AI Breaking Software Economics, CLARITY Bill, & Debating BitGo’s IPO | Weekly Roundup

At the beginning of Blockworks, when we had no money and we wanted to, to do a bunch of hard things at once, we just said, we can't do that now. We did. We just, we just, I'm sorry, we just can't get to those things. Then when we got money, we raised a round, we start, we were spitting off a decent bit of cash flow. We said, we can do a lot of hard things, but we have to go hire lots of people. And now that there's Claude, and this sounds like overly simplistic, but it's like, if we want to do a lot of hard things, it's like a great, take ownership of that thing. And someone goes and builds it in a day or two. Nothing said on Empire is a recommendation to buy or sell any investments or products. This podcast is for informational purposes only, and the views expressed by anyone on the show are solely their opinions, not financial advice or necessarily the views of Blockworks. Our hosts, guests, and the Blockworks team may hold positions in the companies, funds, or projects discussed. Oh, what's up, folks? Welcome back. We got January 22nd. You're listening to the on the 23rd or the 24th. We finally got the gang together. Santi, Rob, what's happening, guys?

Only took us 22 days.

Full crew.

Crazy.

Full crew.

Crazy. Santi's been spending the first 22 days getting some like glorious rug behind him. Where are you, Santi?

I was in Davos, uh, yesterday, so I made my way down, uh, stopped by halfway through there.

Uh, so like the global elite that you are.

Yeah, it definitely feels like you're in the old continent. Have you—

the, the only people who hang rugs on their walls are people who have way more money than I do, right? Like, that is the group.

So I will say, Rob, you have an interesting pattern, and you were public. I'm not doing any OPSEC stuff. You said you were moving to Miami. You kind of were, you know, the billionaire's tax, all this.

You're moving, you're moving, Rob, you're moving to Miami.

I'm not moving to Miami. I have a place in Miami for a few months, uh, of which I am back and forth between New York and Miami right now.

He made sure to do the, the, the IRS.

And I'm not, I, I'm still paying New York City taxes. I will be a taxpayer in New York City in 2026.

Why would you be? Oh, in 2026. Okay.

Um, well, in '25, like, you know, last year, this year, every year.

Yeah.

Noted.

Noted.

I will say New York, New York right now sucks. It's like 7 degrees here.

That's why I'm here. And you know what? It kind of sucks here. It's like raining all morning, 70 degrees, but it's like pouring rain. It hasn't been particularly nice, honestly.

I spent a week in Costa Rica and it was lovely. And I was like, what am I doing in New York right now?

Well, you, um, you have a newborn, so, you know, unfortunately you can't just pick up and move to Costa Rica.

That is true. That is true. Yeah, I know. I was like, oh, Dana, we gotta, we gotta move here. And she's like, yeah, you have a child. We can't. We can't go to Costa Rica. So, um, Santi, you were talking about Slack before this. Let's, um, I'd love to hear just how, how like maybe Claude and, uh, I did this, we did this podcast with, uh, Chow that I did solo and it's now I think one of the most listened to episodes we've ever done in the history of Empire. Um, which just tells me that I think people are really trying to figure out like how these tools are actually being used. And I'd love to hear either Rob, like you guys at Dragonfly or your portcos, what you're seeing like on the edges, Santi, you guys, or maybe you're you're not using it that much today. I can talk about block orgs, but would love to just hear like how it's impacted the orgs.

