how
[54:18] Speaker 3: embarrassing would be if it goes from forty billion to zero?
[54:20] Speaker 3: And you know, Galloway and all these guys were piling
[54:23] Speaker 3: on and all these people piling on them, like you
[54:25] Speaker 3: don't even understand what's going on.
[54:26] Speaker 2: So wait, let me tease this out of you a
[54:29] Speaker 2: little bit. I thought you were going in a different direction.
[54:32] Speaker 2: How degenerate the trading in things like GameStop and when
[54:37] Speaker 2: Hurtz was bankrupt and or was it Avis, I don't
[54:40] Speaker 2: even remember which some really foolish reckless, and I think
[54:45] Speaker 2: those of us with gray hair looked at it and
[54:48] Speaker 2: kind of laughed because we knew exactly how.
[54:50] Speaker 3: That gapes and all the stuff. I hate it, right, But.
[54:55] Speaker 2: That wasn't your concern. Your concern was, Hey, here's a
[54:58] Speaker 2: fire hose of new clients, new orders. This is the
[55:02] Speaker 2: scale this company needs to become wildly successful, and they're
[55:06] Speaker 2: just not prepared to deal with the sheer volume. And
[55:09] Speaker 2: if this crash goes on more for a couple of hours,
[55:12] Speaker 2: two days from now, this is a zero.
[55:14] Speaker 3: It was a zero. We can argue. I don't know
[55:16] Speaker 3: the whole story, but I imagine someone called someone at the
[55:18] Speaker 3: options clearing firm and said, you're bankrupt, and the VC's lucky.
[55:21] Speaker 3: We're in so big they had put more money.
[55:24] Speaker 2: They didn't have the reserve cash large trades of options.
[55:28] Speaker 3: We'll never know the real.
[55:29] Speaker 2: Sty So technically Cibo is the counterparty on all trades,
[55:34] Speaker 2: and they also on the platform, so they demand a
[55:36] Speaker 2: certain amount of capital if you're going to trade X,
[55:40] Speaker 2: and they're trading billions of dollars. They didn't have that capital.
[55:44] Speaker 3: So this is why my degenerate economy index was born.
[55:47] Speaker 3: Meaning I don't think AMCs. What's in my index, which
[55:51] Speaker 3: is outperforming everything is Cibo is one in my time,
[55:54] Speaker 3: in one position who benefits. So my degenerate economy thesis
[55:57] Speaker 3: is finding the companies that benefit from global degeneracy.
[56:02] Speaker 2: You created this last year two years ago, right, so free.
[56:06] Speaker 3: I had to share it.
[56:07] Speaker 2: Just to put some numbers on this. It's gambling, it's
[56:12] Speaker 2: day trading, it's mean coin speculation. It's vaping one hundred
[56:16] Speaker 2: and seventy percent. The Nazak one hundred of the same
[56:19] Speaker 2: time period isn't even up one hundred percent, it's ninety
[56:21] Speaker 2: four percent. You're almost doubling the nasdack.
[56:24] Speaker 3: And I give it away for free because and I share.
[56:26] Speaker 2: It's not Why isn't this an ETF because.
[56:29] Speaker 3: The bank always talks about I was like, why do
[56:32] Speaker 3: you want to be in the ETF business?
[56:33] Speaker 2: So do it? You know you use alpha ETF architects
[56:37] Speaker 2: work with But then I have.
[56:39] Speaker 3: A product again. This is I think part of like,
[56:42] Speaker 3: you know, the age I'm at is like I don't
[56:44] Speaker 3: want to be someone yelling I mean that my that
[56:46] Speaker 3: I kathy that as soon as I monetize it or
[56:49] Speaker 3: go to zero, like this thing will stop working. I
[56:52] Speaker 3: love the idea that I can give it away for free.
[56:54] Speaker 3: This goes back to the I appreciate social media, meaning
[56:56] Speaker 3: what am I going to make? It's like as soon
[57:00] Speaker 3: as I start charging for it, the whole thing becomes I.
[57:03] Speaker 2: Took ads off the blog because they were annoying and
[57:05] Speaker 2: ugly and the amount of revenue it made was just
[57:08] Speaker 2: too annoying. You're saying the same thing.
[57:11] Speaker 3: Yeah, I'm saying like, hey man, I'm like, I got
[57:14] Speaker 3: a little thesis. It's not that complicated.
[57:18] Speaker 2: I love this thesis.
[57:19] Speaker 3: I think people the CBO CME hyper liquid now is
[57:24] Speaker 3: in there, and no one knows what hyper liquid is.
[57:26] Speaker 3: I constantly imagined hyper liquid is the is the thing,
[57:30] Speaker 3: Meaning today all I get pitched on are by the
[57:33] Speaker 3: next Robinhoods, and I'm like.
[57:35] Speaker 2: The world doesn't robinhood.
[57:37] Speaker 3: But all they keep talking about is, you know, we
[57:39] Speaker 3: got purpse trading twenty four to seven on hyper liquid.
[57:42] Speaker 3: It's it's it's a new salon now let's call it.
[57:44] Speaker 3: Because I'm not a crypto guy, and I'm like, after
[57:46] Speaker 3: getting one hundred pitches of the same product and they
[57:49] Speaker 3: all talked about hyper liquid, I just bought hyper liquid.
[57:51] Speaker 2: And what's the market cap of that.
[57:55] Speaker 3: Couple. It's like twelve people in one of the most
[57:56] Speaker 3: profitable companies in the world out of Singapore. Like the
[57:59] Speaker 3: guy has no freedom because he's so rich. It's like
[58:03] Speaker 3: a system. It's like a very fast change. What's the
[58:05] Speaker 3: symbol hype?
[58:07] Speaker 2: Hype? What a great symbol.
[58:09] Speaker 3: Yeah, it's a token and you can buy it on
[58:11] Speaker 3: robin Hood. I'm not promoting, I'm.
[58:13] Speaker 2: Just saying, so this you can buy it on robin Hood.
[58:15] Speaker 2: But does this not trade over the counter. You can't
[58:17] Speaker 2: get it anywhere?
