Podcast with Avi Arya - Coaching, Agency & Bitcoin

Everybody is wanting to be a Shah Rukh Khan. Everybody's assumed that every day 5,000 people will come to Bombay. Out of 150,000 people a month and 1.5 million people a year, two people will become Shah Rukh Khan. And everybody's like, let's play this 2% game. Guru Donacharya was one of my favorite characters in the Mahabharata because he coached both sides initially. And all of them were superstars and they had one guru. And so they could not do without a guru after having such magical feats. And today we feel that we come from a small town and we are like, oh, coaching discount. It's ridiculous.

The successful B2C startups, which are like Zomato, Swiggy, Amazon, Flipkart, are also not necessarily profitable. And these guys are just sustaining it through investor funds with the hope of making profit in the future.

Then comes entrepreneurship, where there is no structure, no discipline, no community. Most people are leaving their job because they don't like the boss. But there's a discipline, the structure. We escape that come into entrepreneurship, and we lose our discipline, structure and community. And therefore only 3% startups are successful. Now I understand people are like, what if I get the wrong coach? Firstly, I believe that you should have a micro niche coach, somebody who's done exactly what you want. And secondly, you will make a few mistakes before you find the right girlfriend or boyfriend or whatever in life. So why are people crying? I paid a coach money and it didn't work out, so I'm not going to do. I always say that Sadhguru is such a revered guru. Tomorrow, if Sadhguru stops doing yoga, the whole world will stop doing yoga. No, you've learned from him how you continue.

I want to keep the conversation today around agency, real estate, and bitcoin. So I think these are the three topics which we have agreements and disagreements on. All right, Avi, welcome to the Digital Deepak podcast.

Thank you so much, Avi.

It has been almost seven years since we first met, and a lot has changed in these past seven years.

Pre Covid.

Yes, pre Covid, then during COVID then post Covid, now it's like almost post post Covid. And I want to keep the conversation today around agency, real estate, and bitcoin. So I think these are the three topics which we have agreements and disagreements on.

Let's do it.

Let's do it. All right. So I mean, one of the things that I have been saying in the market, or more like an intuitive feeling, is that if you want to make money. You can't really do B2C businesses. And why I'm feeling like that is that first of all, I am in a B2C edtech business myself and I have seen a lot of e commerce B2C businesses not able to survive, not got the funding through. And it has been a little bit up and down, more like down nowadays because of the lack of liquidity. And the successful B2C startups, which are like Zomato, Swiggy, Amazon, Flipkart are also not necessarily profitable and these guys are just sustaining it through investor funds with the hope of making profit in the future. So if you are trying to start a business, it kind of makes more sense to focus on the B2B and the Enterprise and which is what you have been doing with Internet moguls as an agency. So what has been your experience of looking at B2C B2B and some of your clients being B2B and also B2C, what is your perception of the market?

Okay, awesome. So I'll answer in the series that you asked. So before the podcast finishes, I'll also talk about how I also learn from your perspective because I think that you, you're always somewhere 20 years old in your heart and also think like a 50, 60 year old. So I like that. I don't know how you get that, but maybe I'll ask you how you get thinking with two people in mind. For me, I look at life as I and these challenges. And first it used to irritate me, then frustrate me. Now it pains me to see all these failed startups because I think I from my point of view, I see it as a human problem. The thing is that everybody has a certain way they have looked at life. Some people were bullied, some people were, you know, made fun of, some people had bad homes. Everybody goes through some challenges. That's what life is about. When we grow up and we get into entrepreneurship, we are expected to say everything has to be perfect. All those things you brush aside. But the human inside is not able to take the next step. And although we are wearing suits and everything and you know, but when we go, we have that same scared child inside who's saying I'm going to be judged. I tell entrepreneurs I know exactly because it's fine, but because they seem, because we're still the same people. And behind closed doors or with our loved ones, we all cry, we all say nahi hora. And you know, sometimes you just take a blanket and you put double black curtains because you don't want to face another day. It takes time to get out. But when your team calls or a zoom call happens, you're like, hey guys, how are you? I'm trying to help, you know, but from inside you're broken. It's just a 1% battery that you're running on on some days. So I believe it's a first. The human needs that support to be able to fight such a big battle, which is 99% rejection, 1%. Just like selling a credit card on a phone, 99% of people are going to say no. But all these large credit card companies are successful because they hire other people to sell the cards who are getting a fixed salary. Credit card people are not putting themselves in the emotional line. If the owner was to put themselves and he heard 99 rejections, he would have never built a credit card company like that. So if we are so emotional as human beings and we can get hurt so easily, a we need to be. I think every human being should be in therapy. First. I think or two things that I believe that the government of India should and I'm a first firm believer. I never say what can the government do for me. I always say what can I do for the country? Especially because we're in a developing country. So I we cannot expect the government to do more than what they're already doing. However, these two things I always feel just like you've given us a GST certificate that gives some validation to a business or you say the CA has to sign a balance sheet and the CA is registered and that there's a license which can be taken away. Similarly, there has to be a call it a therapist or call it a mindset coach or whatever because you there's a human that needs guidance on a business. And the second is a business coach and a specific business coach who's doing only that business. So for example, if you're doing selling scooters two wheelers, then there should be a coach who's helped two wheeler companies succeed. That guy, his license number and everything should be put in and at the end of the year he should be submitting a thing to the government. What did he do to these people? Just like a teacher in a Harvard or a Princeton or a nice school in India is asked my school got 88% result or 92% result. My teacher will get a. If my school say 50% students fail, my teachers will be called. But in entrepreneurship a teachers are not given, then they're not asked and human beings are breaking and Shattering more with comparison dot. You know, comparison gram, which I call Instagram is comparison gram. You look at that and be like, oh, I should have done this. My Massey son is doing better than me. My uncle is doing better than me. Oh, now my friends are doing better than me. And whole thing that makes you smaller and smaller and smaller. And therefore then everybody is running towards the spiritual coach or whatever. And some people are getting therapy and they're getting help, but the therapist and the business coach, both of them have to work together to help this entrepreneur. In the absence of that, what is happening is everybody is wanting to be a Shahrukh Khan. Everybody's assumed that every day 5,000 people will come to Bombay out of 150,000 people a month and 1.5 million people a year, two people will become Shah Rukh Khan. And everybody's like, let's play this 2% game or 1% game. Because in entrepreneurship, my belief is when I was in school, you were in school, everybody was shooting this podcast. I'm just assuming everybody went to school because they say that 97, 98% people went to school. Now, we were foolish. We were naive. We didn't know what to do. We couldn't walk, we couldn't talk, we were scared. But we still finished 12 years, learned 8, 10 subjects, learned 4, 5 languages, learned maths, learned accounting, drama, theater, how to be in groups, everything. We learned how when we were such, you know, naive kids. Because school had three things. Structure, discipline, and community. So in the morning, if I didn't feel like going to school, I had no option. 6:30, the bus would come. There was a discipline. If I got overwhelmed, what should I do? There was a timetable. Today there's maths and there's Hindi, then the social studies and there's games. So there was a structure. And then if I forgot something I didn't know, I had my peer group, I had my teachers T shirts, and I had my principal evening tuitions after work. So my community. So structured discipline and community. And 97% of kids who have no idea what to do in life because of this institution called school, which gave structure, discipline, community, we all went through school. Now came college, where we all got this thing called freedom, where we will. You can do what you want. And that's when structured discipline and community went down. And so maybe 50, 60% people are completing college. Then comes entrepreneurship, where there is no structure, no discipline, no community. Most people are leaving their job because they don't like the boss, because the boss demands. Apart from being toxic People, I'm not talking about them. But there's a discipline, the structure, discrimination. We escape that come into entrepreneurship and we lose our discipline, structure and community. And therefore only 3% startups are successful.

