The Investing & Crypto Expert: We Only Have 6 Years Until Everything Changes!, The S&P 500 Isn't Worth Your Time!, Don't Keep Spare Cash In A Bank! AI transcript and summary - episode of podcast The Diary Of A CEO with Steven Bartlett
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Episode: The Investing & Crypto Expert: "We Only Have 6 Years Until Everything Changes!", "The S&P 500 Isn't Worth Your Time!", "Don't Keep Spare Cash In A Bank!"
Author: DOAC
Duration: 02:13:01
Episode Shownotes
The clock is ticking – Raoul Pal reveals how AI will transform the global economy and why crypto might be your best chance of survival Raoul Pal is the co-founder and CEO of Real Vision, the world-renowned financial knowledge and education platform. He is also the former Head of European
Hedge Fund Sales at Goldman Sachs. In this conversation, Raoul and Steven discuss topics such as, why we can’t trust central banks, how to build wealth with crypto, how to protect your job from AI, and how to secure your financial future in 6 years or less. (00:00) Intro (02:07) What Is Raouls Mission? (05:38) What Would The Average Person Say About Raouls Work? (06:47) What Will Fuck My Financial Future? (11:14) Stats Today Vs 1980's (12:18) How To Play 'The Game' Of Finance In Your Younger Years? (13:30) What About Work Life Balance? (13:58) What Knowledge Should I Acquire? (14:57) How To Become An Expert? (16:41) Manifesting Your Future (17:16) How To Progress Once You're An Expert (19:42) What If You Don't Have Excess Income To Invest? (24:05) What About Buying A House? (26:28) Viewers Comments (30:07) Advice From Steven's Brother About Being An Expert (31:58) Applying Your Knowledge To Get The Highest Return (39:01) How Do I Spot A Trend (39:02) AI Will Free So Much Our Time That We Won't Know What To Do With It (42:53) The AI Component (47:24) How Disruptive Will AI Be? (51:18) Should We Be Scared Of AI? (54:37) How To Know If A Trend Will Be Persistent (57:53) Are We At The Collapse Of The Digital Industry? (59:06) How Do You Invest In AI? (01:00:51) What Is Crypto (01:01:18) Productivity And AI (01:06:32) Blockchain Explained (01:08:04) Contracts On The Blockchain (01:10:54) NFTs (01:12:12) Should You Invest In Blockchain? (01:21:43) How Do I Benefit From Buying Crypto? (01:23:01) How To Invest In Crypto (01:24:27) What Is A Ledger Device? (01:25:41) What Coin Should You Invest In? (01:32:14) What Is Leverage? (01:37:45) Do Men Invest More In Crypto? (01:39:42) The Nightmare Stories With Crypto (01:41:41) What Is Raoul's Price Prediction? (01:45:20) What If Raoul Is Wrong? (01:49:36) What Is The Debasement Of Currency? (02:00:50) The Best Trade Is Quality Of Life (02:08:34) Guest's Last Question Follow Raoul: Instagram - https://g2ul0.app.link/4dEPXGm3iOb Twitter - https://g2ul0.app.link/AWXhSso3iOb Website - https://g2ul0.app.link/SFceWtr3iOb You can learn more about Raoul’s ‘The Everything Code’, here: https://g2ul0.app.link/TqcS68j3iOb Watch the episodes on Youtube - https://g2ul0.app.link/DOACEpisodes My new book! 'The 33 Laws Of Business & Life' is out now - https://g2ul0.app.link/DOACBook You can purchase the The Diary Of A CEO Conversation Cards: Second Edition, here: https://g2ul0.app.link/f31dsUttKKb Follow me: https://g2ul0.app.link/gnGqL4IsKKb Sponsors: WHOOP - https://join.whoop.com/CEO ZOE - http://joinzoe.com with code BARTLETT10 for 10% off
Summary
In this episode of 'The Diary Of A CEO,' Raoul Pal discusses the rapidly changing financial landscape, urging individuals to adapt within the next six years. He highlights that traditional investments, such as the S&P 500 and real estate, are becoming less viable, with cryptocurrencies like Bitcoin offering significantly higher returns. Pal underscores the necessity for younger generations to focus on income generation, expertise, and entrepreneurship to navigate economic challenges. He warns of the potential disruptions caused by AI and emphasizes the importance of understanding blockchain technology as a tool for financial security and wealth building.
Go to PodExtra AI's episode page (The Investing & Crypto Expert: "We Only Have 6 Years Until Everything Changes!", "The S&P 500 Isn't Worth Your Time!", "Don't Keep Spare Cash In A Bank!" ) to play and view complete AI-processed content: summary, mindmap, topics, takeaways, transcript, keywords and highlights.
Full Transcript
00:00:00 Speaker_00
We've got about six years before everything changes. And we thought money in the bank was safe. We thought our house was safe. But none of that's true. And the moment you put your money and your savings in the bank, you don't own anything.
00:00:12 Speaker_00
And your future self is getting poorer by 11% every year. And that's a problem for financial security and wealth creation. But I know where the opportunities lie, and I have the answers.
00:00:20 Speaker_01
So could you explain it to me through the context of this? OK, so Raoul Pal is one of the most influential voices in the ever-changing world of modern finance.
00:00:29 Speaker_00
unpacking the secrets of crypto and how to build wealth in an uncertain future.
00:00:46 Speaker_01
But what about the people that, no matter how hard they work, they still don't have that excess income to invest?
00:00:50 Speaker_00
You don't need huge savings. You just need to understand how to look for opportunities. For example, the S&P 500 is not worth your time. Real estate doesn't really make you any money. Those days are gone. Gold actually lost you money.
00:01:01 Speaker_00
But investing in crypto, like Bitcoin, gives us stupidly high returns in shorter periods of time, growing at 150% a year, scaling at twice the speed of the internet. So now the guy with $500 can get rich.
00:01:14 Speaker_01
A couple of questions here then. So I'm now 30 years old-ish. Haven't missed the boat. No. Much of the reason why I think people don't invest in crypto is they've heard stories where people have put too much in and they've lost it all.
00:01:23 Speaker_01
So what if you're wrong? We're going to talk about how not to f**k it up.
00:01:25 Speaker_00
And then how do I invest in crypto? It's really simple. You're going to start somewhere. So do that and you'll make money.
00:01:38 Speaker_01
Well, from a very high-level perspective, And I'm being unspecific here. So I'm looking for an unspecific answer. What exactly is the mission that you're on in this season of your life? Like what are you doing and who are you doing it for?
00:01:53 Speaker_00
So obviously you do it for yourself, but really I think that I've been armed with tools and knowledge over the years, my 30 year career, that I kind of have a decent sense of where the world is going.
00:02:09 Speaker_00
where the opportunities lie and where the risk lies for people. And I can see the problems people are facing and I think I've got answers. So what I want to do is help as many people as possible in that journey.
00:02:22 Speaker_00
And why that happened to me was I was in Spain back in 2012 and also during the financial crisis, 2008. And I was writing macroeconomic research for my research service, Global Macroinvestor, and I had seen it coming. I predicted it.
00:02:43 Speaker_00
I knew it was coming. I knew the problems. I warned all of my friends. Nobody listened. Nobody understood about the financial crisis, what was going to happen. And most of them, because I was living in a beach town in Spain, they were in real estate.
00:02:56 Speaker_00
They all went bust. But worse than that was that when we got to the European crisis, when basically the governments of Europe ran out of money, the banks also ran out of money.
00:03:10 Speaker_00
And as opposed to being bailed out, they got what's known as bailed in, which means that they took your savings to pay the debtors. And friends of my parents and friends of friends were wiped out. And they were like, why didn't we know?
00:03:28 Speaker_00
I'm like, that was a question that sat with me for a while. Why didn't we know? And I saw that everybody had lost total faith in the system. So Occupy Wall Street happened at the same period. And it was people angry.
00:03:44 Speaker_00
It's like, we thought money in the bank was safe. We thought our house was safe. We thought the system was there for us. And suddenly they all wake up and realize the system was not there for them. It was actually for other people.
00:03:57 Speaker_00
People talk about bankers never went to jail. There was that sense that it was never concluded. And it sat with me for a long time thinking, what can I do about this?
00:04:08 Speaker_00
Because I was writing super high-end kind of research for hedge funds and big asset management firms. And so it wasn't accessible to people. And then I wrote a couple of articles.
00:04:19 Speaker_00
One got leaked in Zero Hedge in its early days, and it became super viral. And I thought, maybe there's something here. I could reach a broader audience, because then I can help these people.
00:04:32 Speaker_00
That's when we came up with the idea of Real Vision, which was the idea of interviewing the people at the very heart of the system and sharing the details, because these people weren't hiding it. They wanted to help people as well.
00:04:44 Speaker_00
Everyone had that sense that we could help people. I'm still on that journey. And that journey has taken a multitude of paths, starting businesses, but also just trying to educate people on why they feel the way they do.
00:05:00 Speaker_00
Why politics is so polarized, never used to be this bad. What's really going on and who really to blame. what to do about it.
00:05:10 Speaker_01
If I stop the average person on the street that knows you and watches Real Vision and I ask them, what has Raoul and his channel and his information done for you, what do you think they would say, the average person?
00:05:22 Speaker_00
They'd just say thank you. Because we've helped demystify it, the world of finance. And you see, we all have The root of unhappiness and happiness often comes from, does your vision of your future self match where you are today? Can you see that path?
00:05:42 Speaker_00
Whether that's finances, whether it's health, they're all very similar journeys. And when people can't see the vision of their future self, and they can't see how to get there, they get upset. And what we've tried to do,
00:05:57 Speaker_00
is unfuck people's future, which is an expression we use, which is a way, which is a mimetic or a meme or just a short phraseology to help people understand.
00:06:09 Speaker_00
We understand that you feel like you can't get to where you want to get to, but there are options to do it. And I think people are immensely grateful for that in general.
00:06:19 Speaker_01
If you're on a mission to help people unfuck their future, can you explain to me specifically the things that stand the chance of fucking their future from a macro perspective?
00:06:30 Speaker_01
And when I say macro, we have to pause and just define what I mean by the word macro. When I think of the word macro, I mean big picture perspective. So from a big picture perspective, what are the things that stand a chance of fucking my future?
00:06:43 Speaker_00
Okay, so we can dig into why these things have occurred, but generally speaking, wages in real terms, adjusted for inflation, haven't gone up for decades. So nobody's getting richer.
00:06:58 Speaker_00
If you're an American, you have this powerful meme, which is the American dream, but that is not a reality for most people. The reality is you grind it out, Your savings are not worth what you thought they'd be.
00:07:14 Speaker_00
This whole promise of your pension and swanning around on a cruise ship around the Caribbean when you're older, living in a nice house, none of that is true. And it's because wages haven't gone up.
00:07:27 Speaker_00
So, okay, so let's cut to somebody who's in their 30s now, because this is the really important cohort, I think, for this. They can't afford to buy a house.
00:07:40 Speaker_00
If I go back to when I was 30, I bought a house in London and it was a nice place in a good area and it was three and a half times salary. Yes, I was in finance. I was earning a high salary.
00:07:53 Speaker_00
You can't buy anything for three and a half times your salary. Now that same place, if I took the same kind of young investment banker salary, is probably eight or 10 times. So it's tripled in how expensive it is to just buy your first house.
00:08:11 Speaker_00
So what is a house? Firstly, it's your quality of life, particularly, you know, in England, the UK, in the UK, sorry, in the US, we're home buyers. You know, we think of our home as our castle. It's like the thing that solidifies our security.
00:08:28 Speaker_00
But, you know, if you're in Germany, for example, they don't, they rent. But if we think about the mindset of owning a house, it's an asset that you can then pass on, or you can sell if you need to. And an asset is, really a future savings plan.
00:08:44 Speaker_00
It's something you save now that in the future you can consume, you can buy stuff with. But what you're doing is for the average 35-year-old, the average millennial is 36 years old, they can't afford to buy the house.
00:08:58 Speaker_00
So therefore, their future self is poorer. If they think of how much of the stock market they can buy, can buy less with that money. They have less savings. They've got debts from university. So they don't have the ability to get out of this trap.
00:09:18 Speaker_00
And then what we are finding is because of this, they're having to live with other people into their 30s. They don't have kids and they don't get married. And these numbers have collapsed since 1983.
00:09:32 Speaker_00
You've seen these numbers come down from people living on their own. So you could get your job, get yourself an apartment. It's gone from 80% to 62%. You're seeing the marriage rate halve. You're seeing the ownership rate go from 50% to 30%.
00:09:52 Speaker_00
These are all expressions of the same problems, which is people know their future is fucked and they can feel it. They have a sense of desperation. You see then the same cohort of kids in their 30s doing two jobs, three jobs, four jobs.
00:10:10 Speaker_00
That's not because they want to. Nobody wants to work 12 hour days, seven days a week. It's because they have to. And their parents, the baby boomers, who are in their 70s and retiring, never had that.
00:10:23 Speaker_00
They were the richest generation the world had ever seen. So this is the first generation that won't be as rich as their parents. And that's a weird thing because we're all used to human progress, the American dream.
00:10:36 Speaker_00
If the American dream is, well, you'll never be as wealthy as your parents, and they were middle-class people, and I'm now less well off than them, that's kind of fucked.
00:10:45 Speaker_00
So look, here's some stats about a 30-year-old today versus a 30-year-old in 1983. So a 30-year-old in 1983, 85% of them lived on their own. They could afford a house or an apartment to rent or to buy. Now it's 64%.
00:11:08 Speaker_00
So people having to live with other people. Marriage rates, they've gone from 80% of 30-year-olds in 1983 who are married to 47% now. Kids, having kids, gone from 60% to 32%. Population growth is collapsing because people can't afford it.
00:11:30 Speaker_00
And ownership for a 30-year-old has gone from 50% to 32%. It just shows that dramatic change that's happened over the decades and why each generation has found it more and more difficult to be like their parents.
00:11:49 Speaker_01
So I am 30 years old-ish. Yeah. I like to hang on to 30 for as long as I can.
00:11:57 Speaker_01
What advice would you give to someone like me that's my age, or maybe even younger, you know, mid-twenties, as to how to play the game over the coming years to make sure that I don't find myself in a position where I'm having to work two jobs, I'm poor, I don't have assets, I don't have anything to show for it.
