Zach Obront: Web3, NFTs, And The Future Of Capitalism

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Welcome back to capitalism.com I'm Ryan Daniel Moran and today we're going to be talking about how NFTs and some new technologies will affect your business and your life in this new era. I'm going to be chatting with my friend Zach Obrant. Zach worked at a company called Scribe Media, which helped me get the book deal for my bestseller 12 months to 1 million. If you haven't read it, go read it. It's really good. It's a playbook to building a seven figure business in 12 months or less. But Zach is no longer working at that company. He's now fully immersed in Web3 projects. Web3 is everything, crypto, blockchain, NFTs, all of that. And he and I have been collaborating on how NFTs and the crypto space are going to impact businesses, including E commerce businesses. It's my opinion that using some of the technologies that are now available, we will revolutionize the way that we raise money for new businesses. We will change the way that we have rating fans for our businesses. We will change the way that we reward our investors and our most loyal customers. And we talk about all of that in this episode. If you are ahead of this curve, I believe that you put yourself in a chance to win. Because it's my opinion that over the next few years, this technology and these new ideas will infiltrate all of our businesses, especially E commerce. E Commerce is actually kind of behind the curve right now. And so if you take any of the ideas and just let them be seeds in your brain and see how they will develop over the next few years, I predict that they create new ideas that allow you to stand out from your competitors and in your space. Because most people are afraid of this rather than taking advantage of some of the opportunities that are being created. On top of that, most people, in my opinion, have crypto and NFTs bass acords. They are looking at it as a speculation rather than a way to structure the way that we do business. Zach and I go into that in this episode and we also talk a little bit about the NFT project that I am releasing later this year. Spoiler alert. I am building an investor network that gives them first access to the deal flow that I have from my community. I mentor entrepreneurs and I work with them to be ready to raise capital so that they can grow and scale. And I'm creating an investor group to give that group of investors the first bite at the apple, the first opportunity to invest in the best deals that come from my private deal flow. And the only thing that you need to do to get into that investor network is to buy the capitalism.com NFT. We'll talk about that in this episode and how that works and why there's benefits to doing business this way. But if you want to be on the waiting list for that NFT drop, go to capitalism.com pig. Yes, that's capitalism.com pig. You'll see why on the page. We're only doing a small test of probably 100 to 200 people, so they'll go really, really quickly. I want to make sure that everything is buttoned up and seamless before I do a big launch. So if you want to be first in line and get one of the OG NFTs, go to capitalism.com pig. And in this episode, you're going to see how NFTs and these new technologies are going to change the way that you do business so that you can be ahead of the curve. Let's go. Zach. Welcome to capitalism.com Good to see you, my friend.

What's up, Ryan?

So let's give some context for this conversation, because you and I have known each other for a long time, but this conversation about how Web3 impacts business didn't start until I was talking to you about the idea of an NFT being part of a book launch and you saying, well, hold on a second. I'm sort of building a company around this or thinking about starting a company around this.

So.

So could you summarize how the light bulb came on for you to see that Web3 was gonna change all businesses over the next couple years? Let's start there.

Yeah, I kind of came at it, actually, from the opposite side. So the quick background was after running a publishing company for eight years, Scribe, I decided last year I needed a little time to explore a few different areas of tech that felt like they had some potential and just seemed fun. And I actually thought I was going to be more drawn to the AI stuff, especially, like, AI as it relates to bio or language. So I started off focusing there, and Web3 was kind of on the list of, like, things I'll explore, but that I don't know how excited I am about it. It's just some decentralization stuff. Who cares? And it was like within a week of playing with it, where there was kind of this moment where I clicked, where I was like, oh, this decentralization has value in and of itself. But what's really exciting, at least for me here, is, oh, my gosh, that unlocks us putting ownership and Value on the Internet and then how fun is programming and what other things are unlocked when that's just an extra tool in the tool belt of code? And so when it flipped from protecting downside because like, oh, there's risk of centralization to now we've got these tools and we can play with them. What is, what does that do all of a sudden? Kind of. It came in rapid fire after that of like what was possible when value was programmable instead of, instead of just information.

So are you, are you able to. And allowed to talk about the projects that you were working on or working on? Because that's a really good use case for what you just said.

So can you share what.

I totally care about that.

Yeah. And just to be clear, it's not something I'm going to move forward with. So. So.