Correct.

So it is a human problem. First, before investing money in a company and I've invested money in multiple agencies and multiple things in the past. Small seed fund and you know, helping and most of the time when I see an entrepreneur with a stomach out or you know, ice puffy and I know he's drinking or smoking or what, I'm not judging against that. I've done all those things in my, you know, in my days. But I'm having a conversation with him. What is making you drink? What is their anxiety? What order those things? Because unless I know the human and his habits, my money is going to go to go down the drain in two minutes. So I think today's investors who are investing money, they have to invest and guide. They say okay, we'll give you a mentor to help you and get you contacts and you run 20 hours a day. But for those 20 hours, give him a yoga coach, make sure he does yoga. Give him a therapist, give him a place to cry every day because that's so normal today. It's like going to a place bathroom you're going to. Everybody's going to flop and crash.

Imagine a co working space which has a separate room called crying room. Just like praying room.

Exactly. In fact how I visualize it, I'm sitting on a desk and I'm doing something and I have a manager. It's like almost like my angel and I talk in coming and saying, hey abhi, I know you're feeling a little relaxed but I have so many emails to give. One, one second. So why can't there be a mother and a father kind of a person in every business for all the entrepreneurs and their teams, it's going to become mainstay someday because we're crashing and burning as human beings. And I don't think it's a market problem. Skill is one part of it. But humanly solved. That's my take on it.

It's a good take. I also have some perspectives on that which we will talk about it in the bitcoin section because I feel that there is a non level playing field. It's not a level playing field between a enterprise business, publicly listed small business entrepreneurs do not have access to cheap capital the way that you do it.

And then you tell them that this is how I do it. Then they'll say what Are the tools required? If they ask, then you say, I'm going to do SEO, ppc, whatever. Because in my head I see it as you sell nails and a hammer, there's certain charge for it, 10 kilos of nails, 20 kilos of nails, then use. There's a carpenter you hire, he comes with the nails and hammer, so you pay him a certain price to do a the hardy everyday job. And then you hire an architect who say, okay, you want a podcast studio, 10 people coming in, sitting, whatever, he'll charge you a certain price, he'll get the carpenter, the carpenter will get the nails.

Correct.

So be the architect instead of selling the nails and the things. So there's a lot of money to be made if we just stop for focusing on the fact that I only know SEO, I only know ppc, I know how to develop a website. How should I start an agency? Forget this, this ship has sailed. It's happening for 3,000 rupees a month. Nobody cares about this. Become the architect agency, which is telling people what I can do for you, what is the result, outcome I can produce for you. And now the second question people say in an agency world is I don't know how to sell more. If you don't know how to sell more, see what other agencies are doing, how to sell more. Or in many cases, if you know how to talk well and explain. Well, explain, get the contract, get somebody else to do it. And don't get into a niche where products are not going to be sold. Because when it's only creative and it's only branding, then you're as good as your creative designer. The day he leaves for some other agency, you're done. So then you're like, I have no leverage. I have had clients touchboard for the last 10, 12, 15 years. Not because I've not made mistakes, I've made every single mistake in the book. But as long as you're continuing to deliver revenue for these hotels, they're still calling you and you know, they still don't want to break off ties with you because the revenues are coming in. So I think that is why my vote for the agency model, no investment. Just understand how the 3x3x3 works.

Yeah. The way I look at it is that when you look at all the ways that you could make money, the balance between how much effort are you putting and how much capital you have in is what determines at what path you will take.

Right?

So let's say somebody wants to make 2 lakh a month in income and take Home income. If he wants to do nothing, he could buy real estate property for let's say 4 crores worth.

Sure.

He has 4 flats, 3 BHK flats. Each flat gives a rent of 50,000. He makes 2 lakhs a month. So now that does not mean that he can do nothing. Of course the passivity of the passive income is high. You still have some activity. Like you have to find a tenant, sign a lease agreement and if something breaks, you have to fix it. And some activity, but not, not so much that you have to keep working.

Sure.

So let's say you have to make 2 lakh a month, but you don't have any capital at all. Then you have to also have a little bit of leverage in terms of your knowledge. But you can still manage without capital. Go get a job for 24 lakhs CTC or 30 lakhs CTC and really work hard. But you have to work hard a lot in the sense that it has to be like probably something like 60 to 70 hour work weeks and you have to just like, you know, be very focused. Now you don't need to jump between these two extremes. You can choose something where you have to work for maybe four hours a day productively as an entrepreneur, but you also have some capital with which you can, you know, set up a company, hire some people and have a little bit of cash cushion for operational expenses. And when you do something like that, then that is, I think, the sweet spot between being an employee versus completely having capital where you can enjoy passive income.