[58:18] Speaker 3: You can trade it as a There's a dat called
[58:21] Speaker 3: p you are arm Again, I'm not recommending it, but
[58:23] Speaker 3: I'm long and little is a way that you can
[58:27] Speaker 3: trade it over the counter. And again you're betting on
[58:30] Speaker 3: the fact you don't know anything about supply to man,
[58:32] Speaker 3: you're just right. It's the system that everybody's trading.
[58:34] Speaker 2: Your speculation speculation on other people's speculation. That's that's my
[58:39] Speaker 2: basis squared.
[58:40] Speaker 3: So anyways, what I'm what, So the degenerate economy is
[58:44] Speaker 3: about picks and shovels. We can't stop if a young
[58:48] Speaker 3: person like my son, And again I own and operate
[58:50] Speaker 3: two millennials and I don't want them, betting my son
[58:54] Speaker 3: will call me and goes, I can't believe I lost
[58:55] Speaker 3: a twenty team, Parlago, Who are you we even of
[58:59] Speaker 3: my This is why I have to do a step
[59:01] Speaker 3: in takeover of my son's company, because I'm like, are
[59:05] Speaker 3: you talking to me? Like you asked them to ven
[59:08] Speaker 3: you fifty bucks to put on a twenty team parliam
[59:10] Speaker 3: and your complaining about it's so idiotic. So I'm like
[59:12] Speaker 3: trying to teach them not to be idiots.
[59:15] Speaker 2: You can have a degenerator a little bit of math,
[59:17] Speaker 2: the problem is not a math.
[59:20] Speaker 3: And you also full circle on the general economy. You
[59:23] Speaker 3: have the wrong teachers right now. I got brought on
[59:26] Speaker 3: board by guys like you, Kramer, the people whould experience stuff,
[59:29] Speaker 3: Fred Wilson. These kids are learning from chrum Mouth and
[59:31] Speaker 3: David Secks. These guys were born of one generation. They
[59:34] Speaker 3: worked at Facebook, they work for Elon. You could if
[59:37] Speaker 3: you're not rich working for Elon or Facebook, that would
[59:40] Speaker 3: be interesting. If you are rich and you're kissing the
[59:42] Speaker 3: nipple of Facebook, and it's not interesting. You were supposed
[59:46] Speaker 3: to be rich, right, have some human so we're my
[59:52] Speaker 3: kid is stop being a degenerate. But The fact is
[59:57] Speaker 3: you can't not be a degenerate when prices. Kids are
[1:00:01] Speaker 3: yoloing because they can, and because friction lists we have
[1:00:06] Speaker 3: learned some of these kids will learn how to be
[1:00:08] Speaker 3: good put sellers. Premiums I understand, but the markets are
[1:00:13] Speaker 3: very important, meaning having a price on everything is fantastic.
[1:00:16] Speaker 2: Coming up, we continue our conversation with Howard Linzen, co
[1:00:20] Speaker 2: founder of Social Leverage. I'm Barry Ridults. You're listening to
[1:00:24] Speaker 2: Masters in Business on Bloomberg Radio. I'm Bury Ridults. You're
[1:00:43] Speaker 2: listening to Masters in Business on Bloomberg Radio. My old
[1:00:47] Speaker 2: friend Howard Linzen of Social Leverages here, And when I
[1:00:51] Speaker 2: say old, it's only partly because we know each other
[1:00:54] Speaker 2: so long. It's mostly because he's an old man and
[1:00:58] Speaker 2: is now sixty years old. Years ago, my wife and
[1:01:01] Speaker 2: I I'm not a cruise person. We were young, we
[1:01:04] Speaker 2: were broke. We used to use this website called vacations
[1:01:07] Speaker 2: to Go dot com. You've booked last minute, would question
[1:01:10] Speaker 2: nothing like a week long cruise through eight islands in
[1:01:13] Speaker 2: the Caribbean. Five hundred bucks, food and drink included. Booze included,
[1:01:17] Speaker 2: so as soon as they hit international water as the
[1:01:21] Speaker 2: casino opens, I am not a gambler. We walked through
[1:01:25] Speaker 2: and I just decide to look at the roulette table,
[1:01:28] Speaker 2: not bet look at it. And this is the difference
[1:01:31] Speaker 2: between my wife, who taught fashion illustration and design, is
[1:01:36] Speaker 2: a visual person. I'm a little more of a math guy.
[1:01:39] Speaker 2: And I say to her, so we're watching twenty minutes
[1:01:42] Speaker 2: of roulette, and it's just it's so dumb. Yeah, it's
[1:01:47] Speaker 2: for random, stupid reason. But I point out to her, Look,
[1:01:52] Speaker 2: the red pays or red or black or otter even
[1:01:56] Speaker 2: pay two to one, but you have zero and double zero,
[1:01:59] Speaker 2: so it's not even odds. And then this group pays
[1:02:04] Speaker 2: three to three to one, but it's one and four
[1:02:06] Speaker 2: chance of winning. So they're making money. And I'm going
[1:02:09] Speaker 2: over all the math with her, and she listens to
[1:02:12] Speaker 2: all the numbers and says to me, I don't know
[1:02:16] Speaker 2: about the ratios of the math, but all I can
[1:02:19] Speaker 2: tell you is I see people. I see the croupier
[1:02:23] Speaker 2: taking off a whole lot more money than she's handing
[1:02:26] Speaker 2: out to gamblers. That that's the takeaway, hear, the croupier,
[1:02:29] Speaker 2: not the odds. Be the house.
[1:02:31] Speaker 3: Don't bebo hit all time high the house. Yeah, have
[1:02:35] Speaker 3: you ever hear anybody on social media talking about cbo ever.
[1:02:38] Speaker 3: They love that no one's talking about them. So the
[1:02:40] Speaker 3: other thesis that I have is trends with no friends.
[1:02:43] Speaker 3: Uh huh, Okay, So I'm looking for trends because again,
[1:02:46] Speaker 3: I run a huge social media site, right, So I
[1:02:49] Speaker 3: if I have a choice between Navidi and sand Disk,
[1:02:52] Speaker 3: everybody's talking about Navidio. You want something, I'm not saying,
[1:02:54] Speaker 3: I know, same thing, same thing. So on stocks, I
[1:02:58] Speaker 3: can look for tickers that are trending with very fair followers.
[1:03:03] Speaker 3: No does not have to be here. I don't like
[1:03:04] Speaker 3: small caps, so I'm like, no, I.