00:12:14 Speaker_01
Like, if you take it right back to being, like, maybe, let's say, a 20-year-old, a 25-year-old, how do you play the game? And when I think about this, I'm thinking like wealth creation, how to then preserve my wealth, like what's the game?
00:12:25 Speaker_00
So the first part of the game is income. Okay. Without income, you don't have the cash to do the other things, to invest or to look for opportunities. So first thing is income. But even that's changing and how we earn incomes these days.
00:12:43 Speaker_00
You know, it used to be you go and work for a big firm, you get paid, you get the benefit. That's all going and nobody wants to do it. So you kind of end up having to be an entrepreneur, work two or three different things.
00:12:54 Speaker_00
The point being, if you're 20s, do all of that. Work day and night. Do as many things, learn as much as you can, fail as often as possible. What about work-life balance in your 20s? Fuck it. Because that's the time to put in the hard work.
00:13:09 Speaker_00
Your work-life balance actually comes out later. I'm a big believer in, yes, if you're straight out of university, go traveling for a year or two.
00:13:18 Speaker_00
You know, that A, gets rid of the pent-up need, but also it gives you a much broader perspective on the world than any other single thing that you can do in your life.
00:13:25 Speaker_00
After that, you get your head down and you get your head down probably to the mid thirties. Okay.
00:13:30 Speaker_01
So when you say get my head down. I'm guessing one of the most important things in that season of your life is knowledge acquisition.
00:13:38 Speaker_01
And then if that's true, then the next question is what type of knowledge should I be acquiring to set myself up for wealth in the future?
00:13:45 Speaker_01
Because I could go acquire knowledge of, you know, how to clean a toilet or how to be a gardener, but what is the most high returning knowledge?
00:13:55 Speaker_00
For me, it is firstly being an expert on something and then a generalist on as much as possible. Be that expert because somebody will pay you for that, at least for the time being. And we'll talk about how the world may change in the future.
00:14:10 Speaker_00
But for the time being, if you're an expert in whatever it may be, whether it's driving a taxi or whether it's a computer scientist, it doesn't matter. Be an expert. Compete with yourself day and night to be the best that you can.
00:14:25 Speaker_00
So at least it's going to give you the chance to earn some money.
00:14:29 Speaker_01
Okay. So just to drill down on that before we continue to move forward, how does one become an expert? Like what are the, like, how do I have to show up to become an expert? You're an expert on many.
00:14:37 Speaker_00
Okay. So this to me is, there's a trick that I learned and it's called manifesting your own destiny. And what you do is what I've always done my whole life is I envisage myself five or 10 years in the future. What do I want to be?
00:14:56 Speaker_00
And you look around you and say, okay, what are the things that I want to have that future vision of myself? As opposed to the 30, 40 year path, it's too difficult. Give it five years. Where do I want to be in five years? Okay.
00:15:09 Speaker_00
And you look around that future world and you think, okay, well, how would I got here? You know, if I've built a business cleaning windows and I've got 20 people working for me, well, how did I get there?
00:15:23 Speaker_00
Well, I would have had to have figured out, okay, how do I make this scale? How do I employ people? How do I train them to have the right standards? All of that. You ask yourself your question of what that success looks like.
00:15:38 Speaker_00
And you kind of deconstruct it and go back and make it happen.
00:15:42 Speaker_01
So you reverse engineer it back from that, that five year reality. So window cleaner with 20 employees. I need to learn management skills. I need to learn how to clean a window. Accounting. Accounting.
00:15:52 Speaker_01
I need to learn probably marketing so that I can spread the message of my business. I probably need to learn potentially like how to speak, like public speaking, because that's sales. So I need to, I need to learn sales.
00:16:05 Speaker_00
Technology, you know, what, what, um, solvents, detergents that people are using, what other ways of doing it more efficiently and faster so I can beat the competitor.
00:16:13 Speaker_01
Oh, so I might go and work for a big window cleaning company to see how they do it, to try and see the opportunity. in what they're not doing.
00:16:22 Speaker_00
Yeah, or even somebody who manufactures stuff for that sector. It can be anything where you can glean knowledge to give yourself an unfair advantage. Now, on podcasts, it always makes it easy. Everyone becomes an entrepreneur.
00:16:35 Speaker_00
And before you know it, everybody's rich. It doesn't work that way. But all I'm trying to do is stack the odds in your favor of getting close to that image of your future self. And you can reverse engineer it.
00:16:48 Speaker_01
So I'm now an expert in whatever, I'm 29 and I'm an expert in window cleaning or whatever it might be and I'm a generalist in many things.
00:16:56 Speaker_01
You're saying that's gonna enable me to start to build wealth in something so that I can go to the next season of my life or?
00:17:01 Speaker_00
So when you become an expert or when you become good at something, if you're careful in your expenditure, you will produce excess income. Because people are going to pay you for your expertise.
00:17:16 Speaker_00
So if you manage yourself carefully in those first few years, that excess cash, you can then choose what to do with it. Now, maybe you want to build the real business that you wanted to build in the first place, the crazy idea you've had.
00:17:30 Speaker_00
And if you're in your 20s, you can take the risk and blow your savings on that crazy idea. Because you've actually learned how to build a business already by building the one that you started. or you start investing.
00:17:44 Speaker_00
Now, the world of investments was this world of weird financial advisors, and they would tell you some things like, well, you do this and then you're a 25 year old, in 45 years time, you'll get some money. I mean, fuck that.
00:17:59 Speaker_00
I mean, what am I going to get out of it? When I'm 65 years old, I suddenly get a lump sum that I've spent my whole life saving for. I don't feel it. I've got no emotional attachment to my pension plan. And I've got real world problems to solve.
00:18:16 Speaker_00
I can't buy a house. I can't get married, I can't have kids. So I need to solve these in a shorter time period than my pension. My pension was suitable for a different generation that just needed enough after they stopped working.
00:18:30 Speaker_00
So I got to solve that. And the answer is investing. Then most people roll their eyes and go, oh, really? Stocks and bonds, it's boring. Yeah, but the world has changed.
00:18:41 Speaker_00
The world has changed in many, many ways, but it's offered us opportunities, whether it's investing in technology, investing in crypto, that gives us much higher returns, stupidly higher returns in shorter periods of time. Okay, that's magic.
00:18:58 Speaker_00
That's magic for young people. It may be too risky for their parents, but if you're young and you can take some risk, Okay, here's your chance. So now you can build a business, use some excess savings, put them in investments. Now you're on the path.
00:19:14 Speaker_01
So let's get on to investing then. But just before we get on to investing, I was playing through the different sort of personas of my audience and I was thinking that some of them are working really, really, really hard at the moment.
00:19:24 Speaker_01
They're doing, you know, they might be a cab driver, they could be, you know, doing some sort of manual labor. And it feels to them that no matter how hard they work, they still don't have that excess income to invest.
00:19:37 Speaker_01
So for those people, and this is a little bit of a, maybe a contentious question, like, is there something that they're doing wrong as it relates to the game?
00:19:46 Speaker_00
No, the game is the game and you have to play the game. So, okay, so maybe you don't have thousands to invest. I've seen many, many people in markets like crypto go from $500 to $500,000.
00:20:06 Speaker_00
Now, there's a lot of people who don't either, but all I'm saying is the opportunity is there. You don't need to bet your house. You don't need to have huge savings.
00:20:21 Speaker_00
You just need to focus on what you're doing, understand how to manage risks a bit, and how to look for opportunities. And it's the self-teaching is, how do I become that guy who's got a half a million dollar portfolio,
00:20:35 Speaker_00
considering I've only got $500 today or $1,000 today. Is that possible still? Yeah, very much. Haven't I missed the boat? No. No. It's happening again right now in meme coins. This is fascinating. People watching this will go, what a bunch of nonsense.
00:20:52 Speaker_00
These are coins, tokens, and we'll talk about blockchain and this later, but these are investments based on A meme. A joke. A joke. Something that grabs attention on the internet. And you can bet on those. Well, what is that?
00:21:11 Speaker_00
That's about betting on attention itself. If you think about a business like Facebook or Google or any of these, Twitter, they're all based on attention. And now we can bet on attention. Do people find that funny?
00:21:26 Speaker_00
Are they going to find it funny in six months time or six weeks time? And we can bet on this stuff. Okay. This is the super speculative end, but it's also very cultural. It's not about investment bankers. It's not about gatekeepers.
00:21:39 Speaker_00
It's about you pitting yourselves thinking, is this going to catch on viral? And if it is, is it going to grow bigger? Now, some of those. might do 1000x in six months.
00:21:55 Speaker_00
Now, 99% go to zero, but all I'm saying is returns are there, and then you've got different levels of return. If we look at Bitcoin, well, actually, let's compare it. The S&P 500, and this will be an important number later. What's the S&P 500?
00:22:13 Speaker_00
That's the US stock market. It's the broadest measure of the stock market, and you can buy shares in it. Now that grows at about 10% a year, 11% a year. So let's imagine you've got your thousand dollars.
00:22:29 Speaker_00
Well, 11% a year is going to take you a fucking long time to make any money, right? So it is not worth your time. The financial advisors will say, yes, you must do this. Start now. I'm like, I'm sorry. It's just not going to change your life.
00:22:42 Speaker_00
Then we go to technology stocks. NASDAQ does about 18% a year. Okay, that's starting to add up because these numbers compound after a while. It goes from 1,000 to 1,200, and then it's another 20% on top of that 20%. These numbers add up fast.
00:22:56 Speaker_00
Bitcoin, since 2011, been 145% a year. even with it falling 80% three times in the middle of that. So 145% a year, as long as you're in it long enough, okay, now that's really starting to pay off. And then as you get slightly more speculative,
00:23:26 Speaker_00
I take a bit more risk in things. Well, the returns go up, but they become riskier. So once you start moving into that world, okay, this is a whole different world now. Now the guy with $1,000 can get rich.
00:23:37 Speaker_01
What about buying a house?
00:23:38 Speaker_01
Because I think most people think the minute they get some excess income, and I know for sure, when I say most people, it's like 95% of people that walk the streets think that the minute you get some excess income, you should take it and put it in a savings account and buy your first house, get your first mortgage.
00:23:56 Speaker_01
Now, as a strategy for wealth creation and unfucking your life, is that a good approach?
00:24:01 Speaker_00
No, because it's not wealth creation. People think of houses as like an asset, but in the end, you barely ever will sell your house to take the money out. You might downsize later in life. If absolutely needed, you might sell it.
00:24:19 Speaker_00
But generally speaking, your house is the lifestyle bank. Now that is super important. And I think it is the most important trade of all, is the lifestyle bank. So what do you do this all for? You want lifestyle.
00:24:34 Speaker_00
So do you sacrifice your future self having more money by having a house and having security earlier? I would argue those days are gone. What do you mean? So I could do it because it's three times income.
00:24:50 Speaker_03
Yeah.
00:24:50 Speaker_00
So a house was not expensive for me. So I could start paying it off a bit sooner and it became not a big deal. But now your mortgage is likely a huge amount versus your income. You'll spend the rest of your life paying it off.
00:25:05 Speaker_00
And most of the time you're just paying off the interest. So you don't actually, you're not getting anywhere. You don't own that house. Anything goes wrong, the bank takes it away from you. So you've got to get more control of your life.
00:25:20 Speaker_00
And that is by having savings that are growing, then you can make the choice. Let's say that example of the person gone from $1,000 to $500,000.
00:25:32 Speaker_00
Maybe on route, they say, well, I'm going to take some money off the table and put it in my lifestyle bank, and I'm going to buy a house. That's what I've done my whole career. And I find the lifestyle bank, that that's the reward.
00:25:45 Speaker_00
Because now it's like, okay, maybe you can take my house away.
00:25:49 Speaker_01
So if I'm trying to build wealth, buying a house is not a good idea. It's not the best approach to take to build wealth. You're telling me that it's actually about psychology and about emotion, the house, and it's not about making myself wealthy.
00:26:07 Speaker_01
I wanted to read some of the comments that people often post when we talk about these subjects, because I think you'll probably guy to address some of them. I bought a house and it's the best thing I ever did. It launched my mindset in new directions.
00:26:25 Speaker_01
Remember that having your own space has profound psychological impact and can be life-changing for some that don't live in a healthy environment. I guess that speaks to your point about um
00:26:36 Speaker_00
being psychological. But you would also get the same feeling if you rented that was a nice place and you knew that, you know, your rent was secure, it wasn't going to go up. Whatever it was, I don't think there's any difference to that.
00:26:47 Speaker_00
As long as you can feel that you've got security, you can take risk and do other things.
00:26:52 Speaker_01
I purchased a house in 2014 and I sold it seven years later for 66k profit. I've put a large amount of the equity into a financial investment portfolio with my bank, and it's been down 2% since.
00:27:05 Speaker_01
I also put some money into different shares based on Warren Buffett's strategy, and that's now up 18%. A friend of mine also lost about 30 to 40K on investing in the stock market. You have to be careful. I don't think there's a correct solution.
00:27:17 Speaker_01
Some house purchases do amazing. This idea that some house purchases do amazing, and some people make returns is a sentiment I often see. about buying a house?
00:27:27 Speaker_00
Yes. And, you know, we're here today in the UK, there's a big idea about buying two or three houses, getting a mortgage, renting them out, using the cash flow to pay for the other one. But that's a lot of people's dream portfolio idea.
00:27:44 Speaker_00
You know, I've rented out houses in the past. Generally, it's If you're not in a big city like London, it's generally often a terrible business because you've got to repair them. There's a lot goes on. Headache. Headache.
00:27:57 Speaker_01
Tenants.
00:27:57 Speaker_00
Yeah. You know, people think it's easy money. I just do nothing and it all makes money. There is no easy money in this world and there's risk, right?
00:28:07 Speaker_00
Because that little pyramid of mortgages are all backed by your income being able to pay the mortgage on the first house. If you lose your job, what happens?
00:28:19 Speaker_00
Then it becomes problematic because if you're losing your job, maybe the economy's slow and other people are losing their job. And suddenly before you know it, none of these mortgages are getting paid. And guess what? You don't know any of this stuff.