Just, just to kind of finish that story then. So. So I was coming from Scribe, from a publishing company, I was learning about this space and it felt like, oh, there's this kind of like natural overlap where in spending time in Web three, one of the things that becomes really clear is just how powerful incentivized community is. Right. And we'll, we'll talk more about this, I'm sure, but, but when we have a large number of people who are able to really seamlessly get aligned financially or otherwise on a project succeeding, how there are things that you can't even predict and benefits that you can't predict in terms of what magic comes out of that community all working together. So I was seeing that on one side and then having worked especially on the marketing side at Scribe for so long and telling authors over and over, all that matters for a book success is like, let's get the first thousand fans really excited. Reading the book and talking about it. I'm like, there's something, there's something similar here. And so what ended up evolving out of that, it kind of went through some iterations and getting more complicated and less complicated and different kind of structures. Where I landed was that I wanted to start an organization that helped, say authors, but also YouTubers or podcasters, anyone creating a kind of discrete creative product to fractionalize ownership in that, sell it to their audience and then kind of leverage that community who all co own the project to make the project more successful. So that could be an author selling to their fans and then using those fans for creative input and marketing support and all those other things and in exchange kind of giving them the benefits of access or involvement in the project or financial upside. But I think it applies in a lot of other areas as well. And honestly, where I landed with it and the reason I'm not doing it has nothing to do with the idea. I actually think it's incredibly valuable and something that will happen. And there's already some companies doing a really great job, like Royal is doing this in music and doing incredibly. And I'm seeing some more emerge in other areas. For me, it was more personal that.

I'm coming off a lot of years of running a company that's been focused on growth and I'm having a ton of fun exploring and kind of getting into the more nerdy technical details of this space. So I decided I don't want to start a new project right now. But if anyone wants to steal the idea, you're more than welcome to.

Yeah. And it's important to note that this is absolutely going to be how business is done and that's why that story is important. So where I was looking at it was as an author, I love the idea of skipping the publishing company issuing an NFT, having 100 people buy the NFT at 10 grand. So I have a million dollar advance. I say to those NFT holders, I'm going to use a whole million dollars for marketing of the book, and you're going to own 50% of the royalties that I earn into perpetuity. Which means that now I have a hundred people who are connected and financially incentivized to promote the book. Get me on podcasts, open up their network, and I have a hundred rating fans who are financially incentivized to help ensure that it's successful, and a million dollars in cash to promote the book and ensure that it's successful. You're coming in, you were coming in and saying, could we do that with YouTube channels? Could we do that with music royalties? Could we do that with anything that does not have a clear owner and create ownership for it? Is that a fair summary of how you were viewing it?

Yeah. And I think what's important, especially for people who are new to the space, is like, this is a common pattern in web3 stuff where if you take what you just said, you could break down a version of that that could exist without any blockchain tech. Right. I could say, well, you could start an llc. You could sell shares in the NL LLC to accredited investors who would own a fraction of it. Now all the money has been fundraised, so now you could use that for marketing. Like all those things you start to be able to say, like, well, we could construct this and wow, if we did, it actually would be this really good system. But the complexity comes in where the checks need to be big enough for it to make sense for people to go through all the legal paperwork. They need to be accredited investors. If they lose interest in the project, they're not able to resell it. There's all of these things that are barriers to doing that in a more traditional way that are solved when you're doing that on the blockchain where you can do small transactions. When you have payouts of $83 for the month for one person's investment in the book, that you're able to send it straight to their wallet. You don't need banking information and all these other things. So there's very often this pattern of like, okay, this would be possible, but there's no way we would ever actually do it to all of a sudden. Well, actually the process for that is pretty seamless and it's easy for people to buy in and out and they can sell their share if they decide they don't like it. And it kind of changes and makes that kind of mass coordination possible.

It's the same thing with raising capital for a startup or for growth of a business. And I'm seeing that web3 and sometimes even DAO structures which we'll talk about can be simplifying that where if you have an entrepreneur who casts a vision for a business and is raising $250,000 at a million dollar valuation for their startup, you have to go through the channels of networking, doing the legal paperwork, wiring the money, then your investor is not happy. So how do they get out? But if you do it on blockchain and you do it through like a token structure or even as an nft, then anytime an investor wants out, they just sell their NFT and, or they sell their coins to someone else, money shows up in the person's account. And there's not legal precedent on this yet to be able for this to all be approved by the government because of securities laws and all this. But it's coming because just a faster way to do how we.

And that's, it's how I've tried to think about this. I had a few conversations about this recently where it's like one portion of the benefit is that because there's not legal precedent, there are many areas where you're almost skirting around current laws. And in some cases I think that's a bad thing and the laws really need to fill in quickly. In some cases I think like I think accredited investor laws are not really serving people. And I think it's a good thing to avoid those. But in the end we just need, we need laws that tell us what is allowed and what is not allowed so that we can follow them. Right. And it's this weird middle ground. But for, for what gets me excited about this space, it's seeing how many areas there are where if you filled it in with all the same laws that exist now, it would still make things easier. The resellability, the.