[1:03:06] Speaker 2: Mean before it really goes up.
[1:03:09] Speaker 3: So it's the one thing that Starctor tells and I
[1:03:11] Speaker 3: have to AI. You asked me why I came back
[1:03:13] Speaker 3: to Starctor. It's two things, AI and the fact that like,
[1:03:16] Speaker 3: I can now code with clog code and so I
[1:03:19] Speaker 3: can call both own engineers a little bit.
[1:03:22] Speaker 2: Oh, this could take six weeks. I need it by today.
[1:03:25] Speaker 3: Well again there's not today, but there's not six weeks, right, Okay.
[1:03:28] Speaker 3: So there's that, and then there's the fact that we
[1:03:30] Speaker 3: have all this data and we have a great community.
[1:03:32] Speaker 3: So I wanted to come back and like see this
[1:03:34] Speaker 3: thing through and we're and we're doing very well. The
[1:03:37] Speaker 3: the issue is now I can explain to people and
[1:03:41] Speaker 3: I can pull out the data to show people trends
[1:03:43] Speaker 3: with no friends meaning I want to you want to
[1:03:46] Speaker 3: find stocks that are trending that have very little.
[1:03:49] Speaker 2: Discussion makes a lot of sense.
[1:03:51] Speaker 3: Yeah, it's just intuitive meaning IBD. I learned on IBD.
[1:03:55] Speaker 3: I love price relative strength. I've just added a layer
[1:03:58] Speaker 3: to that that matches high price relative strength with low socials.
[1:04:02] Speaker 3: It's almost like the Mooshe of Vegas. I'm trying to
[1:04:05] Speaker 3: find the stocks that know even though I run a
[1:04:07] Speaker 3: social media site, I'm like betting on the fact that like,
[1:04:10] Speaker 3: they'll discover this in time.
[1:04:12] Speaker 2: You should talk to Ben Hunt and what he's doing
[1:04:14] Speaker 2: with the Persians because they're too they have a narrative
[1:04:17] Speaker 2: then there too. But the combination of where the narrative
[1:04:21] Speaker 2: is just starting to take the tipic and where the
[1:04:24] Speaker 2: trends is friends.
[1:04:27] Speaker 3: That's why I so I give it away from quantify it. Yeah,
[1:04:30] Speaker 3: I hate the quant side. I did visually see it
[1:04:34] Speaker 3: from years of being a known quiet which there's you
[1:04:36] Speaker 3: I don't even know.
[1:04:37] Speaker 2: Matt, but but if you want AI to help you with.
[1:04:39] Speaker 3: Yeah, I got to catch up with That's awesome, But
[1:04:42] Speaker 3: but he also sees the role a little darker than
[1:04:44] Speaker 3: I see it. I'm a much more of an optimist.
[1:04:47] Speaker 2: You and I both, Yeah, but when I want to
[1:04:49] Speaker 2: know what's the worst case scenario, like when the tariffs
[1:04:52] Speaker 2: were first rolled out, not so much losing the finger,
[1:04:56] Speaker 2: but his piece the end of the Pass Americana is true,
[1:05:00] Speaker 2: was the end point where if this really goes off
[1:05:04] Speaker 2: the rails, this is how bad it.
[1:05:05] Speaker 3: It's deglobalization, right.
[1:05:07] Speaker 2: But he works out the details. Yeah, so great, But again,
[1:05:12] Speaker 2: you and I are both a little more of it.
[1:05:13] Speaker 3: I'm much more simple. Right, If I see something going up,
[1:05:17] Speaker 3: you want to that's my queue book. And then if
[1:05:20] Speaker 3: it's a certain market cap, and then I check stocks
[1:05:23] Speaker 3: and I go, no one cares. I love that. Then
[1:05:26] Speaker 3: I need to tell a story. Everybody needs to tell stories.
[1:05:28] Speaker 3: Stocks are stories, and some people are great at storytelling.
[1:05:31] Speaker 3: The pounter guy, there's certainly. But again, the numbers eventually matter,
[1:05:36] Speaker 3: and I'm trying to find companies going up, right, and
[1:05:40] Speaker 3: that's not complicated. But then I have other layers to it,
[1:05:44] Speaker 3: and I need to understand the catalyst myself, like, if
[1:05:46] Speaker 3: it's just something I'll never understand, it's hard for me
[1:05:49] Speaker 3: to ride the waves. So if I don't really understand
[1:05:52] Speaker 3: and use the product, the odds of me getting scared
[1:05:54] Speaker 3: out of a trade are ninety nine percent.
[1:05:56] Speaker 2: So let's talk about you.
[1:05:58] Speaker 3: So that's my index.
[1:05:59] Speaker 2: Let's talk about your startups who are becoming degenerates. Your
[1:06:04] Speaker 2: kids given social apps, zero commission trading, all the option
[1:06:10] Speaker 2: stuff that's going on for your kids benefit. What sort
[1:06:15] Speaker 2: of guardrails I don't know. If it's the product, regulation, educational,
[1:06:21] Speaker 2: what do you wish was in place to protect them
[1:06:24] Speaker 2: that isn't there yet? And let's also add these are
[1:06:28] Speaker 2: not miners. These are late twenties adults out of school
[1:06:33] Speaker 2: for almost a decade, real people. What guardrail should they
[1:06:37] Speaker 2: have to protect them from their own most instincts?
[1:06:40] Speaker 3: Listen, we could argue that the bet we put our
[1:06:43] Speaker 3: negative hat on it. It's like, you can go buy
[1:06:44] Speaker 3: bullets at Walmart, So it's like, what is a guardrail?
[1:06:48] Speaker 3: Right in a world where you can buy bullets and
[1:06:51] Speaker 3: you know everybody's got drones. So I'm like more like, okay, guys,
[1:06:55] Speaker 3: if I hear that you did a parlay. We can't
[1:06:57] Speaker 3: be related, so stop betting. Betting different than investing. So
[1:07:01] Speaker 3: if Shane at Polly Market and they're partners of ours,
[1:07:04] Speaker 3: if Shane or Tarika at Call she had pitched me
[1:07:08] Speaker 3: those ideas at the same time that Robin had pitched
[1:07:11] Speaker 3: me their idea, I would have passed. Why I don't bet.