See, that's where you need a coach. Like who who? You need a coach and you need to pay the coach at least for one or two years. Now I understand people are like, what if I get the wrong coach? Firstly, they should. I believe that you should have a micro niche coach, somebody who's done exactly what you want. And secondly, you will make a few mistakes before you find the right girlfriend or boyfriend or whatever in life. So what? Why are people crying? I paid a coach money and it didn't work out. So I'm not going to do. I always say that Sadhguru is such a revered guru. Tomorrow if Sadhguru stops doing yoga, the whole world will stop doing yoga. No, you've learned from him how you continue. So people put people on a pedestal in their head and then they bring them down. But that's what that poster says. So no sabki karo apnea. Don't blame anybody. So everybody needs a coach. Like what you said was amazing that this is this Advice on its own should be 1 lakh an hour to say, tell me what your resources are. This should be the path. Now every month before you take one step, you're going to get anxiety. So call me and I'll help you go to the next level. So that's why coaching is needed. So I genuinely, you know, Guru Dharmacharya was one of my favorite characters in the Mahabharata because he coached both sides initially and all of them were superstars today. Those are the super rock stars or superstars we had before Spider Man. And everybody came and they had one guru.

Yes.

And so they could not do without a guru after having such magical feats. And today we feel that we come from a small town and we are like oh, coaching, discount. It's ridiculous.

Yes. The entire market has been commoditized.

Right?

Yeah.

I genuinely feel that if they say discount, you say strike it off. Go to the next one.

Yes. The best coaches don't give discounts. So you can find out whether the coach is best by finding out whether they are giving discounts or not.

100%.

Interesting.

Yeah.

All right. So yes, we need a coach. We need to focus on agency business. We need to generate cash flow. But obviously especially in a service based business, you can't keep going on reinvesting all the cash flow back into the business. And it's not possible also. Right. If you have three clients and you are making let's say 10 lakh revenue a month with a micro agency and you, you make like a profit margin of let's say 3 lakhs. There is nothing for you to invest that 3 lakh back in unless it's a consumer startup. And you need to figure out how are you going to go and store that capital in a safe way. Because you don't want to keep working forever. At some point you would like to take some time off. You need good amount of nest egg which helps you maybe relax in the sense because you are creating value for.

Other people like Bangalore says Fu. Money.

Ah. A few money. Yes. So first let's talk about real estate. Real estate has worked as a great store of value for you. Not just you but your family for a very long time. So do you invest in stocks? Abhi?

I do now I do. Yeah.

But percentage might be less compared to your real estate portfolio.

Mutual fund. Yes, of course. Real estate. Because see why since I started the agency, my dad always got me into the habit. Since we were since childhood he always. My dad never brought money home. He always made us feel we have Less than what we had. And if we had, because he was so some percentage was always going to some EMI or something or the other. So I and my wife that we imbibe that, then every time I have even a little bit spare money, like for example when I was making 3,4 lakh rupees profit in an agency, immediately I had a 1 lakh rupee EMI for a 2 crore apartment at that time. And so that money was never mine. Now over a period of time I have, you know, all those EMIs which are going for different properties that I have, I don't even look at that. That is an expense. We have to go above that and get more deals. Otherwise we would say, oh there's so much cushion. And sometimes my team argues that this money is going towards your personal investment. And so this is not really operational expense. I'm like, this is operational expense beyond this. You have to think, don't even look at this because if this is not happening, I'm not interested in running the agency.

It's an operational expense because you as a CEO has to operate.

Exactly, exactly. So that is my motivation. Where is my incentive? And motivation is coming from the fact that I'm building all this. I'm running around 20,000 flights a year. And all of that is because, okay, my assets are being paid off every month. So that is my this thing. So I've always kept that EMI pressure on myself and my team. Any new member who comes and gets a pnl, he says, okay, this is also part of it. So they get a percentage of shares for everything in the profit of the company. But this part has to be there. And one day you're like, oh my 48 got my hair is right. Oh, I've got so many properties. So time goes, you know, you're just having fun for an untrained youngster. You should not have money in your hand.

Anyways, yeah, that's what keeps pushing you to iPhone.

And I've never bought a 1,60,000 iPhone, you know, in my life because multiple reasons I'm not. But people in my office, sir, I want to show your phone. And I'm like, oh shit. And I know he's showing me the phone because he's like, if I see it myself, I'll get upset with him. So definitely real estate has worked for me in that this thing and mutual funds because a lot of my friends are wealth managers. So they've told me that you should. They explained to me and I liked it. They said, invest in companies that you really like, like, I love Facebook for the capacity to be able to sit at home and reach out to a target customer avatar in any part of the world. He's going to see my ad. I just love the magic of that. So I invested in Facebook. It went up almost 600% after Covid. So I've invested in mutual funds, the company that hold the stocks that I like crypto. I know that you've been a proponent of crypto for such a long time. I've always been worried, is it safe? Is it legal? Should I do it? How should I do it? What are these wallets? So fear of the unknown has kept me away.

Yes. So taking the conversation there. So I believe you have not invested in bitcoin yet. And I would like to separate bitcoin and crypto because a lot of people put Bitcoin, Ethereum, Solana and all the cryptocurrency assets is how they call it, into the same bucket that it is crypto. But the way I look at bitcoin being different from all the other type of online cryptocurrencies is that bitcoin is like digital gold. And have you invested in gold or do you hold a gold portfolio?

No.

Okay, okay. So let me try to arrive at trying to convince you to take bitcoin seriously by asking you, let's say you have made a 1 lakh profit this month and you have 1 lakh in cash. Why can't you just hold that 1 lakh for 10 years? I can. You can, but you won't. You will invest it somewhere.

Oh yeah, yeah. Don't hold it on something.

You won't hold it. You won't just hold that 1 lakh.

100%.

You generally are not cash rich. You are always invested. Right. And the reason for that is that the cash loses purchasing power.

Exactly.