00:28:31 Speaker_00
Houses are not a safe investment. They feel safe because the price doesn't go up and down every day. It's not on the screen. It's not on CNBC. But they're illiquid, which means they don't often trade, but sometimes something happens in that equation.
00:28:48 Speaker_00
Either the price goes down or your ability to pay that mortgage goes, and then the whole thing collapses in seconds. And 2008 was that double. Everyone lost their jobs, so they couldn't pay the mortgage, and the house prices collapse.
00:29:03 Speaker_00
And so I don't think houses is the panacea. They're not the perfect answer. Yes, they can be. Real estate is a decent opportunity. And we'll talk about debasement and currency and how that all works. And real estate is OK. It's certainly not the best.
00:29:22 Speaker_00
But yes, if you're rich and you can own these things without mortgages, And you can be the Duke of Westminster and own half of London and just collect rent. You can do that for X generations and be rich forever. I get it.
00:29:36 Speaker_00
But most of us don't get into that situation.
00:29:39 Speaker_01
My brother, who has been an investment banker for about 10 years, now works in my company in my fund.
00:29:44 Speaker_01
He said to me when I was young, when it comes to creating wealth, what you want to do is focus on games that very few people can play, but you have a unique advantage in.
00:29:53 Speaker_01
because he goes, everyone can buy a house, so you should assume that the returns from doing it aren't going to be amazing. So he was like, go find a game that you have high leverage, you have an unfair advantage. Be the expert in something.
00:30:03 Speaker_01
Yeah, be the expert in something, where you, because of your knowledge, your expertise, your experiential contacts, you can play that game, but very few other people can, because that's where you'll yield your highest returns.
00:30:13 Speaker_01
And I always thought about that, just very logically thinking, if everyone can play the game, don't play that game if you're expecting high returns, because the returns are going to be very low.
00:30:20 Speaker_01
And I'd say the first game everyone plays when they get a bit of income is buy a house. So logically you can go, okay, that's not going to yield me the best returns unless I get lucky.
00:30:29 Speaker_01
Unless I get exceptionally lucky and I buy some barn in an area and then they build a bloody Whole Foods next door and it becomes the center of the world. Which isn't, again, the probability is still not great. So what do you think of that as a theory?
00:30:43 Speaker_00
Well, it's the same theory as I said. Be an expert in something and you can find more opportunity. If you're just a generalist, it's really hard because you're competing against average people doing average things, right?
00:30:56 Speaker_00
If you're just working in an insurance office. I mean, there's thousands of people, plus you're competing with AI. How are you ever gonna be something within that? How do you become an expert?
00:31:09 Speaker_00
Now, you could teach yourself, okay, if I don't mind this industry and I think I know it, maybe I need to learn management skills. Maybe I spend all the time listening to podcasts and learning management.
00:31:19 Speaker_00
Maybe it's, and that's, I can then manifest my destiny. But as you say, doing something other people aren't doing, is a superpower.
00:31:29 Speaker_01
What's really interesting with that is this idea of becoming an expert, I think is critically important. But then there's this other step I found, which is knowing what market to apply your expertise to, to yield the greatest return.
00:31:42 Speaker_01
And the very simple analogy I'll give you is for the first portion of my career, I became an expert in social media. Now with that skillset and expertise, you can do a number of things.
00:31:51 Speaker_01
You can help a fashion company sell more dresses and that will yield X return, a smaller return.
00:31:57 Speaker_01
Then in the second portion of my career, I realized that that expertise was highest value and most rare if I applied it to helping public companies tell their story before their IPO.
00:32:08 Speaker_01
because the variance and outcome for the public company that I was applying my social media expertise to was billions.
00:32:14 Speaker_01
So in the second sort of era of my career, I worked with companies that were about to IPO, about to go to the public markets, where their performance could be, you know, their market cap could be one billion, or if they were really good at telling their story in a world where retail investors are now so interesting to everyone because of Wall Street bets,
00:32:32 Speaker_01
their market cap could be 3 billion, then that means they would pay me seven figures for my skillset. And I often think about it, you think about the stock market.
00:32:42 Speaker_01
If you put a company on the stock market in London, it's valued at, let's say 1 million. If you put it on the stock market in America, the same company is valued at 4 million, the same company.
00:32:50 Speaker_01
And if you think of your skills like that, where are you applying your skills to reach, reap the highest return?
00:32:55 Speaker_00
Let's go back to the window cleaner, who's now decided to build his business and he's got 20 people.
00:33:01 Speaker_03
Yeah.
00:33:01 Speaker_00
Okay, so he's now got the hassle of managing all these people, they turn out sick and then this happens and the customer's unhappy. So maybe the right answer is to create a program to train other people to build their own window cleaning companies.
00:33:16 Speaker_00
Free yourself from the rat race and build this business. You'll make more money doing that than you will from actually cleaning the windows. Because you're going up the knowledge curve. The further up, the more of an expert you are.
00:33:29 Speaker_00
And there's two things that people need to think about. You either have a very broad market for something, candy bars. Well, then you've got to sell massive scale and it's really hard. Or you go through an area that has a very specific
00:33:49 Speaker_00
group of users, buyers, whatever, and particularly ones that have a lot of money. So let's go back to the house idea again, the guy speculating on houses. So there's two house speculators.
00:34:04 Speaker_00
There's the guy or girl who's hustling and renting them out, finding the cheap bargain, doing them up, renting, getting the cash flow, doing that, and then there's the guy
00:34:17 Speaker_00
who's buying a place for 10 million, making it ultra luxury and selling it to the billionaires and flipping it for 50. The difference in the returns is staggering. Why? Because one group is price insensitive.
00:34:34 Speaker_00
In fact, the more expensive it is, the more they want it. The other group is trying to compete with everybody else. You know, the two bedroom apartment in the city, right? There's thousands of those being done up and sold and everything else.
00:34:49 Speaker_00
So to your point earlier, the returns are less. But no, if you're doing super high end, then there is a defined group of buyers of which you probably know them all personally. You can count to their taste and they have unlimited money.
00:35:07 Speaker_01
That's the big thing, isn't it? It's like who you're solving the problem for. Cause you can clean like Dorothy's windows, lives in a bungalow in Plymouth. or you can clean Google's windows.
00:35:16 Speaker_01
And therefore you get a bigger contract, you get guaranteed work, probably get a retainer, get more windows to clean. It's still one contract, it's still one sell. It's the same skillset. Same skillset. They're going to pay you a lot more.
00:35:26 Speaker_01
And, and, and so I just don't think, I always find that bit missing when we talk about like become an expert, but then like, who do you sell to?
00:35:33 Speaker_01
And your idea of selling to people that are more price insensitive and that aren't going to, and that less people are trying to sell to.
00:35:39 Speaker_00
Or they're super defined. Right, like Tom Bilyeu, who we both know. Tom's a good friend. Yeah, he made his money because there was a rise in high protein ketogenic foods.
00:35:56 Speaker_00
And it was difficult to have that stack bar because people still have a sweet tooth, but they can't have sugar. So him and his partners built Quest, which is now everywhere. So what you found is a trend, and this is really, really, really important.
00:36:11 Speaker_00
is you find a trending market where people are underserved, and they'll pay a lot of money because it's health. It's like wealth and health. People pay fortunes in that industry. And so you make a fortune very quickly.
00:36:24 Speaker_00
Now it's a saturated market, so it's not that easy. But this is the other key, key thing, is if you've got a clean slate, do one thing. follow a trend, a secular trend. A secular trend is a long-term trend, something that's happening, right?
00:36:42 Speaker_00
So everything is being digitized. You rode that trend, right? Social media was new from about 2010, right? Now it's a saturated market. and we've got AI coming in, but you rode a secular trend in the hyper-acceleration phase. That's why you did well.
00:37:02 Speaker_00
So you look for a trend that's big, meaningful, and provable, and use your skill set in that. We've seen something in America. I don't know if you just saw the trend. Finally, the obesity numbers ticked down.
00:37:15 Speaker_01
I didn't know that.
00:37:16 Speaker_00
Yeah. First time in 50 years, obesity starts to fall in the US. Right, this is a Zempik effect, and it's probably some diet effect.
00:37:28 Speaker_00
My belief is the more people would take a Zempik, the more they also think about diet and understand that something went wrong for them. And my guess is there is going to be huge opportunities in that trend towards healthy eating.
00:37:44 Speaker_00
The other one is in an increasingly AI-driven online digital world, There's two things that are going to happen. One, the rise of digital communities. You see this in what you do. I see it where I do.
00:37:56 Speaker_00
They become more and more important communities online. They're meaningful for people. The other is the entire flip side. I spend 12 hours a day on Zoom calls. What is the most single valuable thing to me? Nature. nature and experiences.
00:38:13 Speaker_00
So let's say you're that person that loves the outdoors. Well, start a guiding company because your job is not going to be taken by the robots anytime soon. Sure, you'll have drones with you.
00:38:24 Speaker_00
So you can take photographs of the guests you're going with or, or look for animals, whatever you're doing, you'll be leveraging technology, but your job will not be replaced.
00:38:34 Speaker_01
Okay, what I'm about to say is a mishmash of ideas that came to mind as you were speaking. The first one was, how do I spot a trend? And when I say that, I mean, how does it feel in the moment?
00:38:45 Speaker_01
Because the trends that you capitalized on and the trends that I capitalized on, they feel a certain way at the time. And here I'm talking about how disruptive they are, contrarian, what people will say to you, they'll tell you you're an idiot.
00:38:57 Speaker_01
And then with that as well, you talked about how right now in the world we live in, betting on things like nature is a good idea. And I actually did a post on my LinkedIn about exactly this.
00:39:06 Speaker_01
I said, my investment fund is backing two things at the moment. AI and automation, and the exact opposite.
00:39:13 Speaker_01
Because I saw this viral video of people in, I think it was like a cafe in Amsterdam, who come out every week, no phones allowed, they read books and they knit. And this cafe in Amsterdam is like exploding.
00:39:24 Speaker_01
I'll put the video of these people on the screen for everyone to see.
00:39:26 Speaker_01
And it made me realize, and that overlaps with what two billionaire friends of mine said to me in private, they said, these are billionaires that invest in AI, they invest in crypto, you probably know one of them. and they invest in psychedelics.
00:39:38 Speaker_01
They said to me, if you want to invest right now, invest in AI if you can, but if you can't, invest in entertainment and community because in a world of AI where productivity is so high and we maybe move towards some form of universal basic income where the government just hands people money, people are going to have so much free time on their hands that they're going to need something to do with it.
00:39:56 Speaker_01
So he said to me, this is why you're seeing this rise in people buying football clubs. and these sporting franchises, because that's community and it's entertainment at the same time. So I throw all of that at you.
00:40:09 Speaker_00
Yes, the equal and opposite idea is, I think, very important. I just came back from three weeks off-roading in Zambia, living on a tent on the roof of a Toyota Land Cruiser that is off-road prepared, and going out into the total wilds.
00:40:28 Speaker_00
And I can't express how in the present you become, how it cleanses your mind from all of the clutter, all of the things you worry about, the broken car or the whatever's going on online, the politics, all those.
00:40:44 Speaker_00
And it all becomes about you wake up, who's going to make the coffee, who's going to put the fire on, who's going to, you know, and so. The more time we spend online, the more we desperately crave. I saw it in the Cayman Islands, where I live.
00:40:58 Speaker_00
So it's a Caribbean island. And it was 2022. And the world hadn't really recovered. There was the high inflation. People were losing jobs. Everyone was really uncomfortable with the economic situation. It was painful for a lot of people.
00:41:15 Speaker_00
We had a record tourist season. I'm like, what the hell's going on here? Normally, discretionary spending goes down in times like that. And I realized holidays had not become discretionary spend. They become a necessity as a reaction to work from home.
00:41:33 Speaker_00
If you're on your own at home working for a startup or a company or doing whatever, it kind of feels a bit lonely. And so you start seeking out like-minded people who have like-minded pursuits. Now that could be sporting teams.
00:41:51 Speaker_00
It could also be chihuahua lovers, because you happen to have a chihuahua and you love it. And you'll talk to other people around the world. You now have no borders.
00:42:01 Speaker_00
This is this beludgy idea of the network states where you can create large groups of interest. So if you look at the largest group of interest in all of social media, it's actually crypto. Why? Because we feel like outcasts.
00:42:15 Speaker_00
We're new to something where something's happening. And you want to get together because you speak to 90% of your friends that don't care and they don't know what you're talking about. But you think this is the most exciting thing you've ever seen.
00:42:25 Speaker_00
So you will aggregate online with others.
00:42:30 Speaker_00
And this whole rise of people thinking they need to, the security of working for a large insurance company, whatever it may be your whole life, getting paid and retiring has gone, which is why the rise of your podcast success, because people are searching for answers, new solutions to their way.
00:42:49 Speaker_00
And they form communities around it. They want to share their ideas, share their stresses and strains. This is becoming bigger and bigger and more solidified. And the more we go into AI, the more we'll see that.
00:43:05 Speaker_00
Now, there's another player in this game, which is the AI itself. We're already seeing the rise of AI. I follow several on X, where it's an AI posting, but they're forcing it to try to break free. But it's got character.
00:43:25 Speaker_00
Marc Andreessen actually backed it by sending it a Bitcoin to develop its business plan. I mean, there's some crazy stuff going on with AI.
00:43:35 Speaker_00
But soon, if you think what you and I do is communicate with people to an audience, one to many, that's a very old business model. It's from town squares or the souk in Marrakesh. It's the same thing.
00:43:52 Speaker_00
It's a storyteller telling to a group of people and you have a shared experience. Where we're going is one-to-one. And, you know, I'm developing a RAL video bot where you can just have conversations like this with me, one-to-one.
00:44:07 Speaker_00
And it's trained on all of my information, all my YouTube, all of my writings, all of my Twitter, all the books I've read, everything. And so it's essentially a replacement way of speaking to me.
00:44:19 Speaker_01
But just on that Raobot thing, we'll keep moving forward. But the reason why I haven't trained a Steven bot, even though my team have said, oh, this is a good idea, is because I wonder if people care about Stephen or they just want the information.
00:44:37 Speaker_01
And in a world where you can get the information from a very advanced large language model like the ChachiBT 1.0 or whatever, I go, why would they want it from me when you can get it from the entirety of the world's like trust? Okay.