Ability to pay out really easily, all of these things that are like, oh, this isn't just a new framework for dealing with the legality. This is also kind of a technology breakthrough that just enables new ways of interacting, coordination. And I think where it gets really interesting, going back to the same example with an author or anything else, is like, okay, now you fractionalized ownership and the upside of your book. Part one of that is that you sold that to the investors. But now when you want a cover designer, you're able to reward them partially in upside of the book and your editor you're able to reward with that. And you're person who helps you with marketing. And maybe you set up a program where when people give you valuable introductions to media, you're able to give them some portion of the upside in perpetuity. All of these tools that allow us to be more aligned and coordinated in the value that's created from this are kind of opened up because now you've got this token that's representing that upside.

Yeah. The thing that interests me is what you called it, aligned incentives. When incentives are aligned, then you have mutual benefit of a project succeeding. It just allows us all to get on the same page, get business out of the way and march towards the goal of the business or the project. And that's what sold me on crypto NFTs web 3 was I saw it as no longer as a speculative thing of what's this art project going to do? But oh my goodness, this financially incentivizes me and the other person to win in the same direction. That's when it clicked for me. It's when I started going down the rabbit hole of how do we do this@capitalism.com how do we tokenize our memberships, how do we create communities that all have aligned incentives? Because the entrepreneur wins, we win, the investors win. And it just gets everyone on the same page going in that direction. Now you said it very interestingly once, where you bought into a dao, which we've talked a little bit Here on the podcast, when we interviewed Garrett Akerson, if you haven't heard that, that explains the DAO structure some more. But, Zach, you described it in a way that really surprised me because you said you bought into this dao and you found yourself engaging a lot and realizing, I'm incentivized to engage in this group. And then people started collaborating more together and then talking about how to reward one another. Would you share a little bit about that experience?

Yeah. So I think what's interesting is, like, everything we've talked about is saying, okay, there's these discrete things that we already do that become better if we're using a token. Right. If that's raising money, if that's rewarding people who are working on the team. But what I see often is that there's fundamentally just a different way of interacting that seems to happen when you are on this structure. And I think the reason is if.

You think about, by this structure, you simply mean you have ownership and I have ownership of a token and we're collaborating in some way.

That's it. I mean, a DAO is like, is how people often describe it, but really it's just tokenized communities of any sort. Right. Because what you end up with is this weird thing where the lines between investor or owner, employee, user, they all kind of get blurred into one group. And so there's things like, like friends with benefits that say.

A group where you need tokens for membership. And what you see is like, okay, the money that's, that's coming to this group is because people are paying for these tokens because they want to be a part of it. So we're all like the users in a traditional membership community. We'd all be the ones who are paying. But then once we're in, we're the only people there. There is no company. And so what do we do to make this more valuable? Some people are working to earn more tokens and basically earning a bigger chunk of this membership. Everyone is an owner, and everyone's seeing the upside when things appreciate. And so there's this dynamic that evolves where everyone who's contributing to something is an owner, but they're also the people who are actually using it and benefiting from it. And it can create this really kind of beautiful mix. I don't want to give the impression that that's automatically always what happens. Right. I think, like, what you were saying, like, aligned incentives just mean that people are going to kind of like, work together to accomplish something. But if those are aligned incentives, Kind of like within a small in group that doesn't always work out well, right? If a bunch of people own one nft, they've got aligned incentives to try to make people want to pay them more for it. Maybe that means make the community better. Maybe that means like lie to everyone that the community is good so that people will want to join. So I don't want to give the impression that like just by tokenizing things now it's Kumbaya, everyone's everything's amazing, but it's just this extra tool to get all the people who have a stake in something on the same page moving in the same direction. That if people are working towards kind of like noble goals, facilitates kind of a better teamwork.

Well, something I remember you telling me was a lot of these projects or these daos are we're going to do a dao and then we're going to figure out what we're going to do. Whereas something like you mentioned, Friends with Benefits is just a community that is looking at benefits and resources that they can all share together. It's basically a big glorified mastermind.

But I think the line between those is blurred, right? Because once you have the big Lora Fly mastermind, then you're saying, well now what are we going to do with this? So, so you end up or hey, we're all members here. What do we want to do to make this more valuable? What do we want to do to make it more valuable to us and as a financial thing? And so I think that, yeah, you can very, very often, more than I've ever seen in any other area of business, community comes first and then, and then they decide what to do with it, right? More often than hey, we have this mission now, who do we hire to help accomplish this mission and kind of keep straight in there, right?