And that loses purchasing power because of inflation. And we have understood inflation as a part of economy. That's how it is. But I want to tell you that based on my research and understanding of how money has evolved, it has always not been the case. And for 5,000 years, humans use gold as money and an asset. Right? It's money, currency and an asset. And it might look like money and currency are the same, but I will tell you, like how they are different and what gold has given and why people chose gold is that, see, even today they say that gold has utility value, but 90% of the gold is just sitting in vaults, in gold bars, bullions and everything. And for 5,000 years, the reason why gold evolved as Money is. Because let's assume that there is an island. There are thousand people in an island. And have you seen Castaway movie, Tom Hanks? So this person Wilson. Yeah. So Tom Hanks is in this island all by himself. And you know how life is harsh when you are alone. Forget about the emotional companionship part. Life is still hard. Because he took four years, Tom Hanks, to figure out how to catch fish efficiently. Because he had to take care of his dental health himself and catch fish himself, maybe build a hut himself. It takes a long learning curve for him to become good at something. And then life can be extremely harsh. In such condition there is no luxury. But let's say you have thousand people in an island and you divide the responsibilities. 100, 100 each. So hundred people are fishermen, hundred people are building huts, hundred people are taking care of others health. 100 people are doing agriculture and maybe growing some fruits and stuff. So now because hundred people are just focused on catching fish and nothing else, they are getting better at it. They are becoming more productive. They can build a fishing boat, they can build a fishing net.

Micro niche.

Yeah, they are niching down, right? And when they niche down, the abundance of the island increases. Because the fisherman, instead of catching fish for himself, for his own family, he's able to be productive enough that he has a surplus. And now this surplus can be given to other people. So let's say a fisherman who has caught, let's say 10 fishes, he just needs two. Now he can't store the remaining eight fishes for two months, right? Okay, two months. I will just chill for like a week. I will take a vacation now. Because the fish is not a form of currency, he has to barter it with somebody else. And somebody else might also have some goods which is not again, right? It's not durable and it's perishable, right? So now that's when. So let's say these island folks figured out that let's have shells as currency. Because these type of specific shells are limited in number and they go ahead and just choose that shells. So let's say, for example, for the simplicity of mathematics, you can say that there are thousand shells in the island. And let's say the fish is selling for a shell. So the fisherman sells a fish, he gets a shell back. Now that shell does not need an intrinsic value, does not have any utility value. It's just a mutual agreement between all the participants in the island that this is of value. And tomorrow you can redeem this value for the excess service that you have provided. For other folks in the island, we owe you services and products in return, which is represented by you holding that shell.

Okay, Right.

Now imagine if somebody just finds 100 shells in a cave, and he will be like, oh, I found wealth. I found a treasure. But has he really found a treasure? Has he worked for that hundred shells? No. And if the total amount of shells in the island becomes 1100 from thousand, then what? This person who has found hundred shells without working hard for it and earning it, basically what he has done Is that steal 10% of everyone's energy and everyone's hard work. And that is where the shell inflation is happening. So people tried different forms of currencies throughout history. In Africa, they used glass beads as currency. And then Europeans came in and manufactured glass beads, which was a difficult process to do manual labor. But Europeans used factory built glass beads. And those glass beads were actually called slave beads because that's how they sucked out the energy of the Africans so much, impoverished them so much that they had to sell themselves as slaves to kind of help their family or whatever. Right. Eventually the world settled in gold, because they found out that gold is scarce. And for anything to be money and also a currency, it has to be scarce, because the scarce item represents energy of people to be used as money. Right. The shell was basically somebody's hard work and effort. Currency. Right. So gold became currency for 5,000 years.

And you work for Elon Musk. No, I'm just kidding.

Gold.

Very nice. I like the way you explain it.

Yeah. Because I have been trying to explain this bitcoin thing to thousands of folks across thousands of conversations, and I optimized my path to trying to.

Very nice. I'm enjoying this story. Yeah, awesome.

So gold eventually kind of became money. Yes. The cattle was used as money. People used rice as money at some point. But again, there is a difficulty of bartering. There is a difficulty of acceptability across, you know, trade routes and everything. And gold eventually became money because, first of all, gold is limited. The amount of gold that can be mined out from Earth has not been more than 1 to 2% a year for, like, centuries now. And that's how much people have been able to extract gold. So it's limited. So that's the first property of money. But it's also divisible and it's verifiable. And most importantly, it's durable, and it's also fungible. A piece of real estate or an artwork is not fungible in the sense my artwork and your artwork cannot be exchanged. But yes, modern Currencies do have fungibility. Which means my hundred and your hundred is the same. My one gram gold coin and your one gram gold coin will be the same. So until 1930s, every dollar was backed by gold. And when US dollar was issued, it got credibility for the currency notes. And people slowly moved on from transacting gold coins, which is heavy and bulky and risky to carry around. And then people slowly moved on from transacting gold coins, which is heavy and bulky and risky to carry around. And they started transacting in paper notes. Because the paper notes were literally representation of the gold in the vault. That's what gave value to these short notes. Right. But in 1935, I think 1935 or 36, the US government declared that private gold ownership is illegal. Okay, give the gold back. We will give you the dollars. It was around 19 to $20 an ounce. And after all the gold was seized from common public, it went up to $35 an ounce. Which means that the US dollar, which was backed by gold has now diluted and more currency units has been created for the same gold.

Sure.

And that is why it went from like $20 to $35 immediately. And in 1971, US stopped redeemability of gold for dollars for international organizations, countries as well.

Right.

That you cannot go to US and give the dollar and get back the gold. And finally the dollar became backed by nothing and it became backed by debt and the promise to repay the debt. And I will give you like a very simple example of how debt can create new money and how it can create inflation. So let's say I go on and deposit 10 lakhs in a bank. 10 lakhs is my savings. And you want to get a car loan. Let's say you are buying a car for 9 lakhs. You go get a loan from that bank. The bank would say, okay, 10% cash reserve ratio, 90%, I can loan it out. And you take that 9 lakh loan. And let's say the bank from which you took the loan and the bank in which the dealer has the account are two different banks. That bank will get a deposit of 9 lakhs. Now that bank can also say, I can keep 10% of it and lend out 90% of it. So 8.11 lakh is loaned out. And again, if you keep doing that with a 10% cash reserve ratio, your 10 lakh becomes 1 crore of circulating money in the economy because of lending, lending, lending. And it remains 1 crore as a bubble as long as everybody is in debt. But Once everybody starts repaying their debt, it starts shrinking again. And that is what we call recession. And when money is not backed by gold or any hard asset and it's only debt, like you know, I don't want to go too deep into how central banking works today. But as of today, money can be created out of thinner which is cheap credit, which is what is causing inflation, right?

So like they did every time.