[1:07:14] Speaker 3: I think it's stupid, right, okay, Like I think it's funny,
[1:07:18] Speaker 3: and I think prediction markets are news better than the
[1:07:21] Speaker 3: New York Times. No offense because I like prediction markets
[1:07:24] Speaker 3: because I don't have an opinion. I just look at
[1:07:26] Speaker 3: the price and I go whether I believe it or not.
[1:07:28] Speaker 3: I think that's the genius of it. But if poly
[1:07:30] Speaker 3: Market and Call she went out to VC's and said
[1:07:32] Speaker 3: we're the new news, their valuation would be a dollar right, okay,
[1:07:37] Speaker 3: so we know the real story. They can't tell what
[1:07:39] Speaker 3: they really are good at, which is news.
[1:07:41] Speaker 2: And by the way, they're not great at news.
[1:07:42] Speaker 3: I understand there is news. Good at news, it's.
[1:07:45] Speaker 2: Probability of something happening, But I'd rather not.
[1:07:49] Speaker 3: Read someone's opinion. I don't need to see Elon's finger
[1:07:52] Speaker 3: on the news because that's a story. They're not the
[1:07:54] Speaker 3: real story. Give me the numbers. I know it's fake,
[1:07:57] Speaker 3: but I got a numbers. If Mondamie isn't ninety percent
[1:08:00] Speaker 3: of my daughter's mad. But Rachel, here's what you do.
[1:08:03] Speaker 3: Then bet the other side. Do you make eight time
[1:08:06] Speaker 3: or put it's ten to one, ten to one. But
[1:08:09] Speaker 3: I would bet money on Mandamie. And if you really
[1:08:11] Speaker 3: want to change how you think about the world, go
[1:08:13] Speaker 3: help somebody on the other side who has a chance.
[1:08:16] Speaker 3: Go put in the time. Go help Mark Cuban if
[1:08:18] Speaker 3: you really want.
[1:08:18] Speaker 2: To be I love what he's doing on the healthcare.
[1:08:20] Speaker 3: But what I'm saying to my daughter, I said, call Mark,
[1:08:23] Speaker 3: I'll get you in touch with Mark. Do something. But
[1:08:25] Speaker 3: just complaining about the numbers that you see and the
[1:08:28] Speaker 3: numbers were right, whether they whether they tipped it in
[1:08:31] Speaker 3: this again, I don't want to get in all like
[1:08:33] Speaker 3: the fraud and all the fake stuff about it. But
[1:08:36] Speaker 3: the numbers is much e's than reading an opinion piece.
[1:08:38] Speaker 2: I'm gonna Can I tell share something fun?
[1:08:40] Speaker 3: Yeah.
[1:08:41] Speaker 2: So there were some of the early bets about outcome
[1:08:45] Speaker 2: of the war and different events happening, and I said
[1:08:49] Speaker 2: in a quarterly call, Hey, I don't really know who's
[1:08:53] Speaker 2: putting We don't know who's putting these bets in. Yeah,
[1:08:55] Speaker 2: but if you stop and think about it, if you're
[1:08:58] Speaker 2: negotiating with another side, this being the syop, because you
[1:09:02] Speaker 2: spent half a million dollars to move the outcome of
[1:09:06] Speaker 2: something that's the least money the Department of Defense will
[1:09:09] Speaker 2: ever spend, and anybody on this side is looking as oh,
[1:09:12] Speaker 2: they're they're really going to put boots on the grounds.
[1:09:15] Speaker 2: A look at the track record. Here, here, here's a
[1:09:20] Speaker 2: wallet that's ten for ten. Oh my god, we have
[1:09:24] Speaker 2: to stop and think about You don't really know who's
[1:09:28] Speaker 2: using this, who's betting this, who's manipulating? But we didn't
[1:09:30] Speaker 2: that guy who got arrested, that was a throwaway.
[1:09:32] Speaker 3: That's it's still better than Russia and China using our
[1:09:36] Speaker 3: social media.
[1:09:37] Speaker 2: Oh my god, I'm very and North Korea and I ran.
[1:09:41] Speaker 3: Yeah. So I'm not saying I'm for. I'm an investor
[1:09:43] Speaker 3: in poly market and call she personally at crazy evaluation
[1:09:46] Speaker 3: because I wouldn't have invested. I just chased it in SPVs.
[1:09:50] Speaker 2: The co founder of Calshi, the woman what's her.
[1:09:55] Speaker 3: Name, I don't know, but I know that's a woman.
[1:09:57] Speaker 2: I know she was a guest on the podcast is
[1:10:00] Speaker 2: she rites she was really good this three years ago.
[1:10:03] Speaker 2: I shed never even thought to put money into it.
[1:10:06] Speaker 3: So it's more academic than anything. It was academic it
[1:10:10] Speaker 3: still is because there's very few people using these products
[1:10:14] Speaker 3: for all the free presses. It's like Twitter. There's very
[1:10:16] Speaker 3: few people using Twitter and the drain at this point. No,
[1:10:21] Speaker 3: but I'm saying at the beginning it had a lot
[1:10:23] Speaker 3: of power even though there weren't that many uses.
[1:10:25] Speaker 2: It was it was, you know, it was a fraction
[1:10:27] Speaker 2: of Instagram with TikTok so fraction.
[1:10:31] Speaker 3: It's a fraction of the news. But I'd rather my
[1:10:33] Speaker 3: son and daughter go to page two of poly market
[1:10:36] Speaker 3: because you know what they're going to see, news that
[1:10:39] Speaker 3: they didn't would never look at in the New York Times, saying,
[1:10:41] Speaker 3: look at the election in Peru and now at least.
[1:10:44] Speaker 2: I'll know the names Venezuela for that or Venezuela.
[1:10:47] Speaker 3: So I'm super bullish for different reasons on prediction markets.
[1:10:51] Speaker 3: And I know there's like obviously.
[1:10:53] Speaker 2: Money right into the Degeneracy index completely. How long does
[1:10:57] Speaker 2: the DJN index run for us this short term thing
[1:11:01] Speaker 2: or does this question?
[1:11:02] Speaker 3: That's why I don't want to charge for it because
[1:11:04] Speaker 3: I think I'm allt because Google and Apple are my
[1:11:06] Speaker 3: biggest positions because they are the rails for the degenerated economy.