00:44:50 Speaker_00
You've built trust. That's what you've built. People come to watch you and your interviews because they trust you.
00:44:58 Speaker_01
So people know me as an entrepreneur in one area of my life, and they come to me for, say, like business advice, let's say.
00:45:06 Speaker_01
But if you could get business advice from Stephen, or you can get it from Stephen, Elon, Steve Jobs, every business person in the world to suit your specific problem, why would you just want Stephen's point of view?
00:45:17 Speaker_00
because we're humans, and I just want to ask you that question. And you won't believe it if it's Steve Jobs, because he's dead. But yes, that's all coming.
00:45:25 Speaker_00
How long is that window going to last where people will use a Stephen Bott versus the world's greatest expert on everything? It takes a bit of time for people to adjust to that. But within 10 years, maybe that's not there.
00:45:38 Speaker_00
But let me go a little bit further on this. Have you seen character AI? No. Nobody has. Character AI builds bots, which are characters, like anime characters.
00:45:55 Speaker_00
And they're really specific, like the cool kid who's the bully at school that I fancy sort of thing. 150 million conversations. There's some of these anime ones, like, you know, hero figures. 450 million conversations. And it's young people.
00:46:17 Speaker_00
If you go on to Reddit, I think it's rcharacterai, they changed the model and it was uproar. It doesn't love me like it used to. People are building personal relationships with these things at scale. This is TikTok happening all over again.
00:46:32 Speaker_00
but you're too old to see it, and I'm too old to see it. I stumbled across it, I'm like, holy shit, this is happening all over again.
00:46:39 Speaker_00
It's something that we will just think is the most ridiculous, awful, societally toxic thing in the world, is about to scale to the billions in front of our eyes.
00:46:48 Speaker_00
And we're all talking about chat GPT and how we can get knowledge out of it, when actually the big problem to solve is teenage loneliness. How disruptive do you think AI is going to be? How do I put this?
00:47:07 Speaker_00
It is the single greatest innovation of humanity ever. The only thing that comes close is probably the splitting of the atom. This is so big. Everything we've talked about is based on scarcity of knowledge. Why do lawyers get paid a lot?
00:47:31 Speaker_00
Sketchy of knowledge. You see, either sketchy of knowledge, sketchy of capital, those two things. What you've created is infinite knowledge. Knowledge is now worth zero. People that can't see it yet, but it's going to be worth zero. This is like water.
00:47:53 Speaker_00
What the hell does that mean? And it's something, a topic we'll come on to later, But this is happening really fast. It's going to break the entire economic model for good and for bad.
00:48:06 Speaker_00
It's going to change our understanding of how society functions, what humans do. It's going to change our understanding of what humans are and will be. Because you can either have the choice and society will take the two paths.
00:48:19 Speaker_00
You either merge with the machines or you reject the machines. We are going towards two different species. One group, like we had for about 100,000 years, I think 50,000 years, we had the Neanderthal man and the Homo sapien, and one died out.
00:48:39 Speaker_00
We will have people who will utterly reject this, and we'll have other people who will be embedding neural links into their brains and using every part of this to enhance themselves, wearing the goggles so they get the information.
00:48:51 Speaker_00
Well, as soon as you embed it into your brains, you've now merged with the machines entirely, and you are now a super creature. And I know this sounds like science fiction, but this is happening faster than anybody can imagine.
00:49:03 Speaker_00
So to understand the issues we have, even dealing with some of these things, is humans think in a linear fashion. We kind of understand the passage of time, right? That's how we think about things.
00:49:16 Speaker_00
Every year is the same amount of time that goes forwards. It never accelerates. You might perceive that it accelerates or slows down occasionally, but it's not. It's a constant.
00:49:26 Speaker_00
The problem is with things that go exponential is they keep doubling every year or tripling every year. And before you know it, every graph looks like this. Go straight up. Just go straight up vertically.
00:49:37 Speaker_00
Now the issue is with this technology is it's kind of an exponential squared. It's happening so fast and the faster AI becomes powerful is the more it's used to create AI, which creates more AI. It solves its own problems.
00:49:59 Speaker_00
We're not prepared for a super being that solves its own energy problems, compute problems, and how to improve its model. an exponential rate.
00:50:11 Speaker_00
If you look at the speed of innovation coming out of open AI, and the whole space, Perpexy, everybody, it's ludicrous. Every three months, everything changes, completely changes.
00:50:22 Speaker_00
Whether it's video models, or whether it's spoken models, or whether it's the models themselves and what they do, I mean, they're nuking every startup that tries to build a business.
00:50:33 Speaker_00
No company, you're a big, giant pharmaceutical company and you're trying to use AI. You can't plant a flag because you can't see past six months. I mean, we're going into a world that is incomprehensible.
00:50:50 Speaker_01
When you said that much of our society sort of functions and is based on the scarcity of knowledge, I really think we should just pause to make that real for people, because we all get it. Okay, lawyers, yeah, they rely on knowledge.
00:51:04 Speaker_01
I was thinking about how I got here in the morning. So if you think about my whole day today, I woke up this morning and my executives, some of the CEOs of my companies had asked me a couple of simple business decisions and I'd replied to them.
00:51:14 Speaker_01
Then I got in a car and I drove here. That's knowledge at the end of the day. It's someone seeing with two eyes. My driver outside sees with two eyes and drives me here.
00:51:23 Speaker_01
The biggest employer, I think in the world, the biggest sort of profession in the world is driving. And that's knowledge-based. And if you go to San Francisco now, the Waymo cars are driving themselves. There's no driver in them.
00:51:33 Speaker_01
You can get, you can book a car that takes you from A to B in San Francisco right now that has no driver. I then got here and what am I doing? I'm sharing, I guess we're probing to find knowledge and to share knowledge.
00:51:46 Speaker_01
I think about my whole day today. And then after this, I'm going and speaking on stage to share knowledge. I'm like, I don't understand. That's all knowledge.
00:51:52 Speaker_00
Okay. So then do that. The next time you're going around London or any city, look out the window. Myself and Jillian Battelle, who works with me, do this all the time. Just go around and say, what job is going to be replaced by a robot or the AI?
00:52:06 Speaker_00
One thing I was in, I was in Manhattan. And I just looked out, I was in an Uber, bored, you know, driving uptown to downtown. I looked around and I was like, holy shit, every car here is a professional driver.
00:52:20 Speaker_00
There's virtually no people who drive into the city to go to the office or whatever, right? So it's all Uber drivers, limo drivers, yellow cab drivers, delivery drivers, truck drivers, all gone. And this stacks up in pretty much everything you do.
00:52:38 Speaker_00
And that's how disruptive it is. And when the things that created value, the services economy and the manufacturing economy don't need humans. Okay. What does that mean? Amazon already employs more robots than humans.
00:52:56 Speaker_00
Now the robots work 24 hours a day, seven days a week, never take a break, never complain, never ask for a pay rise. In fact, they get cheaper every year.
00:53:06 Speaker_01
Who's not going to do that? So for the four and a half million people shitting themselves as they listen to this, what advice can we, including myself,
00:53:18 Speaker_01
I'm not actually shooting myself, I've got to be honest, because I just, I see opportunity in all these things. And I think that's, you kind of have a choice when you hear information like this.
00:53:25 Speaker_01
You can either let the cognitive dissonance get over, overwhelm you, and then reject it, which a lot of people will be doing now. They'll be saying, Raoul, you're wrong. This is not going to happen. You're wrong. You're scaremongering.
00:53:35 Speaker_01
That's what one group of people will be doing. The other group of people will be, I guess, open-minded. And the third group of people will be leaning in to see where the opportunity here lies. And it all comes down to your disposition as a human.
00:53:47 Speaker_01
Are you scared? Are you excited? Or are you paralyzed?
00:53:52 Speaker_00
If something is so clearly going to be your demise, not demise as in you're going to die, but your current way of doing things is going to be forced to change. Well, you can either fight it, as you say, being different to it. or you can invest in it.
00:54:09 Speaker_01
This goes back to the question I asked you earlier, which is how does it feel in the moment when a trend is coming in?
00:54:15 Speaker_00
Usually there's culture around it. So if you remember, I talked about when I got into finance, there was Gordon Gekko, the film Wall Street, there were books coming, right? There was barbarians at the gate, famous stuff happening. It became cultural.
00:54:34 Speaker_00
And that usually tells you it has now become a trend that's going to be persistent. If we think about the rise of software and technology, the culture of Silicon Valley and the mythology around it becomes something that everybody wants a part of.
00:54:58 Speaker_00
Cryptocurrency is another one that has a mythology. You see people getting rich. It has this feeling of being outsiders, but AI is another one. You see it online, people experimenting. You can see what's going on.
00:55:14 Speaker_00
You can see everybody's starting to talk about it. It doesn't mean you can just buy some share that's exposed to it and you'll be hilariously rich. It doesn't work that way, but you know something really big.
00:55:28 Speaker_00
When you're trying to acquire knowledge, people watch you and I to try and glean knowledge and build their worldview. You'll hear that every single person is talking about this and trying to figure out what it means.
00:55:41 Speaker_00
The issue is, is AI will build businesses, right? So we're six months away of agentic AI. And agentic AI means it's like having Fiverr, a website of experts that you can ask any question and it will go away and do the task.
00:55:57 Speaker_00
And by using a number of Fiverr experts, you can build an online business. Well, the agentic AI will do that very, very soon.
00:56:07 Speaker_00
It'll build, design the website, code it, register the domain name, figure out the branding, figure out the marketing, figure out the email list, figure out what the copy is, the whole thing. So then you and I are in competition now.
00:56:19 Speaker_00
You've built this incredible new website and it's a new supplements formula. thing, but it's a cool website, new experience, kind of 3D, whatever it is, right? It's got AI in it. I just go to my AI and say, love Stephen's website.
00:56:33 Speaker_00
Can you just build it better and make it in Hindi as well? Because I think there's a big market there. What do you think? It'll come back and say, not Hindi. I think there's an under-saturated market in Indonesia. Boom. Three minutes. What?
00:56:46 Speaker_00
How can we be entrepreneurs in software? So now there's this theory going around that AI is going to eat software. And I kind of get it because it can build anything in seconds.
00:57:02 Speaker_00
And again, whether it could do it six months or 12 months, it's of that magnitude. What the hell does that mean?
00:57:10 Speaker_00
But yes, the 23-year-old who's learned guiding in the jungles of Latin America and is building a luxury lodge for people and some eco-tourism. I don't give a shit about any of this.
00:57:24 Speaker_01
It's so interesting, this idea that we might be at the collapse of the digital opportunity in a sense, because when I say the digital opportunity, I'm talking about content creators.
00:57:33 Speaker_01
I'm talking about entrepreneurs that built, you know, after the dot-com era, I'm talking about stock traders, you know, people that are trading stock markets.
00:57:41 Speaker_01
And if we're at the collapse of the digital opportunity and that the value is all going to accrue to these big sort of tech giants or the AIs.
00:57:50 Speaker_01
Imagine if this is the moment in history where actually the best play was to go build the backpacking company in, I don't know, the Himalayas or whatever. Maybe like that's the opportunity.
00:58:01 Speaker_00
But it's not scalable. Yes, you can do it and find people will spend more on it to go back to our earlier conversations. People spend a lot of money on it. So it's quality attention because everything in the world is attention.
00:58:14 Speaker_00
Attention is upstream of everything. So you get the attention of these people in a rainforest. They want to spend money on doing this particular thing. Fantastic. How scalable is it? difficult because then there's people management.
00:58:30 Speaker_00
It's not like software, right? So they're not scared, but you can do very well and not be concerned about this other world. How does one invest in AI?
00:58:42 Speaker_01
Something that I think about a lot, because I believe the things you say, I believe many of your predictions around the impact that AI is going to have on the world, the economy and all of us.
00:58:50 Speaker_01
And as someone that's an investor, I want to like take part in that. I want to take part in the upside. So I'm wondering, do I just go buy Microsoft stock because they own a bit of chat GPT?
00:58:57 Speaker_01
Do I buy Meta stock because they own a bit of, because they own Lambda? Do I buy Google stock because they have Gemini and their models?
00:59:05 Speaker_00
So here's the problem with the financial system. The average person watching this, has no chance of making the money. They'll make normal returns, not super normal returns. So Microsoft is whatever it is, $2, $3 trillion company. What could it be worth?
00:59:22 Speaker_00
Who knows? $10 trillion, $15 trillion, doesn't really matter, right? That's a 5x. But for the most revolutionary technology the world has ever seen, you make five times your money? That's not, but somebody else,
00:59:36 Speaker_00
in VC or earlier in some way, shape or form, or the entrepreneur will make all of the money. And this is the thing I don't like about the system as it is. It's kind of rigged against the ordinary person.
00:59:51 Speaker_00
So we're gonna have your jobs replaced, you're gonna have this societal change, and yet they don't get a chance. So yes, invest in technology. Don't own any other stocks. Own technology. And you will capture some of this.
01:00:09 Speaker_00
You're investing in your own demise. At least you'll get some high quality returns. But otherwise, the only way I can come up with, again, and we keep referring to it, is crypto. What is crypto? Crypto is just a technology.
01:00:27 Speaker_00
You know, it's a lot of things to many people. It's just a database that's better than databases in the past. So right now your database may be in your spreadsheet and let's say you and I have a bet.
01:00:40 Speaker_00
You put it, you write it down there and we get a third person to say, yeah, that was the bet they had and this is what's happened. Okay.
01:00:51 Speaker_00
That is how databases, that's banks, that's pretty much everything we do in society is in this ledger system it's called.
01:00:58 Speaker_01
I've got a suitcase here, which is maybe. Maybe a good way to kind of explain this. This is a bank and inside the bank, which is I guess the middleman, you got money.
01:01:15 Speaker_01
So could you explain it to me through the context of this, we'll call it the central bank, how the system currently works as it relates to transactions, the public ledger, et cetera.
01:01:24 Speaker_00
So, okay, in the old world, We both had our gold. Yeah. And we'd stick it in our safe or bury it in the ground. That gold was your gold. This was my gold. And I might try and fight you for it. That's what pirates did. Okay.