So in 2008 we had this great financial crisis which was over leveraged systems. And the end effect of this inflationary monetary system and debt system is that if you go to the bank and if you want to take a loan, the bank will say that give me some collateral. That if you don't repay the loan, I sell the collateral in the market and I encash it. So you can take gold loan, you can take loan against gold, you can take loan against property, you can take loan against your car, you can take loan against your house, refinance it if.

You want, even your working capital money, your books.

Now this loan money which you take is not necessarily coming from people's savings. If it had to come from people's savings, the cost of interest rate borrowing will be very high, right? It is coming from debt, which is newly minted money. And I will give you like another simple example to understand how debt creates inflation. So same island, thousand people, let's say each person has $1 and the bank says, or the government says that now you go deposit all this $1 in a bank. The bank has thousand dollars. Now there is a huge corporation who is coming and he's like, okay, I want to take a loan to build a factory. So the bank says, okay, 10% cash reserve, I will give you $900 loan. Now imagine a basket of goods and services in the island costs $1. Now the factory can possibly increase the productivity of the island through factory and you know, some kind of innovation. But when this corporate who had the power to take that $900 loan started spending that money out into the economy, people got paid. Let's say anybody who got paid $1 is assuming that he can buy $1 worth of goods and services. But by the time that entire $900 is spent into the economy, the total amount of money circulation in the economy is not thousand dollars anymore, but $1,900. Because this debt money has come out, but the goods and services has not doubled yet. So the basket of goods and services which used to cost $1 will now cost 1.9 dollars. And that is what we call inflation. And Inflation is created through this debt. Now who is the biggest benefactor in this entire process is the person who took that cheap credit.

Right?

Right. Because while he was paying it out, people thought that this is of high value. But while it finished paying out, the value reduced in terms of purchasing.

So that is what happened in the crisis when they bought these debts thinking that they have value. And the debt itself which you bought.

Did not, did not have any value. That was collateralized debt obligations and everything. But at the same time, when debt is paid back, the economy shrinks. The capital, total amount of capital, money supply shrinks. But when debt is defaulted, also the money supply shrinks.

Right?

Right, Right. So if a bank is giving you loan for let's say 1 crore property, they are just asking you to put 20 lakh down. They're giving you an 80 lakh loan. And it is based on the assumption that the property value will not go below 80 lakhs. But if you take a loan and if you are unqualified and lot of such people take loan because the money is so cheap coming from credit, a lot of houses are being bought. The house values has kind of bubbled up. And then we had, I think situations where 95% the bank will lend you and only 5% was down payment. I think in some cases it even went to 1%, 2%. Right? So now when people can't repay this debt and they start defaulting on the debt and the bank is saying that okay, I have to put this property back into the market to liquidate. And then the supply of houses has gone up which reduces the price and it gets reduced more than the collateral value. That's when the bank is supposed to fail or at risk of failing. But if banks fail, if banks failed, then let's say the insurance, AIG failed, then all the flights will stop flying because all the flights are issued by aig. So then the government steps in, says that okay, we cannot let this happen, we have to bail them out. So the government themselves go into debt. And this is where the tricky part comes. The government can't sell debt. But the government cannot take loan against a real world asset. Right? You take loan against gold, you take loan against property. But the government sells treasury bonds. I mean there are corporate bonds as well. But it's just a promise. And the promise is the asset against which a liability is created. So yes, you can sell your debt to retail, you can sell your debt to corporate. You can sell your debt to other countries, central banks, who will purchase your bonds. But if none of Them do. You can still force your own central bank to buy. And the central bank puts that promissory note or the promise to repay that debt as the asset against which it creates a liability, which is newly minted money out of thin air, gives it to the government. And that's where the waterfall of capital starts. From government and then to institutions to publicly listed companies. Now, my biggest problem with this is that the people who are in the top 1%, top 10%, who hold any form of hard asset which does not increase in supply, like gold, real estate stocks, are protected to some extent against this newly created capital, which creates inflation, increased costs of goods and services. And you might have seen past 20 years how much cost of goods and services has increased.

Oh my God.

But we are protected. It affects the most when it comes to the last segment of the economy, right? You have the government and you have institutions and you have private institutions and you have publicly listed companies. Then you have venture capital startups, then you have small businesses with small business owners having some form of assets to protect themselves against inflation. But I would say 80 to 90% of the population who live paycheck to paycheck not able to accumulate assets because the cost of living is increasing so much now everywhere. People who feel smart of investing in assets and having their wealth grow, I also feel it's an invisible extraction of wealth from the bottommost layer of the society, which includes your cooks, mates, construction workers, sanitary workers, whatever that might be, because they don't have any assets. They their cost of living only increases. Now, it's beyond the scope of this podcast to explain the technical architecture of Bitcoin, but this is the question that should make people curious to study Bitcoin more. Because Bitcoin comes across as this digital commodity money, which is literally trying to replace gold. But one of the problems with gold is not I cannot send 1 kg of gold from India to you, where you are in Canada, portability. And you have to store the gold somewhere. And then you need ETFs or some form of digital gold. But then they say that Fort Knox, whatever it claims, there is no gold. Recently you have started seeing in news, they say that the gold has been rehypotheticated, like, you know, lint against lint against lint against multiple times. So when you look at the total amount of price that is representing the gold and the actual gold that is there is a huge mismatch.

My God.

So you can't always go ahead and buy gold bars and put it in your locker and then Try to safeguard it and everything. Right, so how bitcoin is digital gold, how the supply of bitcoin cannot be increased. The technical architecture of it is very beautiful. If I have to give an analogy on. So now you understand that you need a. You need a currency like gold, which is limited in supply. And if you have currency like gold, which is limited in supply, imagine somebody thousand years back here, let's say 2 grams of gold coin for a day.

Sorry, you know, here, just on this point.

Yeah, sure.

So that means that in. In places like Kormangram or some places in Delhi where the limited supply and the property is high, that's a good investment.

It's a very good investment, yes. But I'm not saying that we are trying to compete. This has an investment. But we are looking at the system and the flaws of the system.

But because you're saying, are we basing this on scarcity?