[1:11:10] Speaker 3: They are the front facing tool of it.
[1:11:14] Speaker 2: Apple of the phones and mobile.
[1:11:16] Speaker 3: And Google because of the phones, and YouTube and the
[1:11:19] Speaker 3: casino games all run on the app stores. The free
[1:11:22] Speaker 3: games that you have, they make Amazon or face. Amazon
[1:11:28] Speaker 3: just added at the beginning of the year because of
[1:11:30] Speaker 3: robots Axons and.
[1:11:32] Speaker 2: Not not Amazon Web Service because of robots.
[1:11:35] Speaker 3: Yeah, I mean, it's just you can't not own Amazon
[1:11:37] Speaker 3: at this era in the generate economy because they are
[1:11:40] Speaker 3: the center of it, robots, the degenerate economy. You have
[1:11:44] Speaker 3: to any of the robot builders you like, because they're
[1:11:47] Speaker 3: too early. I'm a personal investor in a few, but Aptronic,
[1:11:52] Speaker 3: which is just massive. But again it's a personal You.
[1:11:56] Speaker 2: Have any interest in what uh Elon is doing with Groan.
[1:12:02] Speaker 3: Yeah, but it's a holding company, like I don't know
[1:12:04] Speaker 3: what this position is kind of a round.
[1:12:06] Speaker 2: It so so meaning Tesla is a holding company for everything.
[1:12:10] Speaker 3: But is that going to be the entity that goes
[1:12:12] Speaker 3: public for No. But I'm saying to SpaceX, why does
[1:12:16] Speaker 3: he need two tickers? Like, again, I don't understand what
[1:12:19] Speaker 3: the final being is, So why do I need to
[1:12:21] Speaker 3: own some Elon holding company. I think I'm stupid. So
[1:12:25] Speaker 3: you're betting on him, and you know I'd rather bet
[1:12:27] Speaker 3: on something I understand.
[1:12:29] Speaker 2: I'm with you, I'm not I don't disagree. I'm trying to.
[1:12:31] Speaker 3: Yeah. Another recent ad is it's already doubled as Clear secure.
[1:12:35] Speaker 3: You know Clear when you go through, it's so to me,
[1:12:38] Speaker 3: if the world's degenerously, you need security. So it's like
[1:12:41] Speaker 3: it's a clear Clear has been a home run. They
[1:12:43] Speaker 3: don't have a lot of tech, but the great brand.
[1:12:45] Speaker 2: Yeah I thought they have tech is I.
[1:12:47] Speaker 3: Think they license a lot of this every their own. Yeah.
[1:12:51] Speaker 3: So again, once you dig into a story, my conviction
[1:12:54] Speaker 3: comes like how much of this they own? But the
[1:12:56] Speaker 3: hell of a brand that the company has been around
[1:12:58] Speaker 3: forever and they have they lailed many fat and they
[1:13:02] Speaker 3: can do so much more stadiums, the brand, Man.
[1:13:05] Speaker 2: What are you talking about? You go to wash a
[1:13:07] Speaker 2: nick game, it's clearer, it's clear on the way in.
[1:13:11] Speaker 3: That was my bet. It's just a clear trend. No
[1:13:14] Speaker 3: one ever talks about it too, so it's a massive
[1:13:17] Speaker 3: up trend. Broke out and you never hear people talk
[1:13:20] Speaker 3: about it.
[1:13:20] Speaker 2: If I use either CHASEEFI Reserve or MX, I want
[1:13:24] Speaker 2: to say, PLAT you get a credit towards any travel
[1:13:28] Speaker 2: and clear is just an automatic. It's no brainer.
[1:13:31] Speaker 3: Yes, what is it?
[1:13:32] Speaker 2: One hundred and fifty dollars a year. It's fantastic.
[1:13:34] Speaker 3: My son would call me because that's the greatest gift
[1:13:36] Speaker 3: you ever got.
[1:13:37] Speaker 2: Man.
[1:13:37] Speaker 3: I'm like, wow, when a twenty year old knows something
[1:13:39] Speaker 3: and any year old knows something, those are a good trend. Yeah,
[1:13:42] Speaker 3: you know that's a brand. Yeah, when it's just a
[1:13:44] Speaker 3: twenty year old knows it, not a brand?
[1:13:45] Speaker 2: Maybe catch them? Maybe it doesn't.
[1:13:47] Speaker 3: Yeah, CBOE I love it because they power the whole thing.
[1:13:51] Speaker 3: You can't do this without CBOE. Cme the MRK you know,
[1:13:56] Speaker 3: I yes, you know the New York stocking shame.
[1:13:58] Speaker 2: Let me ask you a question of direct investing question
[1:14:01] Speaker 2: before we get to our favorite questions that I think
[1:14:05] Speaker 2: a lot of investors have a hard time with. I
[1:14:08] Speaker 2: started on trading this, so I'm okay with losses. It's
[1:14:11] Speaker 2: a given. But if you say to somebody, I want
[1:14:14] Speaker 2: you to put a little money into these ten or
[1:14:16] Speaker 2: twenty stocks, half of them going to go out of business,
[1:14:20] Speaker 2: maybe five or break even. You'll make money on a
[1:14:22] Speaker 2: couple and maybe one's home run. How do you deal
[1:14:26] Speaker 2: with that? Really fat head long tail?
[1:14:29] Speaker 3: You know what I mean? Index? I'm so into indexing.
[1:14:32] Speaker 2: No, I mean on your on your private seed state.
[1:14:36] Speaker 2: Like most of the seed investments you're going to make
[1:14:39] Speaker 2: aren't going to get you a greatful of your time.
[1:14:41] Speaker 2: I am Oh, I'm wrong all the time.
[1:14:44] Speaker 3: I'm to bearish on my industry, right, I never I
[1:14:47] Speaker 3: believe it was a moment in time with ZERP. I
[1:14:49] Speaker 3: think it got the country through its unintended circumstances. We
[1:14:54] Speaker 3: live in all these unintended circu consequences, right, yeah, or
[1:14:57] Speaker 3: unintended consequences.
[1:14:58] Speaker 2: Sorry, By the way, it's nicely wealthy. That happens a
[1:15:01] Speaker 2: whole lot.