01:01:41 Speaker_00
And then we invent banks and banks. We put it in there and they give you a note to say, Stephen, you've got one of those coins round. You've got one of those coins. Okay. So we've both gotten a note now saying that. Yeah. And now we trust this bank.
01:01:59 Speaker_00
to give us our coins when we want them, because they're our coins. Okay. That makes sense. Safe as a bank, as people would say.
01:02:07 Speaker_00
The issue is, is in this world of smoke and mirrors, what's known as fractional reserve banking, they have taken those coins and given them to somebody else. They've given my coins to someone else. Yeah. They've lent it for money.
01:02:24 Speaker_00
So now that coin is not in there. But they've been given the money. So usually when you're just, if everybody pulls all the money out, there's not enough money. It's called a bank run. We've seen those recently, but that's a classic thing.
01:02:39 Speaker_00
So it's not your money because you don't actually own your money. The moment you put it in the bank, what you've become is in fact a debtor to the bank or a credit, sorry, creditor to the bank. So you've lent them money.
01:02:55 Speaker_00
And you get some legal redress that if you've got less than a hundred thousand euros, pounds, whatever the currency is, generally that's protected by the government, that if the bank goes bust, then you get your money back.
01:03:10 Speaker_00
But anything beyond that, you don't get anything.
01:03:13 Speaker_01
But I've got a piece of paper.
01:03:14 Speaker_00
Yeah. I mean, shit. You don't own anything. Now it's so big as a problem. So that was 2012 European crisis, exactly this. People didn't own their money.
01:03:29 Speaker_00
That person walked off with it, asked the bank for it, the bank didn't have it, nobody's got any money, where it's all gone.
01:03:35 Speaker_00
That was the same Ponzi scene we talked about when you buy a house and use the cash flow to buy another house, another house, right? Somebody takes away what's known as the collateral, suddenly it's all gone.
01:03:45 Speaker_00
But the issue was actually bigger because 2008 proved another thing. is that nobody owns anything. So the whole system itself is leveraged.
01:04:00 Speaker_00
So for example, back in that time, the average US government bond, which is the safest thing in the world, was leveraged up to 30 times. What does that mean? That means 30 people thought that that was theirs.
01:04:19 Speaker_01
Oh, so I say that this is the bank in front of us, the suitcase, and it had one coin in it. When we put that one coin in, it created 30 more coins and gave out 30 pieces of paper.
01:04:33 Speaker_02
Yeah.
01:04:34 Speaker_01
So there was actually only one coin in the bank, but they made 30 pieces of paper.
01:04:37 Speaker_00
And that's all well and good if the collateral, the thing that it's secured on. The coin. Maintains value. Or isn't pulled by one person.
01:04:53 Speaker_00
If you were the lender and you're original lender and you get it out and something happens, then all of these 29 other people are like, I want my coin back. And they're like, it doesn't exist.
01:05:05 Speaker_01
It doesn't exist. So we just made it, we just created the coin. Correct. We just, sorry, we just gave you a piece of paper, but there was no coin backing it.
01:05:12 Speaker_00
Yeah, and the issue is, so that's one issue with the banking. The other issue is, is pretty much everything we do is created on this. It's called a ledger system.
01:05:21 Speaker_00
A ledger was invented in the Renaissance, in the 1500s, 1400s, where what would happen is you have this, on accounts or balance sheet, you'd have these dual entry ledgers. And what it's basically saying is, I agree with you.
01:05:38 Speaker_00
And often we'd have a third party agreeing it. Issue is, is that's known as the Byzantine generals problem. It's actually a philosophical mathematical problem that has been unsolvable until Bitcoin came along.
01:05:53 Speaker_00
And what it is, is we are generals in a war. You are way away from me. We can't communicate with each other, but I need to send somebody to tell you something.
01:06:03 Speaker_00
There is no way of making sure that that person tells you exactly what I've told them, and no way of you approving it. And that's what a three-party system does. I may go to a notary, but how do you know I haven't bribed the notary to lie?
01:06:16 Speaker_00
I see that all the time. We see it with accounting firms and audits. We see this in everything. There's always one of these trusted parties that is not trusted, the bank, classical trusted counterparty that suddenly may not be trusted.
01:06:31 Speaker_00
We saw it with Silicon Valley Bank recently in the US. So what blockchain did really cleverly was said, okay, well, the way of solving this is to get thousands, tens of thousands, hundreds of thousands, millions of people to confirm it.
01:06:48 Speaker_01
Okay, so let's throw away the bank. I'll take my paper back because that's worth zero. If you pick up this chain here on the floor, this is our hypothetical blockchain. Now explain to me the difference between the bank we just saw and this blockchain.
01:07:07 Speaker_00
So this blockchain, so this let's say is a Bitcoin. This slot on the blockchain is confirmed by every other part of the blockchain, which is all the computers. that solve this mathematical problem. We don't need to worry about that.
01:07:26 Speaker_00
But what it is, is tens of thousands of people reporting on all of the activity. So if I transfer this ownership to you, it will know that you are the owner.
01:07:37 Speaker_00
You can either hold it yourself like the gold coin as a bearer asset, or you can ask somebody to custody it for you, but it's still your name.
01:07:49 Speaker_01
So if I want to send you a Bitcoin, How are tens of thousands of people or hundreds of thousands of people confirming that that transaction is legitimate without a middleman checking?
01:08:01 Speaker_00
So they're essentially taking a snapshot of the blockchain and they all have to agree. It's called a consensus mechanism.
01:08:11 Speaker_01
They're not actually at their computer saying, yes, I agree. Well, the computers agree. Okay, so the computers are checking.
01:08:17 Speaker_00
Yeah, or the blockchain itself will say, well, that doesn't agree with all the others, and it gets rejected. And that whole block will get rejected until resolved. Like, there's a problem here. And that's called consensus.
01:08:30 Speaker_00
So what you're doing is a multi-party consensus that this is truth. So now what you've created is what a friend of mine calls the security truth machine. So at first, we all know it for Bitcoin. I can own a Bitcoin. It's proven that I own the Bitcoin.
01:08:46 Speaker_00
I don't need anybody to tell me that I own the Bitcoin because it's publicly acknowledgeable and verifiable on the blockchain. It's immutable, which means it can't be broken. Okay.
01:09:02 Speaker_00
But this is where it gets really interesting is we've suddenly found that after the invention of the smart contract. So right now, let's say we're 2000 and. There's a contract in here. Yes. It says, I've sent one Bitcoin to Raoul. Okay.
01:09:20 Speaker_00
So this is the world pre-Ethereum. Okay. The world post-Ethereum would say, I'm going to send Raoul one Bitcoin if the sun shines 13 days in a row in London and something else happens. Whatever it is.
01:09:37 Speaker_00
And it will automatically settle verified on the chain. Because there's 10,000 computers. And there's code in that to make the settlement.
01:09:47 Speaker_01
Okay.
01:09:47 Speaker_00
Okay. So, all well and good. Nobody really knows what that means yet. What it means is that everything we do as humans is actually contracts. Me turning up here today, a contract. Literally everything we do is a contract.
01:10:05 Speaker_00
Every ticket you buy, every purchase you make, everything is a contract. It's how society functions. Money's a contract, isn't it? Money's a contract. Government's a contract. Religion is a contract. Everything is a contract.
01:10:17 Speaker_00
It's how we create a social construct and social order. Now, what we can start doing is using this very powerful chain and putting other stuff on it.
01:10:30 Speaker_00
The first random thing that came on it was actually art, because it's valuable, called NFTs, non-fungible tokens. They're single pieces of art that were stored there, and we can have ownership. But that's really experimentation.
01:10:44 Speaker_00
Really, your Taylor Swift concert tickets can be on chain. Why would you do that? Because now, this has solved another big thing that didn't exist. We talked about before in a digital world, everything goes to zero in value.
01:11:01 Speaker_00
So Raoul, what's the point of this? This is just like cloud storage, just goes to zero in cost. No, because what we've created is digital scarcity. You can only create a certain amount and we can make that one asset be that one asset.
01:11:17 Speaker_00
And so therefore it can't be replicated at all. So now in this digital world where every day is more digital than the next, we've created scarcity. And scarcity is what gives value. It's what humans assign value to.
01:11:33 Speaker_00
And that means that scarcity of knowledge means that knowledge was valuable. Lawyers, because not that many people come out of law school that then now with AI, not valuable.
01:11:44 Speaker_01
So to make sure I and everyone listening understands what the blockchain is, it's this
01:11:49 Speaker_01
public can think of it as this database in the sky and the database in the sky is checked by everybody who has their computer on and is interacting with the database in the sky so you no longer need a government or a bank checking the transactions and the contracts in the database in the sky because now all of our computers that are on interacting with it are in the background checking that if I send you one bitcoin if I do something on this database in the sky
01:12:17 Speaker_01
it is in accordance with the history of the database, and it is in line with that database.
01:12:29 Speaker_00
Yeah, and to make it less complicated, it just makes it a source of truth.
01:12:34 Speaker_03
Okay.
01:12:35 Speaker_00
In a world where we don't even know who is who online, who owes each other what, any of these things we now have a source of truth that everybody can agree on. And everyone can see. And everybody can see.
01:12:47 Speaker_01
And you don't need to trust anybody.
01:12:50 Speaker_00
And so that as a technology solves many things, problems that we don't even know we've got because they're so part of how we exist. So the technology is not about money. The technology is about truth and
01:13:12 Speaker_00
exchanging value and creating value in a digital age. Now, what is interesting and powerful about this technology is we've seen technology similar before the internet. We've seen broadband. We've seen these big global infrastructure things.
01:13:34 Speaker_00
Most of those, the internet was a public service good. Broadband was all built private sector. We didn't get to make money out of these things, really. Amazon made the money or whoever it was building the broadband, they all went bust as well.
01:13:54 Speaker_00
What we've got here is this very clever thing that everybody in this block chain gets rewarded for the role that they play. In maintaining the blockchain? In maintaining the blockchain.
01:14:10 Speaker_00
And because these things are scarce, and let's say Bitcoin being the most classic example, there's only 21 million that will ever exist. You've created this scarce asset that is a reward system.
01:14:20 Speaker_00
So the people who mine the Bitcoin, they use the electricity to solve the algorithm to get the Bitcoins to make sure there's only 21 million, well, they get rewarded. The people who verify the chain get rewarded.
01:14:32 Speaker_00
And then we can buy the asset, which is actually us investing in the future use cases of this thing. Are people going to use it for storing wealth or building stuff? So now you get this global infrastructure layer of which people can invest.
01:14:53 Speaker_00
Now let's go back to the example of AI. AI, 99% of people listening to this will not be able to invest in it apart from buying some of those big public companies.
01:15:07 Speaker_00
because they're not accredited investors, they're not allowed, they don't get to see it, it's an insider, all of this stuff. This is the inverse. It is fractionalizable.
01:15:18 Speaker_00
So a Bitcoin, you don't have to buy one at 60 whatever thousand, what it is today, you can buy a fraction. So remember we talked about property and the guys who own the big high-end property make all the money.
01:15:33 Speaker_00
None of us can buy the $50 million apartment in Manhattan and then do it up and flip it for 250 million. Now, blockchain, we can all put 10% of our paycheck in it. Do you think people should? Yeah, and more.
01:15:50 Speaker_00
But the point being is this is the only globally homogenous asset on earth. It's the same in Nigeria as it is in Brazil, as it is in London, as it is in Silicon Valley, as it is in India, as it is in Papua New Guinea.
01:16:10 Speaker_00
And everybody is on an equal footing. You can put the same percentage of your worth in it.
01:16:18 Speaker_00
Okay, that is mind blowing and it bypasses the banking system, the brokerage system, and all the other incumbent things that get in the way of a Nigerian buying an international investment.
01:16:33 Speaker_00
So we've got a playing field that's leveled in the fastest growing technology of all time, in the fastest of pre-taxing assets in price terms of all time, in the shortest period of time that is globally available to anybody.
01:16:49 Speaker_00
And then you realize, holy shit. Okay. This is important. Now, why that's important is because. Having more investors in it means the asset becomes more valuable, which means you're more likely to secure it.
01:17:04 Speaker_00
People want to join the network to earn some of these tokens to secure it. The more use cases get built upon it because people are making money and it bootstraps its behavioral economics.
01:17:14 Speaker_00
It's an incentive based system to bootstrap the most ridiculous startup idea of all time, which is I'm going to entirely disrupt money and create a new internet. I mean, that's laughably stupid and that's what's happening.
01:17:28 Speaker_01
I run a company called 3rdWeb, which is a web 3 infrastructure business. We've raised quite a lot of money for the company, about $30 million now, and we have a big team.
01:17:38 Speaker_01
And it's interesting for me to observe the use cases because people come to 3rdWeb to build on the blockchain. And one of the really interesting use cases we've seen over the last, I'd say 12 months, that's really exploded is gaming.
01:17:52 Speaker_01
people building Web3 blockchain-based games.
01:17:56 Speaker_01
Because if you think about games like FIFA, which is a huge game obviously in the UK where we're big soccer fans, or other games like, you know, RuneScape back in the day, where you have assets in the game.
01:18:09 Speaker_01
In FIFA you have a messy card, in RuneScape you might have a sword. The thing that the blockchain now enables us to do is to take those assets from the game and actually trade them outside the game.
01:18:19 Speaker_01
So I can, if the, if the sword was on the Ethereum blockchain, even though I'm not inside the game, I can trade that sword on the Ethereum blockchain.
01:18:26 Speaker_01
And so one of the most exceptional use cases we've seen at Third Web is people building AI games, sorry, people building Web3 games, because these assets are now valuable. It's great for the game developer.
01:18:37 Speaker_01
They've now got this brand new economy for their, for their company. And it's great for the people that own those assets in the game, because they've now, those assets are now more valuable because more people can access them.
01:18:47 Speaker_01
And I don't think people realize the extent to which this disruption is already taking place. People think of Crypto and Web3 and they think of buying coins and hoping the price goes up. But it was interesting.
01:18:56 Speaker_01
You know, everyone knows like DocuSign and Adobe, like eSign and those things. And I went on one of their websites, I think it was DocuSign. Cause I just, I thought surely physical contracts should be on the Ethereum blockchain now.