We are basing it on scarcity, yes. If we have a store of value, it has to be scarce. It has to be portable, durable, verifiable, and portable as well. And it also has to have a history, which is what bitcoin does not have yet, because it's only 16 years old. But when you look at, let's say somebody earning in gold thousand years back, let's say he earned 2 grams of gold in a day for a day's worth of labor, and he spent one gold coin or one gram of gold, he does not need to convert this remaining gram of gold immediately into stocks, real estate, or some kind of investment, because the amount of gold itself is limited. So when the currency is limited, it also acts like an asset at the same time, where the purchasing power of that currency keeps increasing over a period of time because gold failed. Now bitcoin is coming across as digital gold. And they say that mining bitcoin is as difficult as mining gold now. More difficult. And if you earn in bitcoin, let's say at some point time in the future, 50 years later, you don't need to convert that bitcoin into other assets because the purchase power of that bitcoin itself is going up. So imagine. So One Bitcoin is 100 million Satoshis. And imagine there is a cab driver, or let's say because of AI, there are no cab drivers exist. Let's say there is a chef who is making gourmet dishes for me. I don't want the robot to make me dishes.

Just in America. And I saw a robot chef by Tesla.

Okay, so chef is also gone. And he is earning, let's say, 10,000 Satoshis in a month. Now he can spend 5,000 Satoshis and save 5,000 Satoshis. And the purchasing power of this 5,000 Satoshis will keep going up, which means that he does not need to convert this money into another form of assets to protect its purchasing power. The money itself is doing its job of protecting the purchasing power. Just like I gave an example that if you earn 1 lakh, and if that 1 lakh buys you more and more over a period of time where things are getting cheaper, then you will just keep that 1 lakh as 1 lakh. Right. You might not need to put it on FD gold, stocks, real estate or whatever. But, you know.

Yeah. So, you know, my, my point is that when it comes to mutual funds or real estate, I have not gone into so many details.

Yeah.

You know, on this, I have just seen precedence. And I also got on that probability and precedence and I started doing. Yeah, same with mutual fund. I did not go into the detail, although there's a friend of mine who's very passionate about mutual funds, like you're about crypto. And he tried to explain, I found 5% logic in what I'm. Yeah, this is making sense. And I saw precedence and I did it. Crypto is not showing me precedence. You know, like 20 of them.

Definitely not precedents, but that is the opportunity.

Sure.

Right. If you are waiting until it shows a precedent, your one bitcoin is already at a million dollars or $10 million.

When you started talking about it.

It was cheap.

Yes.

So. Yes. So that way, the decentralized protocol of Bitcoin is a protocol for value itself. And I'm not saying that I am 100% sure that it'll become the protocol of value, but I expect it to. And I keep trying to find reasons why it might not. And I am unable to find solid reasons is the way I do my research process. And you can think of it this way, for everything we have a standard value for time, the standard value is seconds. For weight, the standard value is grams. But even when you have two standard values for weight, which is kilograms and pounds, it does create a lot of confusion. Kilometers and miles. Imagine for time if you had 40 seconds in France and 80 seconds in Australia, the amount of confusion it will create. But we do live in that confusion where whenever we travel internationally, we have to do a currency exchange and the value keeps differing from one place to the other. Right. Imagine what if there is a standard value for value itself? I mean, Standard measurement of unit of measurement for value itself. And imagine currency that is globally accepted, where everybody just calculates the value of things in Bitcoin terms. And I believe that the percentage of.

Chances to standardize lots of things to.

Get to that level where imagine I was in Vietnam, and as soon as you land, wherever you go for a vacation, you convert all the dollars that you carried into a local currency to spend there. But my friend who was in Vietnam, who I went to meet, said that don't convert all your dollars into Vietnamese currency. Some hotels accept dollars as currency, right? Now why do they accept dollars as currency is because dollar is stronger and $100 is 2.5 million Vietnamese dongs. While the airport is just giving me 2.4 million Vietnamese dongs and Google is showing me 2.5 million, the hotel is also accepting 2.5 million because they like to hold some dollars. And even though dollar is also inflationary and also dilutes in value over a period of time, because more units of it is created, it still holds value a little bit more stronger than their local currency. So what Vietnamese dongs is to the dollars, dollars is now to Bitcoin itself. And because of its limited amount of units that are going to circulate. And that is enforced by a decentralized algorithm. Just like chess rules, right? Nobody creates chess rules. It's just an agreed upon consensus. We are looking at loss, but not lawmakers. We are looking at rules, but not rulers. And the rules is something that we have commonly agreed upon as a protocol for value, which is like a protocol for communication, which is the Internet, right? The whole Internet is built on top of TCP IP protocol. So the protocol for value exchange and value storage both is what is the promise of Bitcoin and the chances that it would become the world reserve currency, where everybody transacts everything in Bitcoin and calculates the value of everything in Bitcoin. The chances of that might have been 1% back in 2012. It was something like, I would say roughly 3% back in 2017, 5 to 6% back in 2020. But now you see, like people were saying that what if Bitcoin is banned? Forget crypto. Crypto might be banned, might not be banned, I don't care. But what if Bitcoin is banned because the only truly scarce thing is Bitcoin? What if Bitcoin is banned by governments because it fundamentally goes against their principle of being in control of the currency issuance and the supply of currency is what people were saying. And that's why I missed out buying Bitcoin at $500 back in 2016 when I noticed it. And it has gone up 160x since then. And they say that bitcoin is an ego test, not an intelligence test. Because at some point you have to accept that you were wrong about bitcoin and missed out buying it in low price. But it is still a great price considering where it is going. And you need to understand that it could still go ahead and keep expanding.

In ego because people are saying I didn't buy it now so I would buy it.

And I don't want to be falling behind people who bought it for cheaper.

Right.

Why would I buy Bitcoin for $80,000 when somebody has got to buy it for thousand dollars.

It's an ego thing, you know, that's. Now you understand why I say that you're like a 20 year old and.

A. Yeah, I'm like totally excited, but I'm also thinking lot.

Exactly, exactly. You're excited. Like this is a new thing, amazing, cool thing. But at the same time you've thought through with so many layers from 1800 to now. That's why Deepak Kana Raju, ladies and gentlemen, for you is two versions in one.