And I look at things where I get interested in this space is from the other perspective of we have this mission, we have this goal. Now if everyone has aligned incentives, that's a part of gets there faster. So the way that this, for example, like with our project, our nft, when an investor buys an this NFT and gets access to an investor group, we're selling the investor group more than the nft. By joining this investor group, you're going to get private deal flow from the brands and the students that my team and I have been mentoring and are raising capital. So you have the group of investors that wants to buy into that access of deal flow, but the way they buy it is with ownership of an nft. Now why does that benefit them? It benefits them because now we have all of these investors who are financially incentivized to bring more deals to that group. Why? Because as the deal flow gets better, as those projects succeed, the value of the NFT goes up, as does the net worth of the holders of it. So if you ever want out of the group, you could sell your NFT at a profit, theoretically. So it's no longer a cost structure, it's an asset that you are getting benefit from. It's like buying an Airbnb. It's a thing that cash flows and you can go vacation there anytime you want. In this case, you join this investor group, it's not an expense, it's an asset. You're getting deal flow from it. And we're all incentivized for the group to win and for the entrepreneurs to win. That's aligned incentives. And that's where things get really interesting to me. And I have even wondered, Zach, are most of the things that we buy going to end up being assets? Is, is my gym membership going to now have a fixed number of people that can work out there?

Yeah.

And the gym is now incentivized to just make it cool to be there so that other people want to buy access from the people who already have the access. This is where my brain goes and that's when I go, we're about to have a more collaborative, kinder, more interesting world, Right?

It's so interesting because I think we've spent the past few decades going the other way, right? Like Microsoft Word is $800. Okay, nevermind, it's $8 a month. Like we businesses have realized that when consumers are indifferent, when there's no benefit either way, we might as well charge people small monthly amounts because it adds up to big numbers and it feels like a smaller burden. I think what we're seeing now is the beginnings of companies realizing that they can go the other way. That yes, small monthly payments is nice, but now you don't have people who really are committed or believe or have upside in it. And that when you're able to let people really get in and participate in the upside, then the pendulum can swing back the other way and say, hey, let's just turn everything into an asset and allow people to buy in. And yes, maybe it's more expensive upfront, but I know how my mindset has shifted with these things where what used to feel expensive, now I've come around to the fact that, okay, this is a thing that I'm buying that it's not a car that I drive off the lot in, the value plummets. It's something that should be as valuable down the road, especially if it's something that I really believe in and think it may appreciate. So, yeah, it changes a lot and, and it changes a lot about how that gym is run when they know that every member is an owner in the gym.

I think we can't even predict the ripple effect of what that means in terms of hiring or how things are run or how schedules are formed or how community is involved. All of it changes when everyone's an owner and everything.

Yeah. And I think the built in scarcity of that type of structure creates its own demand, which raises prices and profit margins a lot of the way a.

Lot of the time.

And so as a result, I think the quality of what we buy, anything that has to do with a membership is going to improve. I even think about membership courses, which everybody's got a course now and everybody's tired of buying courses. But what happens when someone like you or me launches a course and there can only ever be 1000 buyers, ever. And the way that you get access is you buy an nft. Well, why would you do that? Because now you can rent your NFT to other people who want to take the course. And now it is not passive income for the course creator, although it can be. We'll talk about that. It's passive income for everyone who bought the course. And so I or you as a course creator are now incentivized to make the course as amazing as possible. Because the only way you're going to make profit in the future is as a percentage of what gets rented, or if the NFT is sold on the secondary market, you get a kickback. So we're now incentivized to focus on quality and raving fans and letting the raving fans be your distribution. That's nuts. You now have built in marketers for any project that you want to do.

And what I love about it is everything you say makes me think, wow.

And obviously this isn't always the case. People will, there'll be exceptions, but like everything makes it more of a uphill battle if you're trying to sell something crappy and more of a like, easy downhill ride if you're making something that people actually love. Right. Like, I feel like in the short term, yes, there's a lot of hype in this space, especially when right now the NFT stuff is very focused on people wanting to flip them and all that. But in the long term, all of this aligned incentives, what it really does is it just allows marketing to be a smaller factor and quality of product to be a bigger factor in everything we do.

That's exactly right. It's exactly right. The incentives are now stacked for quality to rise because the owners are distributed and they're your marketers, your raving ass fans, is your marketing team. And the incentives are for you to do a great job for their value to go up, so you get a percentage of that rather than where you just sell more and sell more and sell more. That's what we mean when we say aligned incentives.

What I also think is interesting, just one other point on that because you mentioned with the example of our NFT project where, okay, people who are buying in now, they have an incentive for the group to do well because, well, maybe they would want to leave and they would be able to resell it. What's magic in this space is I feel like everyone's mindset goes to the aligned incentives and goes to, well, how do we make sure that everyone's benefiting from everything? So one example of how we're setting things up is for all of those secondary market resales, instead of having a kickback, just kind of go back to you, the kickback, a portion of it is going into a general treasury that's co owned by everyone who owns the NFTs. And so now there's this central pot that's growing. Of what? Of money that has been earned by everyone. That only happens as the group gets more and more valuable. And so I think they're just like there's layer after layer in all of these projects of ways that as the group succeeds, all the individuals succeed too. And I think that just, it changes everything.