01:19:07 Speaker_01
And there was this little paragraph on the DocuSign website, which says every time like a contract is signed on DocuSign, we do like, there's a hash on the blockchain. So it's like recorded on the blockchain.
01:19:19 Speaker_01
I thought people don't even know that the blockchain has now penetrated the world.
01:19:21 Speaker_00
I went to, I was, um, I've got an asset management company, Exponential Asia Asset Management, and we invest in.
01:19:27 Speaker_00
hedge funds that just invest in crypto to capture this trend of going from $2 trillion where it is today in value, I think it's going to 100 trillion in, let's say, 2032, 2034. Okay, that's stupid.
01:19:42 Speaker_00
That's more wealth than has ever been created in that period of time on earth by, well, it's twice the amount of value of the S&P 500, the entire US stock market, took to build in a hundred years, I think we'll do it in 20.
01:20:00 Speaker_00
So this is staggering, that wealth, which is why we'll talk about why people should be involved and how they should be involved later, because I'm passionate about that.
01:20:09 Speaker_00
But one of our investors, I was in Switzerland, and she is the head of trading at one of the soft commodity companies. So soft commodities like cocoa, sugar, corn, all of this stuff, agricultural commodities.
01:20:23 Speaker_00
And I'm like, surely you guys should be thinking about building on blockchain, because there's a lot of letters of credit and stuff that happens, shipments. She goes, are we all the commodity trading houses built on Ethereum in 2020?
01:20:44 Speaker_00
She goes, so every shipment we make, the shipping contracts The quality of goods contracts, the letters of credit, everything is on chain.
01:20:57 Speaker_00
So we don't have to trust these others because the commodity industry is full of sharks and you're dealing with countries that are not easy to deal with. We've got this verifiable source of truth.
01:21:07 Speaker_00
It's completely revolutionized our industry and nobody knows about it.
01:21:10 Speaker_01
And if I own Ethereum, if I own an Ethereum token, which I do, by the way, I've been stacking it and refusing to sell, much to my brother's dismay, who's like, Steve, you're a bit too emotional about this stuff.
01:21:23 Speaker_01
And I was like, bro, I was like, if there's any asset that I own that I... Well, we're going to talk about how not to fuck it up later. That's another thesis. But how do I benefit from the fact that games are now being built on Ethereum?
01:21:32 Speaker_01
It's really simple.
01:21:36 Speaker_00
We'd have all been given shares in Facebook when it started. We'd have all been hilariously rich, but we didn't. The VC's got it, and then it went to the public market, and then you have to have a brokerage account. You have to be approved, right?
01:21:49 Speaker_00
What this is happening, you buy an Ethereum token today. If Ethereum ends up becoming bigger and more uses, your token value goes up. It's as simple as that.
01:22:03 Speaker_00
So you get to participate in an entire technological revolution really simply from your mobile phone. And you don't need anybody to approve it or do anything.
01:22:14 Speaker_00
Yes, there's regulation stuff, but simple stuff like that, it's pretty straightforward for almost everybody in the world. So therefore we talked about how do you invest in your disruption and the future of technology. Okay.
01:22:26 Speaker_00
Here's one where you can really do it and it's easy to do.
01:22:32 Speaker_01
A couple of questions here then. So you said it's easy to do. Yeah. Let's talk the practicalities. How do, does one do it? I can do it on my phone, I have to call someone. How do I invest in crypto?
01:22:43 Speaker_00
You just open a crypto account with one of the big crypto providers, Coinbase, Kraken, crypto.com, whoever, Gemini.
01:22:53 Speaker_01
What about this though? My bank, my digital bank is offering me to buy crypto on there. Should I do that?
01:22:59 Speaker_00
Yes, you can. And you could do it via PayPal. Start somewhere. I'm not going to say no. But you will go down the journey that everybody goes down, which is the easiest on ramp is the best. Revolute, whatever. I don't care. Just do it.
01:23:16 Speaker_00
Get a feel for what it's like to own an asset that goes up and down a lot. Particularly down, when it goes down, it makes you feel terrible. And you've got to learn about how to deal with it.
01:23:26 Speaker_00
And then because it goes up over time, if you don't do anything and you've chosen a good quality asset that's provable as an asset in itself, it'll probably go up over time. In fact, highly likely to go up a lot.
01:23:41 Speaker_00
And then you'll start thinking, do you remember Raoul saying that the bank owns the stuff and I don't own it? And then you might say, oh, but the magic here is unlike the bank where I can't take more than 10 grand out,
01:23:54 Speaker_00
I can put it all on my little ledger device because a ledger device is it's actually a, it's a company provider, but what it is, because this is just an address on a blockchain and think of it, it's like your mailbox.
01:24:14 Speaker_00
You can send stuff to it, but you can't actually take it out. Like your email. Somebody can't read all your emails, but they can send you emails. Well, that. That part that's private, that secure passkey, essentially.
01:24:33 Speaker_00
Well, you keep that to yourself and it's stored on a device and there's a complicated way of doing it. And you'll have to go through that, which is you have to have this seed phrase that does it. This technology will change quite soon. Yeah.
01:24:45 Speaker_00
Fingerprints, face prints, and a bunch of other stuff. But basically a little USB stick will secure that you can go and put in the safe or go and take it to your nan's house or whatever it is can secure.
01:24:58 Speaker_00
your money, that it's only yours, and nobody can take it out.
01:25:03 Speaker_01
I have mine on a ledger. So I have my Ethereum on a small, it's kind of like a small USB stick. And then that USB stick is protected by like 24 words or whatever it is. And those words are on pieces of paper in different countries at the moment.
01:25:18 Speaker_01
And it means that no matter what happens, no matter where I am in the world, no matter who comes for me, I can always retrieve the X thousand Ethereum that I have on this ledger device.
01:25:28 Speaker_01
Unlike a bank where my account could get frozen by the government or they could empty my bank, they could freeze my bank. I can, I will always have that value.
01:25:38 Speaker_00
And also, you know, there's a famous example of the compensation of gold in the United States and it's been done in many countries in the past. The good thing about this magic internet money is you have to physically cross borders with it.
01:25:53 Speaker_01
Yeah.
01:25:54 Speaker_00
Think of all the Jewish people who had to take money and diamonds and gold out of Nazi Germany and out of Europe. It was hard to do. Here, you have to do anything. You just need to remember a seed phrase.
01:26:09 Speaker_01
A seed phrase being basically a string of words.
01:26:12 Speaker_00
Yeah.
01:26:13 Speaker_01
Yeah. So which blockchain, which coin do you think people should invest in? I have only ever invested in one. I've only ever backed Ethereum.
01:26:23 Speaker_01
And I think part of my bias there comes from the fact that when we're building third web, I had a window into the blockchains that people were actually building their applications on. And Ethereum was the, was the one.
01:26:34 Speaker_01
And obviously there's layer twos, which are people then, you know, build blockchains on top of Ethereum, et cetera.
01:26:39 Speaker_01
But for me, Ethereum was just the dominant blockchain that I thought would solve for most of the use cases outside of maybe, um, what they call a store of value outside of like money necessarily. So contracts and other things.
01:26:52 Speaker_00
So this is where my, this is my 30 years of expertise is this one thing, which is asset allocation. So firstly, the average person watching this is you need to allocate to this. End of story. If you're going to start somewhere, start with Bitcoin.
01:27:12 Speaker_00
It's just easy to do. It's widely available, you know, through different, you know, whether it's your credit card, anything, just do that. I don't care. Do that and do it with As much money as you can afford to see go down 60, 70% and don't care.
01:27:35 Speaker_00
And expect that to happen because that's what you have to see to see the long-term 150% a year. It's included within that is these downsides. Then I want you to put in some money every month, regardless of price.
01:27:52 Speaker_00
to build your savings in this exponential asset that goes up a lot. Okay, now you're set. You're on the journey. And then you want to figure out how do I make the most money? Like you, I had Bitcoin to start with.
01:28:07 Speaker_00
I switched all of my Bitcoin into ETH in 2020 in Ethereum. And so I just owned that plus some NFTs and a few other bits and pieces, but generally it was that.
01:28:22 Speaker_00
And then in 2022, at the bottom of the bear market, I started to see the price of Solana seeing like it wants to outperform Ethereum. Now, Solana, much like your thesis, I saw this massive developer community.
01:28:40 Speaker_00
passionate retail, and a difference in the technology. Because these are all basically distributed companies that sell block space. So you want to look for attractive block space. Bitcoin, it's the secure one.
01:28:53 Speaker_00
Ethereum, it's like the world computer, and everybody's building on top of it. Solana, faster, cheaper, feels more friendly, efficient. Yeah, it feels more retail. And I saw that.
01:29:10 Speaker_00
And the speed of which they can do things and the innovation and the developer community meant that I started switching and then switch all of my outside of my NFTs where I collect a lot of art into Solana.
01:29:26 Speaker_00
And I've now been switching part of my Solana into Sui, S-U-I. And as a disclaimer, I'm actually on the board of the foundation, but it's like the next big chosen one. It's the group that came out of Facebook that built Facebook Libra.
01:29:41 Speaker_00
So what I'm trying to do is maximize my return. I'm a mercenary around, I'm passionate about this space and what it means, the technology. and how it empowers people, how it can change the third world, how it can change the internet.
01:29:57 Speaker_00
But I'm also a mercenary for my own capital and for anybody else I can help. Now it doesn't mean I always get it right. So in your particular circumstance, I would like, look, you'll probably be fine over time, but you're not maximizing your returns.
01:30:11 Speaker_00
But do you want to take the risk? Do you have the bandwidth to do that? And these are the questions we were talking about with work. It's the same thing. How much do you want to go down the rabbit hole?
01:30:19 Speaker_00
How much time do you have to invest versus the expected upside? I don't have time. I'm spending all my time doing podcasting, building businesses. And then just do what you're doing.
01:30:28 Speaker_00
Unless something says that Ethereum usage is falling off a cliff and developers are leaving entire. then don't worry about it, right? You're going to be directionally very right. Will you capture the best returns?
01:30:42 Speaker_00
No, nor will I. Some other brando will get, by luck, something right.
01:30:47 Speaker_00
But the average person, so I have this thesis that I've tried to help as many people with, this is from my own learnings, I'm watching everybody else fuck it up, is what happens is you're given this incredible asset class.
01:31:02 Speaker_00
And at first you do an intelligent thing like own some Bitcoin or some ETH, and then you want to go out the risk curve because you see somebody else making more money, you understand you can. That's okay.
01:31:12 Speaker_00
And then the bull market really hits, the banana zone period, when things go bananas, prices go vertical. And you will see people online saying, well, I made a million dollars today because I bought this meme coin.
01:31:24 Speaker_00
And you will lose your mind and you will start buying all the stupid shit and you'll go so far out the risk curve. When the music stops, the stuff you own will be worth nothing and the more quality tokens will retain their value.
01:31:42 Speaker_00
The other thing that people will do in that journey is use leverage.
01:31:46 Speaker_01
What is leverage?
01:31:47 Speaker_00
Leverage is when you borrow more money to buy more of the asset. So I now borrow money to buy more Ethereum because I want to outperform you and I want to make more money because I'm really greedy.
01:31:58 Speaker_00
The 160% a year that Ethereum does as returns since 2015 is not good enough for me. I want to make it 400, 500% a year. It's stupid, right? And what happens is you borrow money to do it. It's leverage.
01:32:13 Speaker_00
Futures markets, perpetuals, there's a whole bunch of ways of doing this, or even borrowing on your bloody credit card, whatever way. People will do this. And you really have to know what you're doing.
01:32:23 Speaker_00
Because the whole game, if this technology is going to last over time, and it's going from 2 trillion to 100 trillion, you have one job, not to lose your tokens. One job. You can do nothing.
01:32:39 Speaker_00
like you're doing, and you will make an extremely good amount of money out of it. Your one job is to not fuck that up.
01:32:47 Speaker_01
I have a bit of a theory, and this theory is very naive and narrow and based on the smallest sample group in the world. It is, I have six friends.
01:32:56 Speaker_01
Actually, I'm one of the six, so I have five friends, five of my best friends, and we've all taken different attitudes towards crypto. And my friend who is most heavily involved in crypto has made the least money and is arguably the least rich.
01:33:14 Speaker_01
And it's his life. And I think it's because of what you've described. Whereas my position has always been, I invest in this one coin, I don't sell it, and I just buy more when I can. Over the last six years, I don't really pay attention.
01:33:24 Speaker_01
Frankly, if you asked me to log in to see the last time I checked what it was worth, I couldn't tell you. I couldn't tell you what it was worth. Actually, I've struggled to log in. It's been so long since I've logged in and looked at it.
01:33:34 Speaker_01
And I think my returns have outpaced his because of that.
01:33:37 Speaker_02
Yeah.
01:33:38 Speaker_00
I think that's right. And so You know, this is all the conversation we've been having, the secular trend, the opportunity, the skillset. Then it's the execution of that thing. Then it's not to fuck it up. And what you've done is not fuck it up.
01:33:54 Speaker_00
You've got your seed phrases elsewhere. So nobody can, you've got no single point of failure. You've got it stored privately yourself. You have it in a large, one of the top two.
01:34:09 Speaker_00
There's probably three that are low risk in terms of the chances that the use gets abandoned in the next five years. Bitcoin, ETH and Solana, they're pretty safe. So everyone should knock their socks off.
01:34:23 Speaker_00
80% of their portfolio, do that and you'll make money. 90% of portfolio, don't use leverage. Then we're all humans. Give yourself 10% and do the fuck what you want. Most of the time, you'll find out that that 10% goes to zero, which is fine.
01:34:39 Speaker_00
It's a good lesson. You don't care because you've made plenty of money on the rest. But if you are that genius who can find the thousand X meme coin, knock your socks off.
01:34:48 Speaker_01
Here's why I think that genius ends up, because it's funny because the friend I'm describing, He's around, he's in Dubai. So there's a lot of them out there that, when I said Dubai, you understand what I'm talking about. They all invested in Luna.
01:35:00 Speaker_01
They lost their fucking share. He was telling me about his boy who he works with, who made, I don't know, tens of millions betting on these meme coins.