[1:15:02] Speaker 3: I am wealthy, just born at the right time, a
[1:15:03] Speaker 3: lot of untended circumstances. SURP is a good thing, right,
[1:15:07] Speaker 3: I'm not saying. I'm not saying I shouldn't be ashamed.
[1:15:09] Speaker 2: But if you have assets, if you're if you're a
[1:15:12] Speaker 2: work and stiff, it's like I used to be. It
[1:15:14] Speaker 2: was tough.
[1:15:15] Speaker 3: Yeah, s and p's at all time highs cash levels
[1:15:17] Speaker 3: at all time high. If I hear those two things together,
[1:15:20] Speaker 3: what do I think of inflation? It's never been a
[1:15:22] Speaker 3: better time to have assets, right, doesn't mean I don't
[1:15:25] Speaker 3: know when it's going to end. I have cash and
[1:15:27] Speaker 3: stars the double whammy. So I'm lucky. I am so
[1:15:32] Speaker 3: bearish on what I do for a living, meaning what
[1:15:37] Speaker 3: value do I add in a world of six percent
[1:15:40] Speaker 3: interest rates tying someone up for ten years, when I
[1:15:44] Speaker 3: can go buy sand disk in the public markets and
[1:15:47] Speaker 3: get six thousand percent in a year. I'm not saying
[1:15:49] Speaker 3: I'm smart enough to hold these things, but in a
[1:15:51] Speaker 3: world where Robinhood and a thousand Robin Hoods are going
[1:15:54] Speaker 3: to bloom. If you're asking me my biggest bad public
[1:15:57] Speaker 3: markets do the work. You have an analyst and CLO.
[1:16:01] Speaker 3: You can go see beaten up. No one's following any stock.
[1:16:04] Speaker 3: Everybody's momentum investing, Go find ten companies. So why would
[1:16:07] Speaker 3: you do a startup investing? Every kid wants to be
[1:16:09] Speaker 3: an angel investor. I'm like, dude, do it in the
[1:16:12] Speaker 3: public markets. You have liquidity and you're not locking up
[1:16:15] Speaker 3: your clients for ten years.
[1:16:17] Speaker 2: But you're not answering my question. Okay, which is how
[1:16:20] Speaker 2: do you as an investor deal with the psychology of
[1:16:24] Speaker 2: knowing most of your seed investments aren't going to work out?
[1:16:29] Speaker 2: Is it just the nature of the beast?
[1:16:32] Speaker 3: No?
[1:16:32] Speaker 2: Or does that weigh on you at all?
[1:16:33] Speaker 3: No? I think it aligned with how I thought of
[1:16:36] Speaker 3: the world as as someone who believes their high integrity
[1:16:39] Speaker 3: wishes who wants people to believe their high integrity for
[1:16:42] Speaker 3: my kid's sake. And you know, the integrity of telling
[1:16:46] Speaker 3: my investors that up front is the release meaning I'm
[1:16:50] Speaker 3: not telling my investors we're going to be ninety percent
[1:16:52] Speaker 3: hit right. If you give me money, you're gonna hate
[1:16:55] Speaker 3: me because you're going to think the idea that I love,
[1:17:00] Speaker 3: the dumbest idea, the robin.
[1:17:01] Speaker 2: Quote unquote, yeah, dumbest idea.
[1:17:04] Speaker 3: You are betting on me to hang thirty pieces of
[1:17:06] Speaker 3: art in Howie's gallery did Larry David Gallery, and you
[1:17:11] Speaker 3: will pick If I gave you the choice to invest
[1:17:13] Speaker 3: in all thirty, you would pick the two that went
[1:17:15] Speaker 3: to zero. So you're betting on me to to see
[1:17:19] Speaker 3: the world my way. And then I'm not telling you
[1:17:21] Speaker 3: we're going to make a hundred times their money. But
[1:17:23] Speaker 3: my job is to find one company that's a hunter bagger. Okay,
[1:17:27] Speaker 3: So so I have to know math, I have to
[1:17:30] Speaker 3: do this. I have to have just get yelled up
[1:17:33] Speaker 3: by malps when they read our quartery letters ago that
[1:17:35] Speaker 3: was the dumbest idea. I'm like, you're right, Like I'm embarrassed.
[1:17:39] Speaker 3: But our job is to find a robin hood, and
[1:17:42] Speaker 3: we found many of them, you know, LifeLock, Robinhood, bee Hive,
[1:17:45] Speaker 3: we got one called Alpaca again a trend within no face. Well,
[1:17:49] Speaker 3: a pack of powers, thousand robin hoods around the world.
[1:17:51] Speaker 3: They're like the eight modern apex. So I'm saying, like,
[1:17:55] Speaker 3: our job is to know what we know, take crazy
[1:17:58] Speaker 3: bets and sell that to our LPs. Is like you're
[1:18:02] Speaker 3: investing for ten years. This is like you know, it's
[1:18:05] Speaker 3: not as good as it was in twenty thirteen when
[1:18:07] Speaker 3: rates were zero, and now it's a different game again.
[1:18:13] Speaker 3: And I'm thinking, like with you've got clawed and you
[1:18:16] Speaker 3: can do an you can analyze it stuck in like
[1:18:17] Speaker 3: three seconds, like the the everyone's a CFA all of
[1:18:23] Speaker 3: a sudden if they want to be what a great
[1:18:25] Speaker 3: time to be a public market investor, and yet everybody
[1:18:28] Speaker 3: wants to be a private investor.
[1:18:29] Speaker 2: So again, so funny coming from you.
[1:18:31] Speaker 3: Yeah, in twenty twenty. I've been writing about this since COVID.
[1:18:34] Speaker 3: It's like public markets are amazing because there's so many
[1:18:38] Speaker 3: stupid people making dumb bets on robinhood and dislocation is everywhere,
[1:18:42] Speaker 3: and it's only getting.
[1:18:43] Speaker 2: Worse, and the degenerate economy is going to continue driving
[1:18:46] Speaker 2: this theme.
[1:18:47] Speaker 3: Yes, and I think most people should index, but everybody
[1:18:50] Speaker 3: should learn how to pick stocks too. In this era,
[1:18:53] Speaker 3: I got you.