Yeah. So imagine if I had 2% of my portfolio in Bitcoin back in 2016, that would be 60% of my portfolio today. So not having 2% allocation to Bitcoin back in 2016 was the risk, not buying bitcoin. Because if I had bought it, I would have lost 2%. So what, you lose that in stocks all the time. We lose that in some real estate deals. And right now that's what I recommend people, I don't recommend them to go and just blindly buy something that they don't understand. And yes, it is true that you should not invest in something you don't understand. But people act like they cannot understand it, ever sit and understand it. Invest the time to understand how money works. You hold a dollar or rupee in your hand, understand where it's coming, coming from. And if you go deep down the rabbit hole, you will see that because of access to cheap capital, a lot of negative things are happening in the world. Like for example, a big corporation can take thousand crore loan and they can wipe out all the small stores in a particular area by having a superstore. Now you are not playing in a level playing field because that small guy also does not have access to the same capital. And that capital is newly minted capital, not capital coming from people's savings. But In a bitcoin world or in a gold world, if you have to loan money to somebody, you can only loan it out from people's real savings. You cannot loan it out from thin air, which creates inflation, because the amount of gold will be the same. The amount of bitcoin will be the same. So the way I look at it, bitcoin is more like a philosophical thing and a moral thing. And yes, there are people who are still not understanding it.

So which is like the cheapest guide or YouTube channel or book or cheapest means in terms of easiest, easiest.

So. So there is a book called the Bitcoin Standard by Deepakanagaraju. No, by a guy called Saifuddin Amos. And if you look at the teachings of Quran and the moral principles of Islamism and Islamic money, they say that if you charge interest rate, it's usury and you should not charge interest. Because in a limited supply currency system like gold, if you keep charging interest, you will end up hoarding a lot of wealth. And that's not the point. And if you look at Bitcoin's properties, it's actually halal money according to Islamic tradition as well, which now a lot of people are understanding. And again, bitcoin is not just a digital currency which exists in a system. It is backed by energy. And yes, obviously there are some conspiracy theories or arguments against Bitcoin that bitcoin consumes a lot of electricity. But if you go deep into understanding that argument as well, it's busted in the sense that every unit of bitcoin that you have, every satoshi you have, is a unit of energy itself. And it's not easy to create. And to create bitcoin, you need to run a mining process and it consumes electricity, which means this currency is backed by energy. So what is bitcoin backed by? It is backed by cryptographic energy and it is backed by electricity. It is backed by trust that people have in the system. It's a protocol. And I believe personally, given enough time, this is my personal conviction, people might take a long time to reach this level of conviction. But my personal conviction is that there will come a time in the next five years, 10 years, 15 years or 20 years, that everything is crashing and only bitcoin is going up. And at that point, people will not have any option but to transfer to Bitcoin. It's like you can't carry a knife to a gunfight. You have to adopt a good, right? So you have to adopt the economic weapon which you have, which is the power to store your value in a thermodynamically sound system which does not leak energy. Right? Everything leaks energy in one way or the other. And the amount of time that you have to spend in understanding where you have to put your money is kind of taking time away from people focusing on their career. Like for example, let's say a doctor who makes 10 lakhs a month, he has to now put 20, 30% of his time in understanding where to save that money. And that is time taken away from him, possibly becoming a better doctor or serving most patients. So the current economic system makes us gamblers. It continuously pushes us to think about where to put that money. So can we have just one, that economic battery without having to go for diversification? That is a promise. We are not there yet. Sure, we might get there. If we are already there, you will be already having 100% of your net worth in bitcoin, right? Obviously we are not there. And that is why I tell people, buy thousand rupees worth or buy 5,000 rupees worth. Because if you don't buy, see, you did not buy in 2016. Did you realize that it has gone 160x?

I have realized.

You have realized, but now, because I said so, you are realized, but it's not in your conscious memory.

So it came in my conscious memory when I was coming to meet you.

Because I knew bitcoin. Bitcoin? Yes.

What you used to save in case.

If you had put thousand rupees back in 2016 and it became 1.6 lakhs, it would consume so much of your mental energy that you can't not study it deeper. Because now you have skin in the game, right? Little bit of skin in the game, which what I recommend people, I tell them, buy put 2000 or put 5000. If you lose that 5000, I will give you that 5000 back. I will protect your downside and your upside is unlimited.

Right?

And that is how I have been trying to convince people to study it, not buy it. Right? Because they have to have the conviction. Because if they buy it without understanding.

What it is, then it's not there.

It'll go 10x, then it will crash 50%, they will panic and they will sell and there is no point.

Sure.

Right. Good one. So that's the way I look at it. And I really. One of the things that makes me excited is bitcoin. And I feel like bitcoin is hope for a better future. And one of the reasons I'm so excited about it is that I feel it's the only certainty. In an uncertain world, it's the only certainty.

Whereas people who don't understand it see it completely differently.

They think of it as uncertain because they have not studied it. See, if you have a real estate property worth 1 crore and in two years it becomes 1.5 crores, what is your percentage ownership of the monetary network? Has it really gone up? You still cannot see. If the total amount of money supply has gone up by 60% and your real estate property has gone up by 50%, your percentage ownership in the monetary network, which represents value might have still reduced because There is no 100% clarity on how fast it is expanding. And there is no limit to how much it is expanding. Everything is getting inflated all the time. And in some countries, like Turkey, you have got inflation, which is 50% year on year. You have got hyperinflation in Argentina, Venezuela, and everybody says that, no, no, it cannot happen in India, it cannot happen in us. It cannot.

I just feel that human beings are not rational people. Yeah, they will not go to the rational route.

Yes.

So what we need to do is make two, three famous celebrities buy Bitcoin and then everybody will buy bitcoin.

There are billionaires who have put more than 50% of their net worth in bitcoin. But unless you study it, you cannot handle the volatility.

Like you know, good point. But you know, like, right, you have an answer for everything there is, you know, like all the big film stars in India promoting some Ludo or gambling, whatever. So they should all promote. If they promote bitcoin then they will.

More people, they have to first understand it. Right. And it takes a lot of time.

To understand that it don't. Influencers can only promote other. Because I've just seen around the world all those intelligent people I met because I used to have this self doubt in myself that oh, hedge fund managers. And I don't understand, you know, the mathematics of this. And I met them, they're real human beings like us. And a lot of them understand basics that they've been to school and all of that. After that, for the last 20 years they've just been looking in trends and buying. They haven't even gone deep.

Yes.

So most people are not using their mind.

Yes, it's insanely difficult to understand Bitcoin and it takes a lot of time, which I got the opportunity in the past two years where the amount of time that I had to invest in my work started becoming relatively low. And it gave me plenty of free time like Several hours.

You were always proponent of deep work. Right? I remember, I remember. So.