Yes. So for anyone who didn't catch that, let me summarize what Zach just said. Again, I don't know how the legal structure of all this is going to play out, but theoretically if we just assume that that's all clear, because it will be clear at some, you could set up an NFT so that the kickback that you get, like the percentage of profits that goes back to the creator doesn't go 100% to the creator. Some of it gets just stored in a treasury that is owned by all the other owners, all the other NFT owners. And that could buy Bitcoin, it could buy other NFTs, it could buy equity in businesses. And so as a result of the value of the NFT going up, so does the amount of Assets that is owned by the owner of the NFTs. So it actually builds real world tangible value. This is nuts. We're flipping the whole model on its head where the incentives are right now to just sell and sell more, sell more, sell whatever you can. And that going over to the other side, which is about creating an immense amount of ridiculous value for your raving fans. So Zach, what implications do you think this will have in businesses like E Commerce or software as a service or the businesses that are known for Internet entrepreneurship? What do you think changes as a result of these incentive structures being aligned?

Yeah, I think what I see is right off the bat is too many people.

Trying to just tack this technology on like oh, we'll just have NFTs for blank, or like, oh, we'll just sell some NFTs in addition. And part of it's a money grab, part of it, I think it's just like a kind of fear of missing out and trying to capture what is happening right now as opposed to thinking about where it's going. And so at its core, if we get through all of that, I think where it leaves us is that every business realizes that it's a community first and that this idea of we're this little tight knit group of people and we're going to sell to our users who are separate and they're just going to interact with us and not really with each other, I think that's too much of a competitive disadvantage to work in this landscape. And so I think for like an E Commerce business or a SaaS business, as things evolve there start I guess in the like short to medium term, the ability for users to kind of like what we were talking about, have their costs become the purchasing of assets and have some kind of ownership in the upside of how that business or that product succeeds in the really long term, I think it's a melding of all of those groups of stakeholders where.

The actual company itself is merged in with the community that's using it and that people who are working on the project are able to be incentivized in tokens or in ownership of that product. And the people who are using you can have rewards for people who are using it that are paid out in equity. So maybe as an example of an E Commerce business, what if you had a token that represented the business and when people made big purchases they were rewarded with a little bit of a token? Basically they were rewarded with a little bit of the company that inflated away slightly the value of everyone else's ownership. For being a really good customer. Maybe the same thing with referrals and everything else.

So I think I just want to summarize this because you're saying a lot very quickly and that is you could create. For example, I'm a. I'm the highest level customer at Mizzen in Maine. Missing in Maine is a clothing company. I don't know how to dress myself, so I basically only buy from Mizzen in Maine. And Missing in Maine. I've spent more than $5,000, which is the highest level access, which gets me discounts once in a while. It basically gets me nothing. What they could do if they were trying to move in the direction of aligned incentives is they could say once you become part of the thing, it's called the Admirals Club. Once you're an admiral, we're going to issue you $5,000 in coin in Mizzen coin, which you can use to spend at the store or you could liquidate and sell. And what that would do is it would. It would dilute all of the other equity just a tiny bit, but it would create incentive structures for customers to spend more, which would theoretically create more value than what would be watered down with the inflated number of tokens.

Yeah. And I think there's still so much for us to figure out here. People are experimenting with all these structures of like, well, what if you got those coins and they had a program where you could stake the coins and then you earn a percentage of fees on certain other things. Like there's all this stuff that is ranging in terms of how legally questionable it is, ranging in terms of how effective it is. Like, there's lots and lots to figure out in terms of the models that are most effective for this. But at its core, if there's some tokenized way for them to represent value or ownership in what they're doing and they're able to reward with that. And then users as they receive that are able to either kind of increase their exposure to that or sell it if they don't want it. And employees are able to be paid in that and sell it if they don't want it. I think there's just, There's. Yeah, there's a ton of alignment that can happen between those groups that, that would work a lot better in a situation like that. And I think the more E commerce is interesting because it's. No matter how, no matter how much those groups merge, your customers are fundamentally different than the people working at the company. Right. You're not really. Maybe there's Some, some overlap but you're buying a bunch of shirts in Miz and Main. They're not going to say do you want to come in and do a little stitching or anything like that. But at a software company, if you're a user and maybe you tweeting about it is valuable or maybe you have a podcast and having them on is value or maybe you know how to code or design and they want some help and so, and you do it as a one off project because you're able to be compensated in those tokens. And so I think.

The more Internet native businesses probably have more opportunity for those groups to really kind of engage with one another and the lines to be blurred than an E commerce business.