[1:18:53] Speaker 2: Yeah, all right, so it's almost midnight. I only have
[1:18:56] Speaker 2: you for a few minutes more and you have to
[1:18:58] Speaker 2: end up.
[1:18:59] Speaker 3: At you tonight breaking. This is October Fast, October sixth,
[1:19:04] Speaker 3: coming back to New York. That's our big event.
[1:19:06] Speaker 2: That's exciting.
[1:19:07] Speaker 3: Yeah, a thousand people on the West Side. I am
[1:19:10] Speaker 3: looking for October six If you want to come, hit
[1:19:11] Speaker 3: me up.
[1:19:12] Speaker 2: Let's do our speed round. Five questions two hours, ten
[1:19:17] Speaker 2: seconds each. I'm going to jump right into it, starting
[1:19:20] Speaker 2: with boxers. Who were your early mentors who helped shape
[1:19:24] Speaker 2: your career.
[1:19:26] Speaker 3: I think part of I hate saying this. I didn't
[1:19:28] Speaker 3: have good early mentorships, so I really take pride in
[1:19:31] Speaker 3: mentoring other people because were.
[1:19:34] Speaker 2: Your later mentors. I hear Fred Wilson.
[1:19:36] Speaker 3: Yeah, you like people that I discovered like the mentorship
[1:19:39] Speaker 3: came from the community. Being the mentor led me, like
[1:19:42] Speaker 3: stock Twits. Being a giver opened me up to get mentorship.
[1:19:46] Speaker 3: I think young kids are not getting good mentors.
[1:19:48] Speaker 2: So just pure karma karma. I love that. What are
[1:19:51] Speaker 2: some of your favorite books? What are you reading right now?
[1:19:53] Speaker 2: I know what you're reading next. What are you reading now?
[1:19:55] Speaker 3: Yeah? I got your butt. I don't read.
[1:19:58] Speaker 2: You're on flights all the time. Do you do just movies?
[1:20:02] Speaker 3: I'm so addicted to like HBO Amazon?
[1:20:06] Speaker 2: So you're watching series I built.
[1:20:08] Speaker 3: I'm just very my next question, but hang on, so
[1:20:10] Speaker 3: you're asking books. I still love the classic Shoetog for Business.
[1:20:14] Speaker 3: You know Phil Knight's book. I loved Agacy's biography. I
[1:20:18] Speaker 3: like stuff. I just I just my brain doesn't work
[1:20:21] Speaker 3: with books.
[1:20:22] Speaker 2: Huh, that's really interesting. Tell us what you're watching on Netflix, HBO, Amazon?
[1:20:27] Speaker 3: I just rewatched The Nick. Have you watched The Nick
[1:20:30] Speaker 3: on HBO? Soderberg? Oh, it's about the nineteen hundreds, the
[1:20:34] Speaker 3: Knickerbucker Hospital.
[1:20:35] Speaker 2: No, I did not show real season.
[1:20:38] Speaker 3: It's like surgery wasn't done until like barbers used to
[1:20:42] Speaker 3: do surgery. In nineteen hundred, all the rich oil guys
[1:20:46] Speaker 3: started backing hospitals and that was the original tech. Surgery
[1:20:51] Speaker 3: was tech. And it's just an incredible period piece about
[1:20:54] Speaker 3: the nineteen hundreds and soho in New York.
[1:20:57] Speaker 2: Huh, I'll turn give us one more.
[1:21:00] Speaker 3: There's very little good stuff on TV. I think Oaster
[1:21:03] Speaker 3: is pretty good.
[1:21:03] Speaker 2: Can I tell you some HBO? We have that backwards? Okay,
[1:21:06] Speaker 2: there's too much.
[1:21:07] Speaker 3: I think I've seen it all. Have you?
[1:21:08] Speaker 2: Some Landman?
[1:21:10] Speaker 3: Great? But that's that's more like Harlequin. Romance kind of
[1:21:14] Speaker 3: series are fun to watch, and the kids like them too.
[1:21:16] Speaker 2: Okay, n you will because three body problem. If you
[1:21:20] Speaker 2: want something a little.
[1:21:21] Speaker 3: More, that's sci fi. I think I don't like sci fi.
[1:21:23] Speaker 2: You don't like sci fi? So you didn't watch an Spance.
[1:21:27] Speaker 3: No, I didn't like that either. I try it and
[1:21:29] Speaker 3: I never get into it.
[1:21:30] Speaker 2: Huh, that's interesting.
[1:21:32] Speaker 3: I like Degenerous.
[1:21:33] Speaker 2: How do you feel about U Spy? That sort of stuff.
[1:21:37] Speaker 3: I love them killing Eve killing. I can rarely follow it. Well,
[1:21:43] Speaker 3: I started saying it was good.
[1:21:46] Speaker 2: Wow.
[1:21:47] Speaker 3: Yeah, the British period piece. I love BritBox brick box,
[1:21:51] Speaker 3: so the Crown, not Bridgeston. But BritBox is a great channel.
[1:21:57] Speaker 3: There's that Carter criteria for old movies.
[1:22:01] Speaker 2: If you have BritBox, go back and watch what was
[1:22:06] Speaker 2: the name of that show? There was a show that
[1:22:08] Speaker 2: came out around the same time as Friends, only Coupling,
[1:22:12] Speaker 2: and it has teeth. It's I mean, everything from the
[1:22:16] Speaker 2: nineties is a little dated. But whereas Friends was kind
[1:22:19] Speaker 2: of milk toast and mushy, this has a sharp edge
[1:22:23] Speaker 2: and it's British, so it's nasty and funny in a
[1:22:27] Speaker 2: way that only the Brits can do.
[1:22:29] Speaker 3: Okay, Yeah, so I'm a media fanatic, but not like
[1:22:32] Speaker 3: I'm weird and I'm bullish on YouTube. Apple TV YouTube
[1:22:37] Speaker 3: is just great. I just love YouTube, all right.
[1:22:39] Speaker 2: So final two questions. What sort of advice would you
[1:22:43] Speaker 2: give to a college grad interested in either becoming a
[1:22:49] Speaker 2: seed investor or a startup entrepreneur.