And I think that is a work that everybody has to do otherwise they are going to eventually, in case what bitcoiners say becomes true and in case we become a bitcoin standard world economy where everything is transacted in bitcoin, you will not be able to buy bitcoin. You will only be able to earn bitcoin.

You know, the image I'm getting in my head right now is that you, me, Sid, all of the, you know, everybody will come and you will be the Rancho of three idiots and we look for you. Yeah, you said, you said this is going to come and this happened and then you'll be in Rayyan Radag. And you said, see, I told you, you know, because how deep you're going into.

Yes.

You know, if I was to just give up everything and start again, I would, my biggest focus right now is on. I would invest technology, whatever. I would. My biggest, biggest, biggest passion right now is sleep.

Sleep. Okay.

So I just invested a lot of money and I told my sister, she's. She's like my first daughter, she's 10 years younger to me. So I keep telling her this is happening, that's happening. I'm not sleeping that well. So she said, you know, she. So we got this bed sheet, pillow, I like to look at water but I also like to look at the 1970s homes. It's just my thing. So she made a list of things that I like to do and we put those pictures around frames in my. I get up in the morning, my room, that's about think 3 to 5 lakh rupees we invested. And my room, I sleep like a child. And now I've just ordered this sleep mattress.

Yeah, yeah, yeah, that's a great investment. Like self care is obviously the most investment because one thing that is scarcer than bitcoin is our time in this world.

Exactly right. So the thing is that, so the thing is I'm like, I remember my dad told me many years ago there was a, he used to run a factory and there was a strike in the factory and it was going down by the day and he was losing money. So he said I used to stay in the factory, never come home, like for a month, months at a time. He said, he said his coach at that time, his mentor, whoever he told him and he used to sleep with the AC on. It was a big message being sent that the money is, there's no money in the factory. The workers Are working overtime. The boss is sleeping with the AC on. And my dad asked his coach mentor that, am I doing the right thing? He said, you're the most important asset right now, your energy. If something happens to you, it finishes. So. So you take care of yourself wherever you are.

Yeah. I look at it like your body is the drone and you are the drone controller. So don't crash the drone.

Oh, nice one.

Right?

Nice. I like that.

Obviously, I do strongly believe that our consciousness comes from a quantum field which controls our body in this plane. Because whatever we experience that is not something that is being experienced from inside our brain. It is being experienced from a different dimension. And we exist in this physical reality. And sometimes we think this is all that exists and there is nothing beyond that, which is also something. One last point if I have to make about bitcoin is that I call it spiritual money. Because, yes, it is volatile, but the volatility does not bother me because I understand it very deeply. But it is also the safest store of energy for the economic value that you have provided for other people. And it's a singularity store of energy that you don't need to diversify. And I could become a minimalist. Every asset that I can possibly own out in the world, apart from Bitcoin, needs maintenance. But bitcoin is mathematics and science. So I can put my energy into it, and then I can rest of the time, meditate, and I can seek out spiritual, spiritual goals. Right. If you have a lot of money and if you have real estate stocks and if you have gold and if you have some business investment startup, you can't just sleep peacefully because this needs certain level of maintenance and activity to keep maintaining it, for it to continue being source of energy. But can we have a store of energy which is thermodynamically efficient and strong in such a way that it can just stay there, as good as putting money in a fixed deposit and forgetting about it where the fixed deposit is the highest yielding return. Something like that is what I see Bitcoin as. And that's why my book which is coming out is called Spiritual money.

Oh, what a beautiful name.

I'm writing a book about bitcoin.

Okay.

And I think it has definitely changed me as a person. I'm not chasing egoistic things anymore, like getting an award or coming under this list or that list or, you know, being connected or whatever.

I've seen that change in you.

Yeah. And that is because I feel that from the human psyche, one of the reason why you feel like you have to catch up with the Joneses or you have to be higher than others or you have to find these markers. Most tiring thing and you have to find these markers of high social status is because when humans evolved over thousands or millions of years, they evolved in tribes and you did not have a store of value. So in a tribe, what ensures your survival is being the tribal leader or being the friends of the tribal leader. And within the tribe of let's say 300 people and let's say there are 150 men. And if you are in the bottom 10% of the lowest category of not category of men, but in lowest in terms of social status, which is defined by the dynamics of the tribe, you don't have any reproductive opportunity. And you don't. Your survival is also under question because a tiger leader could kill you. So our DNA constantly says that chase status, chase status. Because status means that you can survive. And people forget that now we have a store of value. Bitcoin allows you to become a nobody. This world forces to always become a somebody, which is always stressful.

Yeah.

Who am I? I'm this, I'm that. I'm Forbes 30 under 30, Fortune 40 under 40 or Fortune 500 company CEO who may or the people join like Rotary, JCS or you know, whatever clubs. And they get this award, that award. It's always about recognition, ego, and where does it stop. And. And I have this car, that car. You buy cars for performance, Boss. I have no problem with it.

I know, I know.

Just do it for performance, not to show off. Right.

I know what you're saying.

You are like, like, you know, doing things to constantly signal to other people that I am higher status than you. And that's a waste of money, waste of energy. And you are doing it in a day and age where you have safe stores of value.

Yeah.

And becoming a nobody in a world which forces you to become somebody is the superpower.

It is 100. I totally agree with that. That is so well said. You become such a good speaker, Deepak.

Thank you.

My God. Like, it was like, where are you reading from? This was amazing. Like non stop on that thing.

It was like, thank you. I hope I have not, you know, tried to make it too complex or chaotic.

You told stories and everything. I'm sure people who are listening will also. I have to listen to it two, three times to understand it. Yeah, yeah.

We can definitely do it offline. And we should do a private mastermind.

We should.

Where you let me talk about bitcoin. For five hours and then you will walk out of the room that this is a solution to everything. Like every problem in the world and every problem in the society. This is the solution.

I was talking to Sid yesterday and we were saying we haven't spoke, you know, caught up in a long time. So maybe we should.

We should. We should. Yeah, for sure. Abi, it was a pleasure. I think we have had a conversation which has gone for more than one hour and it don't feel like that.

Awesome.

And super. Thank you for rescheduling your flight and accommodating this.

No, not at all. Thank you for having.

It was a high, highly due catch up and a wonderful catch up.

Yeah. Awesome. Thank you. Deepak.

Yes, thank you very much.

Kushna Obas.

Yes.