So there was something that you said to me once about a project that you were in or involved in which was as people were participating in the project, the conversation was starting of how do we reward these individuals? And it was exactly what you're saying, let's just, let's mint more tokens and pay these individuals which waters down everybody's share just a little bit. But that person's value was worth watering down everybody else's equity. And it made me think is that how all business is going to run is just theoretically everyone's going to be freelance and they're not going to have a number of clients, they're going to have a certain number of projects that they participate in. Do you think that that is possible, slash inevitable?

I don't totally trust my sense of this because that sounds really fun to me and it sounds really fun to a lot of people I know. I don't know if it's what everyone wants but there's a few patterns I've seen with that. So one is like it's the ability for that compensation to be in liquid equity I think changes a lot of because it allows the people who are doing it as a like I believe in this side project to be like cool. This is my way to accumulate ownership in this thing. And for the people who it's their full time job that they're able to just say, well great, I sell half of mine every week and that's how I pay the bills because the bills don't take equity. So I think there's something interesting there. The other thing I haven't seen a lot of talk about but that I think is a, is a possible path that a lot of this could go because I think one of the biggest gaps or one of the biggest like untapped forms of potential we have as a society is that the same people are doing the same or different people are doing the same job in different organizations. And the way organizations are set up right now, it's like, of course, like, you're not going to be. You're not going to share a role with four other companies. I guess we start to see it with like, fractionalized, certain fractionalized roles, but it's pretty rare and only in certain areas. And what I'm starting to see a little bit of is people who are really, really good at a thing saying, well, my best use of time is to spend half of my time learning and getting better at that thing abstractly, and then a quarter of my time, or I guess say 10% of my time in five different places applying those lessons. And so that's maybe people who are really good at onboarding into daos, or people who are really good at certain kinds of tokenomics saying, the learning I need to do for my role is the same across all these different roles. I can set something up where I'm able to take the lessons and apply them across these organizations and help everyone succeed more. And so I think from a purely competitive sense, I think it's probably unavoidable that that becomes more common because it's just. It's so much more efficient that I imagine organizations will see pretty quickly that the quality of person they can get is just so much higher because they're able to spend less time on their individual project, but still kind of move the needle. I'm not sure if it'll take over as a, like, default way that everyone works, but I could definitely see the excitement in a lot of people who are starting to work more that way. And it seems like there's. There's something magic to it.

And I do think that it gives the investors specifically more control over the value that they can add to their investments. For example, like, I run a fund, I advise entrepreneurs. I can bring a lot of value to those businesses because I'm often the only investor. I'm the advisor. I'm the mentor. It's great. It's why I like what I'm doing. I can't do that with Shopify stock. As responsive as my audience is, if everyone in my audience goes and signs up for Shopify, it doesn't move the needle on how much my net worth is, because Shopify is a really, really big company. But again, like in the example of the project we're launching, if you have an investor who is part of an investor group and Owns an nft. As a result, they can bring deal flow or they can mentor the entrepreneurs that we're backing, or they can start conversations in the group and just make the group more interesting. Or they could lead a call on a topic that was interesting to the entire group, which builds the community. And so your contribution to the project can dramatically impact the value of the asset that you control. Especially when you're only talking about a few hundred or a few thousand people that own that asset. And now all of the internal quality or somebody like me promoting it on podcasts and talking about it and showing the deal flow that's coming out, the demand is now increasing and there's pent up demand to be in this group. And so the individuals, it actually for somebody like me, takes the burden of creation off of my shoulders completely and frees me up to do what I do best, bring deal flow in, mentor those entrepreneurs so the investors have the great opportunity to invest in the good ones. But there's other value there too. And all those aligned incentives give people control over the potential value of the things they invest in.

Yeah, I think what you're pointing to too is humans just tend to work better in smaller groups and the like incentive alignment with a stock you own just isn't the case because like your actions don't matter in anything that's that big. But in smaller groups our actions really do matter. And so I think part of what's happening with all of this is taking the structures that have worked for investments and other things, but that for some reason we've divided where. Well, those are only okay with big companies. Those are only okay when you don't have anything to do with what's being created. And this is part of the crux of a lot of the securities law is securities law is based on the fact that when you're investing in something, you are purely profiting from the labors of others because you can't have any impact on the success of that thing. And I think it's where it breaks down with a lot of web3 stuff where the tokens that people are owning are very often things that they're engaged with and involved with. And so.

I think as we're able to translate those structures and that kind of ease of transaction that you would have on an equities market to these smaller organizations where people can have an impact, it starts to actually move the needle in terms of actions with aligned incentives, because people's actions matter at that scale.