[1:22:53] Speaker 3: Well, I think there's no sham of being a number two,
[1:22:56] Speaker 3: number three, or number four. So chief of staff is
[1:22:59] Speaker 3: the new CEO. So go be someone's chief of staff. Like,
[1:23:03] Speaker 3: don't worry about pay or title, worry about finding something
[1:23:08] Speaker 3: that's working. This way, it's much easier to go work
[1:23:11] Speaker 3: for a company that's just working. So go, like, ignore
[1:23:16] Speaker 3: the title job, ignore the salary, find a rocket ship
[1:23:20] Speaker 3: and attach yourself. Whether it's Manscape, You're going to learn more.
[1:23:23] Speaker 3: They're gonna be smarter people around. There's going to be
[1:23:26] Speaker 3: you know, less aggravation, more work. But hey, like if
[1:23:31] Speaker 3: you're really serious, tell my daughter. It's like, if you're
[1:23:34] Speaker 3: really serious about this, it's going to take a lot
[1:23:36] Speaker 3: of work, but go do it. If you're not serious
[1:23:38] Speaker 3: to be a socialist, like it's okay, but like, don't commit,
[1:23:42] Speaker 3: don't fool yourself, Like, go work for a rocket ship.
[1:23:46] Speaker 3: Otherwise who are you talking to? So like there's no
[1:23:49] Speaker 3: room anymore for these kids that like, if you want
[1:23:52] Speaker 3: to start a company, do you know it's twenty four
[1:23:54] Speaker 3: to seven, right? And if you and no one's going
[1:23:57] Speaker 3: to like you? And if you want to be a
[1:23:58] Speaker 3: number two, do you know when to take to be
[1:24:00] Speaker 3: a number two? So I'm like, be honest, but like,
[1:24:04] Speaker 3: go work for a company that's working.
[1:24:06] Speaker 2: And our final question, what do you know about the
[1:24:09] Speaker 2: world of venture and seed investing today that would have
[1:24:12] Speaker 2: been helpful sixty five seventy years ago when you were
[1:24:16] Speaker 2: first getting started.
[1:24:18] Speaker 3: No, I think I luckily got the right mentorship, entered
[1:24:21] Speaker 3: at the right time. I think you have to do
[1:24:23] Speaker 3: it for a while. You got to get a crop.
[1:24:24] Speaker 3: Like if you're gonna go do wine or weather matters,
[1:24:27] Speaker 3: And same with tech, Like what matters with tech is
[1:24:29] Speaker 3: you have to get you If you were of the
[1:24:31] Speaker 3: Google Glass era and not much worked, right, if you
[1:24:34] Speaker 3: were in the BlackBerry fun two thousand and eight, no
[1:24:37] Speaker 3: go baby.
[1:24:38] Speaker 2: Soles unless you could have been an early investor in
[1:24:41] Speaker 2: Apple or when they were public.
[1:24:43] Speaker 3: I think the public markets are underappreciated because seed investing
[1:24:47] Speaker 3: became cool because of Zuckerberg and because of a few
[1:24:50] Speaker 3: of these rocket shit.
[1:24:51] Speaker 2: I thought seed investing or venture investing really became cool
[1:24:54] Speaker 2: in the nineties and then in the two thousands it
[1:24:57] Speaker 2: became evaded.
[1:24:59] Speaker 3: No, it's never been more.
[1:25:01] Speaker 2: It's never been more loved today.
[1:25:04] Speaker 3: Oh I go see these young kids. It seems like
[1:25:06] Speaker 3: they know nothing and they all want to be venturing
[1:25:08] Speaker 3: invest I'm like, yeah, have you ever bought a stock?
[1:25:11] Speaker 3: Like you get wounded? Like day one, like stock drops
[1:25:14] Speaker 3: twenty percent? Like go open a Robinhood account and learn
[1:25:17] Speaker 3: how to invest. Like if you don't know the public markets,
[1:25:20] Speaker 3: what are you doing? In the private.
[1:25:21] Speaker 2: Markets got to graduate to private.
[1:25:23] Speaker 3: Yeah. I think the most guys, the guys who are
[1:25:24] Speaker 3: interested in me, and I'm not saying they still are
[1:25:26] Speaker 3: the crossover investors, the people that like knew the public
[1:25:28] Speaker 3: markets and then started doing private And I think that
[1:25:31] Speaker 3: was my edge. I knew how pricing worked market. Whether
[1:25:34] Speaker 3: I was right or wrong, I understood how markets worked,
[1:25:37] Speaker 3: and the seed investing the prices made sense to me
[1:25:39] Speaker 3: relative to public markets. Now the prices in private markets
[1:25:42] Speaker 3: make no sense to me.
[1:25:44] Speaker 2: Howard, it is always a blast when you come in.
[1:25:47] Speaker 2: You're bucking Bronco. I never know where we're going to go.
[1:25:50] Speaker 2: You are not Larry David. You are the Zach gallifanakish
[1:25:54] Speaker 2: I love of finance. It was I should put two
[1:25:58] Speaker 2: ferns in here just for your arrival. Thank you, by
[1:26:01] Speaker 2: the way, for being so generous with your time, and
[1:26:04] Speaker 2: good luck at the Cash Tags Awards tonight. If you
[1:26:07] Speaker 2: enjoy this conversation, well check out any of the six
[1:26:10] Speaker 2: hundred we've done over the past twelve years. You can
[1:26:14] Speaker 2: find those at iTunes, Spotify, Bloomberg YouTube, wherever you get
[1:26:19] Speaker 2: your favorite podcasts. I would be remiss if I didn't
[1:26:23] Speaker 2: thank the crack team that helps put these conversations together
[1:26:26] Speaker 2: each week. Alexis Noriega is my overworked video producer. Sean
[1:26:31] Speaker 2: Russo is my researcher. Anna Luke is my podcast producer.
[1:26:38] Speaker 2: I would also like to just drop a little pits information.
[1:26:42] Speaker 2: The paperback of How Not To Invest comes out today.
[1:26:47] Speaker 2: By the time you hear this, it'll be out already.
[1:26:50] Speaker 2: What else do I want to say other than.
[1:26:52] Speaker 3: You look good. Thanks.
[1:26:54] Speaker 2: I'm Barry Dhelts. You've been listening to Masters in Business
[1:26:57] Speaker 2: on Bloomberg Radio

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