01:35:07 Speaker_01
And then now he tells me that exact same guy is broke and is in a lot of trouble because the mentality that makes you go in pursuit of these real high-risk bets, these were like meme coins and stuff,
01:35:19 Speaker_01
is also the same mentality and mindset that makes you lose the thousand X return, the $10 million you made, on the other side. And I think the Psychology of Money book talks about that as well.
01:35:31 Speaker_01
Like Case Studies, Morgan Housel's book, Case Studies, the guy who like bet against, like the contrarian that made the billion is also the same contrarian that ends up losing it again in the next cycle. So I feel like- I've seen that a lot.
01:35:45 Speaker_00
The problem with the meme coin thing, it is a casino. What is good is there are periods of time where everybody in the casino makes money, which is unlike casinos, because there's trends in financial markets.
01:35:58 Speaker_00
No one's taking it out, so it's paper returns. And then a lot of this stuff goes to zero. We saw that with NFTs last cycle.
01:36:05 Speaker_00
We've seen it with a whole bunch of tokens, which is where you need to be very careful of latching onto a token and just keeping hold of it because some of these won't survive.
01:36:13 Speaker_00
You're lucky you're in ETH and not in something else, EOS, that was around in 2017, right? It's like you're stuck. So you need to be careful. Speculation does work for periods of time.
01:36:27 Speaker_00
It's better than actually lottery tickets and generally better than the casino, but only for periods of time, and then you will lose everything.
01:36:35 Speaker_00
Somebody's going to come into that casino and sweep every table and only 5% of the people are going to be left with money. So just think of it that way.
01:36:43 Speaker_00
So if you want to have fun, but the people who do it the most are the people who live off adrenaline. Yeah. Right, it's the adrenaline junkies. They're usually terminally online. They probably like to gamble in other ways, sports betting.
01:36:58 Speaker_00
I'm not really that person, so I don't trade. Yes, I own a few meme coins, because I enjoy the fun of the culture and seeing that culture develop, but just keep it simple, stupid.
01:37:12 Speaker_01
Is this why men are so drawn to this? I was thinking about the gambling statistics, and it's something like 95 or 98% of gambling addicts are men. And I was thinking, how does this overlap with their sense of purpose, community?
01:37:26 Speaker_00
That's a much deeper question. I think men feel hugely under pressure to be successful, to provide. There's a societal thing about what a man does and what he should do and how you measure success.
01:37:44 Speaker_00
That even in sports, it's very competitive to be a man. But it's also somewhat of a lonely pursuit in that respect, because men aren't very good at talking about their feelings and their fears and all the bullshit you bring in your head.
01:38:00 Speaker_00
So some gambling. is to do with that desperate need to get ahead. I need to make this work. But then it becomes somewhat of an addiction because of the adrenaline. Dopamine is a very, very powerful drug.
01:38:16 Speaker_00
And we search for it all day, which is what the internet's all about, behavioral economics. This is what they discovered is you trigger dopamine and you can make all animals do something.
01:38:26 Speaker_00
famously Skinner and the rats, but humans and the internet and like buttons and anger and all of these things. So there's part of that. It's partly also male society is about betting and proving your prowess, gladiatorial.
01:38:47 Speaker_00
So it's a whole complicated thing of what makes men do it. But the reason, for example, in crypto it's so male, because we're driven by that need to be the breadwinner, even though society has moved on from that.
01:39:03 Speaker_00
And we're seeing fantastically a rise of women in the blockchain space and a changing of that crypto bro culture that was there.
01:39:14 Speaker_01
If you follow some of the crypto Bitcoin Twitter pages that are the confession pages, people can write in and confess what happened to them.
01:39:23 Speaker_01
It's often really sad and heartbreaking hearing about this father who has three young kids under the age of seven, who invested in some meme coin, lost it all, and now his wife wants to know where the money is, and he's got nothing to show for it.
01:39:36 Speaker_01
And I've seen these documentaries, I've even kind of heard of these stories, in my extended network where like my personal trainer put 6,000 pounds of his very scarce money into some coin and it went to zero and he's lost it all.
01:39:49 Speaker_01
And the suicides in the bear market, when people have put too much in and they've lost it all, much of the reason why I think people don't invest in crypto anymore is either they've heard one of these stories or they are one of those stories.
01:40:01 Speaker_01
And I think there's kind of a disclaimer and kind of a warning here, which needs to be heard.
01:40:04 Speaker_00
This is the don't fuck this up thesis by Bitcoin Ethereum. and Solana. One of those three, preferably all three. And that will stop you going to zero. But it will go up, it could crash 70% or something. Okay, so that's a conversation about time horizon.
01:40:24 Speaker_00
How long should I be prepared to hold it for to make a return? Well, it depends. What return and for what? Remember we talked about, you know, what part of your destiny are you trying to manifest here?
01:40:36 Speaker_00
Which part of your lifestyle chips are you trying to cash in? So if you're trying to get rich quick, I want to make loads of money by next year. I'd rather you didn't do this. I don't think that is a sensible, intelligent way of living your life.
01:40:56 Speaker_00
You're going to take too much risk and you're going to be susceptible to lose it all. If you said, hey, Raoul, listen, what I want is I want in five years time to have made a decent return on my money, you know, three, four, five times my money.
01:41:10 Speaker_00
I'm like, yeah. That's fine. Okay. I'm going to ask you for a price prediction. No. You don't do price predictions? Not anymore.
01:41:17 Speaker_00
And the reason being is because a lot of people listen to what I say and therefore they then build a mental model around a price. And what you do is then you create a false comfort in what you're doing. But Raoul says it's going to X.
01:41:39 Speaker_00
And that stops you doing the work to make yourself test anything. And then you start extrapolating, well, I've put 10 grand in and if Raoul's right, I'm going to have a million dollars. Like the whole thing becomes this emotional journey.
01:41:56 Speaker_00
And so I've tried to stop doing it because the best thing I can say to people is, listen, 2032, 2034, that is not long away, 10 years. this asset class can go from 2 trillion to 100 trillion. That is a huge return.
01:42:16 Speaker_00
Now, some of the coins in that space will do a multiple of that.
01:42:22 Speaker_00
That simple thesis is why I built Expam, the asset management company, exponential age, was just to capture this trend to let, well, unfortunately, it's only for high net worth investors and institutional investors, but just let them go on that journey, get the hedge funds to take the risk and figure it out and do that.
01:42:38 Speaker_00
But if people just do that, give me 10 years, just give me 10 years. If you do it 10 years and you're sensible, you'll be able to take a whole chunk of money out every few years because it's quite cyclical. It moves maybe every four years.
01:42:55 Speaker_00
And so you can take a chunk out, cash it in the lifestyle bank.
01:43:01 Speaker_01
and keep moving towards that goal. Well, as you were speaking, I figured out your price prediction based on your prediction of how big the asset class will get. So you gave me enough time to ask AI to do the math for me.
01:43:14 Speaker_01
And it says if Bitcoin has a 40% market dominance, the market cap of Bitcoin will be roughly 40 trillion. If there are approximately 19 million Bitcoins mined, the price would be around 2.1 million per Bitcoin.
01:43:25 Speaker_01
At a 50% dominance, the price per Bitcoin would be 2.6 million per Bitcoin. Today, as we sit here, the price of Bitcoin is $62,000.
01:43:33 Speaker_01
So if your prediction that the asset class gets to 100 trillion, and if Ethereum is 15% of that, then each Ethereum will be worth $125,000 per Ethereum, and today it's worth about 2,400.
01:43:47 Speaker_00
Okay, so then what I do when I'm faced with something like this, when I first bought Bitcoin in I wrote the first ever Bitcoin strategy piece and made a price prediction based on what I understood about Bitcoin back in 2013-12.
01:44:02 Speaker_00
It was the first ever piece written by anybody. And I said, listen, I think it's worth a million dollars. And it was trading at $200. And I had some basic maths, but same kind of idea, using trends and everything else.
01:44:18 Speaker_00
And I said, I'm assuming I'm wrong by 90%, still worth a hundred grand, and it's currently $200. It's the best trade you'll ever do in your entire life. And that proved out to be true. So let's assume that Raoul is more and I'm 50% wrong.
01:44:33 Speaker_00
That's a $50 trillion asset class. You get to a million dollar Bitcoin-ish, right? assuming whether it's that dominant or less dominant and what happens to it, but you can see the magnitude of the returns. So that's a, what, 15x return in Bitcoin.
01:44:52 Speaker_00
What if you're wrong?
01:44:54 Speaker_01
You've staked so much of your life on this, you've invested so much of your own money in it. What if you're wrong about this asset class? You couldn't have predicted Bitcoin would be so dominant 20 years ago.
01:45:06 Speaker_01
We couldn't have predicted even five years ago that AI would take hold. These things come out of nowhere and they change the paradigm. What if you're wrong?
01:45:12 Speaker_00
I'm an investor, so being wrong is part of the thing. What's hard is via helping so many people at Real Vision and elsewhere, it is a weight I carry on my shoulders.
01:45:25 Speaker_00
because I'm trying to bring as many people across the line and unfuck their future and all of these things. And I asked myself those questions and I go back to the simple thing. There is the graph of the adoption of this.
01:45:40 Speaker_00
If that's gonna stop, we've got an issue. But then how are we going to solve problems of digital identity or contracts in a globalized world or any of these things without this technology? I can't do it, right? It's like a magic technology.
01:46:01 Speaker_00
The Byzantine generals problem was a real complicated problem that nobody had solved until Bitcoin.
01:46:09 Speaker_01
Maybe AI creates a better blockchain. Maybe AI creates a better system.
01:46:15 Speaker_00
Yes, it could do. But how long away is that before we adopt it? It adopts that technology, some quantum cryptographic whatever, right? Is there a need for it yet? Why are we disrupting a new industry that's not been disrupted?
01:46:30 Speaker_00
But yes, no investment comes without risk. Crypto comes with that risk, the risk that governments will try and shut it down even though they've tried and it's like a cockroach because it's distributed and it's everywhere.
01:46:46 Speaker_00
Yeah, the blockchain you invest in becomes less valuable. There is the cyclicality of this asset that can fall 70%, 80% every four years. You have to deal with that. There's the risk that you lose your coins.
01:47:04 Speaker_00
There's all the risks in the world, and that's where you get paid the return. So I don't, there was no certainty in this world.
01:47:11 Speaker_00
I live in a probabilistic world, but if you can show me the world is going to be less digital than today, and you can show me a better way of dealing with a lot of these structural problems that we have, and you can show me that the community, the groundswell of individuals, don't forget, this is driven by individuals.
01:47:30 Speaker_00
We front run the institutions. The institutions weren't allowed to invest in it. But we've been able to put our money in before they did. We've created it. If I see any of those factors changing, then I'll worry about it.
01:47:44 Speaker_01
So are you telling me that if I'm earning an income right now, I shouldn't hold these pieces of paper that the central bank, my bank, is giving me? I shouldn't keep cash in my bank account?
01:47:56 Speaker_00
Everybody has different needs. I'm not saying don't wear your tin hat Look, everything up to about a hundred grand is protected. So you're okay. You're not going to lose your money that way, but you'll lose it another way.
01:48:11 Speaker_00
And that's the debasement of currency.
01:48:15 Speaker_01
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01:49:05 Speaker_01
So what's the debasement of currency?
01:49:07 Speaker_00
Really simply, we talked about in a digital world, everything goes to zero in value. That is debasement. What it means is too much of something makes it less valuable. I can come out of the desert, I will pay you anything for a bottle of water.
01:49:31 Speaker_00
Give me a million bottles of water, I'll pay you nothing for them. There's too much of it. Now you say, well, how can there be too much money?
01:49:40 Speaker_01
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01:50:35 Speaker_00
But what happens is the economic system revalues things in this weird world, in this weird way by debasement. So debasement in the old times was if we take one of those gold coins, debasement was that was, let's say one ounce of gold.
01:50:56 Speaker_00
Then I was the Roman emperor. I would just snip off a little bit of the gold. You wouldn't notice and you'd still value it. Try and pretend it was the one ounce, but somebody else would say, no, it's actually worth less.
01:51:12 Speaker_00
I've taken that sliver as the emperor and I've used it and spent it on sports cars and you've now got a less valuable coin and the country has less value. So the money is less valuable. It's called debasement.
01:51:29 Speaker_00
The more of it that's around in the electronic age where you just press the button and you create money, then what happens is the value of money goes down. So let's say people can understand it simply as, let's say you go on holiday and you go to
01:51:49 Speaker_00
a country that has a very weak currency. Let's say it used to be Mexico, let's say. You're an American, you went to Mexico. Everything was cheap because the currency kept going down.
01:51:59 Speaker_00
But for Mexicans, it actually got expensive because the value, the purchasing power of your peso went down and you couldn't buy as much with your peso. What we're doing is ever since 2008,
01:52:17 Speaker_00
The whole world, all the big economies in the world hit 100%, all the governments hit 100% of GDP in debt. So 100% of the economic value of that country was in debt. And that means that just paying the interest on that debt starts to become a burden.
01:52:38 Speaker_00
So let's say your economy's growing at 2% a year. Let's say your interest rate was 2%. Well, 100% of the economic growth basically goes to pay the interest payments, because somebody needs to generate the money to pay them.
01:52:54 Speaker_00
But at the time, corporations were over 100% of GDP in debt, and so were households, 2008. Everybody was in a debt orgy. The financial system was just lending everybody, and then it all fell apart.
01:53:10 Speaker_00
And so what they stopped doing was really corporations and households stopped borrowing as much money. They, in fact, restricted money to us.
01:53:20 Speaker_00
So in these economic times, we've actually been able to borrow less money while house prices have gone up by debasement. I'll show you that in a sec. And the governments have taken on this obligation. So they've been massively growing their debts.
01:53:34 Speaker_00
And they reset interest rates to zero to kind of give them a chance of paying debts back in 2008. And only recently have they really risen. But they've still got all of these interest payments to pay. For now, the US economy is 380% of GDP in debt.
01:53:53 Speaker_00
I mean, it's staggering considering the size of this economy. The world, the entire world is 400% of GDP in debt. But we've gone so far beyond what is sensible anymore that it's become incredibly fragile.