There are some challenges that I see in this Space particularly. I think there is a different level of economics that needs to be understood in order for people to get this world. I mean, even the idea of a business or a project having a treasury and then releasing coins from the treasury and thus creating inflation for their, their holders, it requires a different level of understanding, but also creates opportunities. What do you think people should be aware of at this point in the process? I talk about this stuff because I don't think the technology is easy enough for people to roll this out in existing businesses. I mean, we are because I have a partnership with you. But outside of trying to be early and creating partnerships and doing that kind of stuff, what do you think people need to be aware of now in order to be prepared for the changes.

Coming the next few years? Yeah, it's. It's tricky because it's. It's one of those things where we will end up with standards and clear metrics and whatever the things are that make it really easy to say, like, yes, no, or is this. Okay, we're still at that Wild west phase where there you need to think for yourself, which, which sounds kind of like condescending, but, like, you need to think for yourself, which means you need to have the tools to understand what, what all these things even mean. Mean. And so we see tons of these protocols, especially in defi, that are coming out, that are.

Creative in how they're setting things up. And it's hard to parse some of the time whether that creativity is actually doing something different or whether it's just kind of playing mind tricks and convincing people that the value should be higher because we're not used to inflation or intentional aggressive inflation. You see Olympus and a lot of the forks there that their whole thing is, we're going to mint so many tokens that we're going to pay you an outrageous percentage of interest. And at its core, I mean, I actually believe in the protocol, but I think like, at its core, what that's doing is saying the market cap's not changing at all. We're just adding zeros to the number of tokens. Everyone has changed anything and that some of. As soon as that happened, people started taking it to such an extreme. You'd see some of these copycats where the percentage interest you get would go off the screen because they're like, it doesn't matter. We're just hitting zero more times. It doesn't do anything. And so I think it's an important skill. Here's the thing, if you're going to invest in this Space. I think it's an important skill to be able to sit down and look through either a white paper or an explanation of how something like this works and say, where's the money actually coming from? Like, what is it there?

As business owners, as entrepreneurs, what should we be aware of? Because I think this space is going to impact all of us and it would behoove entrepreneurs to think about how could I work this into my company over the next couple of years? Maybe not now, maybe not even a year from now, but the technology is going to emerge fast enough for you to be able to take advantage of this in a year or so.

Yeah, yeah, it makes sense.

That's important to know from that perspective.

Yeah. So on that side, then the biggest thing I'd say is like, then you're not trying to be at the like, leading edge, right? Like if, if you're trying to learn this space deeply, there's a whole lot to learn and I can share some resources if you want to post them after of like where to go to really be thinking creatively about this. If you're just trying to make sure that you're not falling behind and you're paying attention to it, I would spend some time understanding the very basics of.

Even just what we're talking about right now. What changes when you can issue tokens for ownership in something and what are the ripple effects of that? What are the ripple effects of being able to inflate equity in a business? Because that's not something we've ever been able to do before, at least not in a easy minute by minute basis. And so just a little thinking about, like, what are the ground rules here and what are kind of the basic building blocks? And then just pay attention to what people are doing, right? Like if you're not trying to invent some new way of doing things, watch what you're going to do over the next few years. Watch what Gary Vaynerchuk's doing. Just watch what people who are very public and are kind of at the intersection of Web3 and business are doing. And when you see things, think through like, oh, how would this apply to me? And you'll think a lot of it. You'd kind of have to force to make it fit into your business. But occasionally there'll be something where you talk about this NFT project and someone says, oh, I've got a community too, and I think maybe it would be better if my community all had ownership in the upside of the community. And what would that look like for me? And how would it work? So a lot of it's just playing with ideas and thinking about what is.

Best for that end user, not what's best for you, because that is best for the challenge is what is best for you. Like for example, the day is coming when an E commerce company launches their first product and they say the first thousand buyers are going to be in our VIP club. VIP club owners get access to all early products and they're going to get 1% of all profits, are going to go into a treasury to reward those early buyers. And those thousand people are going to be your VIP marketers that take you out to podcasts and blogs and open up their network and then they're going to sell, some of them are going to sell their NFTs and it's going to be an asset. Like, that day is coming. The day is coming in which membership communities like the one we have are all NFTs. You buy the NFT for the access and then the community all has aligned incentives for the value of that NFT to go up. Or instead of it being an nft, you're buying a coin, you're buying a certain number of tokens to get into this and everybody is collaborating on making the community as valuable as possible, so the value of the token goes up. So it's a question of how do I align my incentives as a business owner with the customer. And when you answer that question, then everything we've talked about in terms of technology is just a faster and cheaper way to make your product or your business better for the end customer. That's what matters. That's what makes this, what I think is the purest form of capitalism I've ever seen.