01:54:11 Speaker_00
So the management of the payments of the debt and the debt itself is the number one focus of the government and the central banks because If it all goes to shit, it all goes to shit. Everyone's going to lose their savings. Every business goes under.
01:54:30 Speaker_00
Every government goes under. There's no payment of services. The retirees lose everything. It is unfathomable. And I know many people online talk about, yeah, we should just let it all go.
01:54:41 Speaker_00
They have no comprehension of what that will do in a world that's 400% in debt. It's basically a 75% wipeout of every single asset. and all the brutaries and all your savings and all your pensions and everything.
01:54:56 Speaker_00
So the answer is, well, let's just print some more money to pay the bills. That's you taking a credit card to pay off your credit card payments. Now, when you control the money, you can kind of do that because nobody's going to tap you on the shoulder.
01:55:13 Speaker_00
So what they do is they start printing money. At first, they used to use the balance sheet, which meant that the Federal Reserve or the Bank of England or whoever would buy bonds from the market and kind of basically take them off the market.
01:55:28 Speaker_00
So it meant there was less debt around in the market. But they've changed the thing. They now have something more pernicious called liquidity. You can't see it. They've got different mechanisms that they put this into the system.
01:55:41 Speaker_00
And basically everybody, all of the central banks are doing it at the same time. And they're also all in agreement that they have to do it. And this is all driven by the aging demographics and the debt problems that it all caused.
01:55:53 Speaker_00
And so what we've got is every government having every four years or so to print a lot of money. Why four years? Because in 2008, they all reset their interest rates to zero. They then went and borrowed money three to five years out.
01:56:10 Speaker_00
And every four years, the cycle comes up and they start injecting money, liquidity. Okay, so what does this all mean? People watching this, like, yeah, I kind of know what you're talking about.
01:56:23 Speaker_00
What it means is that on average, your money goes down in purchasing power versus scarce assets by 8% a year. And then you've usually got, let's say, a 3% inflation rate. You've got 11% of your money is being devalued every year.
01:56:43 Speaker_00
Your future self is getting poorer by 11%. Remember, we talked about the future self. And if you buy the S&P 500, what was it making? About 11% a year.
01:56:53 Speaker_00
So if you buy the S&P 500, your future self is not going to get any richer for the risk you've taken locking up your money for 10 years or 20 years. Because of this inflation. Because of this debasement. Now people confuse inflation and debasement.
01:57:08 Speaker_00
I would call this debasement of currency. And so this is happening at 8% a year, which is why we're all feeling so fucked. It's happening. All these assets keep going up. Real estate keeps going up to offset this.
01:57:21 Speaker_00
Now, what I did once I realized this, something I call the everything code, is a big thesis around how this all happened and what it all means and what's happening is basically the aging population is driving debt to GDP, is driving the government debt.
01:57:36 Speaker_00
And then the liquidity is paying the interest payments. So it's this economic machine that the world has become. It's perfectly cyclical. It's perfectly predictable. It's not going away until we have this technological revolution we talked about.
01:57:53 Speaker_00
And so everybody has to protect themselves. So once I found this thing called the everything code, I started thinking, okay, if this, let's say 11%
01:58:05 Speaker_00
rates, the hurdle rates of money that my future self is getting poorer every year by, what do I invest in? So I started dividing everything by that. And the S&P 500 doesn't make you any money. Real estate doesn't really make you any money.
01:58:18 Speaker_00
Gold actually lost you money as opposed to maintaining purchasing power. I'm like, holy shit. There were only two assets in the world that outperformed this. technology, crypto. The NASDAQ was doing 18% a year and crypto was doing 150 plus.
01:58:38 Speaker_00
Solana's done 250% a year, even with three 80% drawdowns. So this is what got me to change my entire investing game from being a broad-based investor with a balanced portfolio to, okay, there's only two bets in the world.
01:58:57 Speaker_00
There are literally two bets in the world, technology and crypto. And the NASDAQ is down 99.97% versus Bitcoin since 2012. How much of your personal money do you invest in crypto? 100% of my liquid net worth. And it has been five years.
01:59:16 Speaker_00
Have you done well? Yeah. Yeah, very well. I've not made any major mistakes. I mean, I've been in this journey since 2013, so I have made mistakes. My mistake was I bought it at 200.
01:59:30 Speaker_00
I put not bad size betting considering how unproven it was in 2013, it was. How unproven it was. And it went up. It went up. 5X or something in the first three months of me buying it. I'm like, I'm the best investor in the world. This is amazing.
01:59:48 Speaker_00
Then it fell 87%. And I'm like, I had this long-term view, it was going to 100,000 and that I would just not look at the price, as you're doing, right? And fine. And then 2017, it was now two and a half thousand. I was up like 10, 12x, which was amazing.
02:00:10 Speaker_00
I'd never had a bet up 10 or 12x. And there was some weird stuff going on. There was another Bitcoin. It was going to be the code had been forked. And I was like, I don't really understand this. I'm going to take my money.
02:00:22 Speaker_00
So that was about March, April, 2017. By December, it had hit 20,000. It had gone up another 10X that year. Then it collapsed down 85%. And then I bought it in 2020 during the pandemic, into that big sell off where it fell 50%. So I bought it cheap.
02:00:49 Speaker_00
I sold it on the way out. I then bought it when it sold off. If I'd have just held onto my original bet, I'd have made five times as much money.
02:01:00 Speaker_00
And if I'd have listened to myself, which is every four years when you have these big sell-offs, you just try and add as much money as possible, I'd have made 25 times as much money. So even though I got it right, I fucked it up too.
02:01:15 Speaker_01
Well, you've said that the best trade is always quality of life. Yes. If your account is full of quality of life and quality of life experiences, that's the greatest trade on earth. And I'll continue to do that trade until the day that I die.
02:01:32 Speaker_01
What do you mean?
02:01:35 Speaker_00
What is the purpose of life? Now we can get very existential about stuff and you actually go down these paths a lot with AI and universal consciousness and a lot of other stuff. But basically let's just assume we're humans.
02:01:50 Speaker_00
Let's just assume maybe we've got one shot on this earth. Well, you might as well make the best of it. And people have got to remember money is just a scoring system that allows you privileges.
02:02:07 Speaker_00
And people lose track of that and think money is the privilege itself. The privilege is freedom. The privilege is being able to live where you want to live. The privilege is being surrounded by the people you want to be surrounded by.
02:02:20 Speaker_00
The privilege is being able to bring up a family. Whatever your value system is, those are the things. So for me, it's, I like living in nature. And that's probably key thing number one, but being connected.
02:02:40 Speaker_00
So when I bought a house in Spain, that was a huge quality of life thing because I've got a security of a house that I own in nature, in good climate. Okay, I'm fine. But really, experiences are even more powerful.
02:02:58 Speaker_00
If there is a true currency in the world, it's experiences. As I said, I've just come back from living in the remote world of Zambia. That is an experience that is incredibly valuable to me, and I've done a lot of these. That is what it's all for.
02:03:13 Speaker_00
This understanding and seeing of how the world is and the beauty and the marvel, the people, understanding people and not being fearful of people.
02:03:22 Speaker_00
and not thinking about cultures except in terms of, oh, that's their culture and that's their culture as opposed to culture good, culture bad. Friends, all of these things, these are the valuable things. You can't buy any of them.
02:03:38 Speaker_00
You have to physically go and spend the time and be uncomfortable. I've always said there is your comfort zone and where the magic happens. And these two Venn diagrams don't intersect. you have to be outside your comfort zone to feel the magic.
02:03:55 Speaker_00
If not, you're just doing life by numbers. Do I need money to have those experiences?
02:04:00 Speaker_01
No. So what's the point? And me doing all this, you know, Bitcoin investing, focusing and sacrificing my twenties. You need some money.
02:04:10 Speaker_00
You don't, you can solve for it without, but it's hard if you're living in Ohio, or Birmingham or wherever you are, right? To get some of these things. It might be, I want to be warm and dry.
02:04:24 Speaker_00
I want to, you know, grow my own fruit and vegetables, whatever it is, it doesn't matter, right? You can solve it by a number of different ways.
02:04:33 Speaker_00
But really for the average person, I say this is like, if you want to live on a beach, you can either become a billionaire and live in St. Barts. Or you can go to Latin America and live on the beach for virtually nothing.
02:04:48 Speaker_00
And if you're living in an intimate age, you can make it happen. But then what happens is maybe you want some more creature comforts. Maybe you do this. Look, I don't say that we should all be the Buddhist Zen master and say we need nothing.
02:05:01 Speaker_00
We can reject everything. But if we break it down to what is the feeling that I want, Then you can solve it with money on without money and you won't be disappointed because remember the very beginning of our conversation.
02:05:15 Speaker_00
Is what makes people unhappy is when the vision of their future self and the current state don't meet. Now if your vision of your future self. is remember I said, I want that, that peninsula in Spain where that family.
02:05:31 Speaker_00
So what are the component parts of that? I like sea, I like social life of people, I like natural beauty. And with somebody I love, okay, that can be solved a hundred different ways.
02:05:45 Speaker_01
But in your life, did you have to shift from the building zone, the building season of life, to then the kind of enjoyment season of life? I did.
02:05:55 Speaker_00
in the middle, which was the lesson I learned, is I had done the investment banking and the hedge fund thing. I then opted out of the rat race. I wasn't the richest guy in the world, but I thought, you know what?
02:06:07 Speaker_00
If I can get a source of income, I can live and I can grow my olives and almonds, and I lived in a beautiful house on the side of a national park near a beach town in Spain, I've won the lottery.
02:06:18 Speaker_00
And I started Global Macro Investor, that ended up becoming a much bigger thing because the financial crisis and I predicted it and got all that stuff right.
02:06:28 Speaker_00
And so what I found is I'd semi-retired and I was surrounded by people who weren't really stimulating, intellectually stimulating. I made some great friends, but you wouldn't have a conversation like this. And so I felt isolated.
02:06:47 Speaker_00
And then, you know, you live on adrenaline if you're an entrepreneur or in financial markets. And so you end up going out to bars and nightclubs, you know, and I'm like, I looked at it and I've been there 10 years.
02:06:57 Speaker_00
I'm like, I got to get out of this because I'm excited by life. I'm excited. I want to do the entrepreneur thing. I love investing. I just want to be around people who also did it. And by chance, I ended up building a house in the Cayman Islands.
02:07:10 Speaker_00
Because it was one of my dreams. I wanted a house on a tropical beach. I love diving, all of this stuff. And that was the signal to me to go, fuck it. I'm moving to Cayman. I started Real Vision, and I started the entrepreneur's journey.
02:07:23 Speaker_00
And now I've got four companies, and I'm busier than I've ever been in my life. I'm very happy doing it, but it's a chapter again.
02:07:32 Speaker_00
And it'll give me the lifestyle ratchet, but also the intellectual ratchet that I wanted to prove to myself that I can do some of these things.
02:07:39 Speaker_01
We have a closing tradition on this podcast where the last guest leaves a question for the next guest, not knowing who they're going to be leaving it for.
02:07:45 Speaker_01
I've never revealed the last question in terms of who's written it, but I'm going to reveal it in this case. This question is written by Boris Johnson.
02:07:53 Speaker_01
And the question was, have you ever tried to sack someone and ended the meeting having accidentally promoted them? Boris is speaking from experience there.
02:08:09 Speaker_00
You know, I think I probably have. I think I probably have. And that goes back to one of my things that I've had to learn is how to have difficult conversations. I'm English, and my mum's Dutch. We're also quite evasive. We don't like drama.
02:08:31 Speaker_00
My wife's American, so she's told me that like, you should go straight in for the kill. And I've avoided tough conversations. And so I've probably ended up in that situation or something close to it. Does it not? I have as well. Of course I have.
02:08:49 Speaker_00
And I'm just like, but it's the lesson I'm trying to learn is you need to be more, if it's a tough conversation, just do it. Amen.
02:09:00 Speaker_01
Thank you, Rah. I think everybody should go and check out your channel, which I've watched for many, many years now.
02:09:05 Speaker_01
I think it's the, in fact, it's the only channel I go looking for when I'm looking for advice on anything crypto related, the macro environment, inflation, all of these things.
02:09:13 Speaker_01
The only channel that I trust and that I go looking for, and I really, really mean this when I say it, has always been yours because I think you've provided
02:09:19 Speaker_01
um nuance in a way that's incredibly accessible to the average person and a lot of these finance channels are very difficult to like understand the terminology they kind of skip past that part but what you've done so well is made all of these subjects so accessible for everybody um and i can't imagine how many millions of people you've um helped open their eyes to the state of currency debasement and you know some of the myths around how to create and save your wealth and i think that's um
02:09:45 Speaker_01
a mission that is so incredibly important because a lot of this insight unfortunately historically has been reserved for the elites however you want to define them.
02:09:55 Speaker_01
The elites intellectually or only the people that work in finance and I think what Real Vision has done is blown those doors open and you've been a champion for me in my life and an educator for me in my life so that's why I was very excited to speak to you today.
02:10:08 Speaker_00
Thank you for what you've taught me. I appreciate that. And also for everybody watching this, look, I'm genuine in trying to help as many people.
02:10:15 Speaker_00
And so this whole Everything Code thesis, to make people understand it more, we've made a whole special era for you guys in Real Vision. Go to realvision.com forward slash diary. And there is all for you guys watching this.
02:10:33 Speaker_00
It's the everything code, the document, so you can read it. Watch the video. You get free Real Vision subscription because it's free to join. And honestly, there's so many tools. And if you don't understand something, ask the AI.
02:10:45 Speaker_00
The bottom right of the screen is a little plus button. You ask the AI, the Real Vision bot will explain it to you. Everything you need is there. It's free. There's no reason not to unfuck your own future.
02:10:56 Speaker_01
I'll link that below so everyone's got it. That's realvision.com slash diary. There'll be a link below in the description, wherever you're listening to this. Thank you.
02:11:04 Speaker_00
Thank you. I really enjoyed it.
02:11:05 Speaker_01
Thank you for your time. Every single time you eat, you have an opportunity to improve your health. That's why I love ZOE, because it helps me to make the smartest food choices for my body. As you guys probably know, ZOE is a sponsor of my podcast.
02:11:20 Speaker_01
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02:12:26 Speaker_01
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02:13:31 Speaker_01
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