Yeah, it's so true. And it also is what makes it the hardest hardest because for someone starting something new in this space, it's really easy to plug into the way it's done in this world where it's like, oh, tokens are distributed, they're airdropped to people who are early users and owner. People who started things only take a small percentage, but the community's also engaged that that kind of replaces a lot of hiring and like, it's just a different dynamic for traditional business owners to flip into this world is difficult because very often the ownership that you've worked hard for and feel you deserve is what needs to be sacrificed in order for the community to have ownership. And so there may be alternative paths, there may be other ways to think about it, but very often I think, especially with like, membership communities, what you're doing is something that's really different. Right. Like, for a lot of people who have a business that a lot of it is based around a membership community, they'd be really reluctant to launch something where they no longer are getting annual recurring revenue from the membership. Like, that's. It's nice to be the business where you're collecting all the money and all of a sudden you're flipping it and saying, I'm going to sell these things once. And now we're all a community. We're all in it together. And so I think it takes a certain type of person and a certain kind of, like, comfort with giving up some of that ownership and upside in order to make something bigger with that community.

Yeah. And it reminds me of. We talked about this on one of our long hikes. I've considered taking one of the projects that I'm a part of that didn't work out, that's been a failure so far. And just saying, all right, let's convert it into a DAO structure and see what happens. And as people buy the token, they now have voting rights over what we do with the brand. And that can only happen when you stop thinking about, what am I going to get out of it, how do I do what's right for the other stakeholders and the customers, which is what capitalism is supposed to do in the first place. I think this is just a way to make it very tangible. There's another thing that Gary Vaynerchuk brought up where he said that because Web3 is on blockchain and permanent has permanent record, if you do a raise for a company or if you do an art project or whatever and it doesn't work out, you permanently can make it up to those people. So, Zach, if I invest in your next thing and it doesn't work out, but then 10 years from now you become a world famous rapper, you could say, I'm going to do what's right to those thousand people who bet on my previous career and I'm going to airdrop them 10% of my new record deal. And it now creates incentive structures for everybody to win, because that's great for your reputation now and people are more likely to buy your next thing. That, to me, is fascinating.

Yeah, yeah, that's a really cool idea.

So, Zach, we're doing this cool thing where we're starting an investor group. You have to have an NFT to buy into it. Is there anything that I didn't ask you or we didn't talk about that project that I should have brought up.

No, I don't think so. I mean, I think there's lots of lots. I think what's really cool about it is like, we've got so many ideas for it and we know the things that we're going to want to work towards launching that with. But like everything else in the space, the most exciting part is that there will be the hundreds or thousands of people in that group and then the real fun starts, which is, hey, we're all co owners in this. We know that there's some value that we're coming to the table with right away to make this worthwhile. But where it goes and what makes it become more valuable over the years is going to be a function of people in the community and kind of the exciting things that we all come up with together.

Yeah. So to piggyback off that, the investor group is the product. You're getting this deal flow of the brands and the entrepreneurs that I've been mentoring and you get first dibs on investing in them. That's the product. But the other benefits are you're in a room with other investors with cool ideas who are doing cool things. It has a mastermind effect. And as another side benefit, there's a chance that as that community gels, the value of the asset you bought goes up. There's a chance that could happen. It could go down too. But rather than it just being a thing that you buy, that is an expense and sort of a risk at that point, you're buying an asset that you contribute to, has tangible value, intangible value, and could go up in value. So this, to me is why this world is fascinating because it's the first time that aligns, that incentives are aligned and I think the customer is in control of where the whole thing goes to. What converted me on crypto, converted me on Web three.

Hell yeah, Zach.

It's good to see my friend. I'm very excited to do this project with you.

Yeah, me too. Thanks, Ryan.

And now a quick word from Jared, one of our members in the 1%.

I was bankrupt and crippled to, to making a million dollars in a year. And then I grew that business and kept growing it. So, like my whole world changed financially very quickly. It was amazing how fast it was able to transition and like turn once things got rolling. Ryan and capitalism.com pretty much taught me everything I knew about E commerce and specifically branding was, was the biggest thing that I think capitalism really does well and they focus on teaching their students about building a brand and just teaching business to people like everything he teaches is stuff that he's done. You know, it's not like from theory that you're going to learn. So it's like all stuff that he's done. So I think the biggest thing that capitalism.com helps you with is that you're getting to learn from somebody who's done the exact thing that you want to do, which is the most important thing thing in the world. Like that's how you fast track your results. So if you want like the fast lane and to get your results really quickly, you go to capitalism.com and you have them show you what to do so you don't make all the mistakes and you get there really quickly. And it was the best money I ever spent because I went from bankrupt and crippled and all this other stuff to a million dollar a year business in one year, which is exactly what he teaches. And I was like holy crap, this stuff works. So I was a, it was a very healthy exit and was able to let me focus on many other things in my life and not have to worry about that stuff anymore.

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