I mean, talking about like internally at Inversion, we are, we're just talking, Rob and I actually talked about in the last pod, uh, and we, it was, you know, we, it is a priority for everyone on the team to like get up to speed constantly on AI, uh, everyone on the team across the board. And we are incredibly more productive. Like for instance, one of my analysts on the private equity side was, we're looking at a it's a public company, it's not very well known, doesn't have research, there's not much out there. He was able to put like the amount of work that you can cram into a 24-hour period. I was like, this would've required a team of like 5 or 6 people. And at JP Morgan, we had an external army in India to do slides. And like, it's just incredible the amount of productivity, uh, we're getting out of, uh, on the engineering side, of course, as well. Um, so, uh, You know, of course we raised a round and you're thinking you're gonna hire a certain amount of people and you have an up, a burn rate, but it's just incredible how much productivity you can get. We haven't, so Claude has not rolled out co-work on the enterprise side. I think it comes out tomorrow actually, but on the individual side, we've been poking around with it, but it's just incredible. Like every other week, the amount of progress that has been made now, it's just, One week you think you're mastering OpenAI and prompting, and then it's like, no, no, you gotta transition to Gemini. And then it's like Cowork. So we're getting a lot of efficiency gains internally. On the investing side, of course, like I'm paying a lot of attention to SaaS. Like it's been a massive disruption in terms of multiple compression there. Again, Rob and I covered it last time. There's a great tweet out there that I actually, I retweeted. I'm off Twitter. Most, you know, less active now, but there's a great tweet that says, um, you know, adapt or die. Like, SaaS is going from like, yeah, EV to revenue, EV to gross profit, EV to EBITDA, EBITDA to free cash flow. Uh, and of course I couldn't resist the temptation to say that crypto trades at the very top of EV to TAM and it's going to EV to revenue. Um, but yeah, I'll pause there, but it's just been very dramatic, the re-rating that has happened in the public markets for SaaS companies. Uh, so I'm just paying a lot of attention to that.

Yeah.

If your business, and I'm interested in what you're doing at Blockworks, but on the engineering side, if your business isn't writing almost 100% of its code today, AI-assisted, uh, you're probably falling behind, right? Even Anthropic is writing all of their code, they will tell you. Using Claude, right? And so it, I mean, they're dogfooding it, but they can't do that.

I think there's a difference between writing 100% of your code with Claude and then writing 100% of your code with AI-assisted Claude.

Like, sure, I agree with you. So AI-assisted, right? Like Claude itself is not going to write 100% of your code. You clearly need people, not today yet. So maybe, maybe at some point and maybe for some businesses, but there's, uh, and you clearly need people in the loop in terms of, you know, quality checks and making sure. Understanding that you're, um, uh, as you go through and make sure that you fix bugs and for some of the more complicated, uh, problem solving at times, but you know, not really, but the, it should be AI assisted today and every single one of your engineers should be using it. And if you're not, one of the things that we've seen in our organizations is that especially for, call it some of the senior engineers and they're a little more hesitant, I think, to potentially you know, use Claude or use, um, you know, I mean, Copilot is not, not at the same level, but you know, one of these types of, of, uh, of, of, you know, AI, um, assisted, uh, bots or agents. And what we've seen is you have to mandate it from management, right? So like even if a non-technical management like Jano, I'm, I mean, I'm interested to hear what you're going to say, but you probably have to be using it yourself. To understand the power of it, to then go and actually require the engineers use it. We've seen that across organizations as well. If the CEOs are using it, C-suite's using it, it's getting adopted much more quickly by everybody else. And if they're not, it's still a push-pull at times for some of the, you know, the staff.

Yeah, I would say there have been two enormous cultural shifts at Blockworks. One was COVID, which forced us to go remote and completely change how we ran the entire company. This is the second one. So I think, I think we are starting to see a huge cultural shift since specifically Claude 4.5, like I think we're a pretty like AI-native org. Everyone's been using chat since the beginning, but it was Claude, you know, 4.5 that really changed things. I think at the beginning, Santi mentioned like, you know, we raised this money, we thought we're going to hire people. At the beginning of Blockworks, when we had no money and we wanted to do a bunch of hard things at once, we just said, we can't do that now. We just, we just, we just, I'm sorry, we just can't get to those things. Then when we got money, we raised a round, we start, we were spitting off a decent bit of cash flow. We said, we can do a lot of hard things, but we have to go hire lots of people. And now that there's Claude, and this sounds like overly simplistic, but it's like if we want to do a lot of hard things, it's like, great, take ownership of that thing. And someone goes and builds it in a day or two. And that gives us the ability to assess if that V1 is good enough or if we should scrap it or if we should double down. And I want to actually show you guys an example of what this looks like. So our sales team, we have a 10-person enterprise sales team. We now have the— I built this out personally. It's the Blockworks pitch assistant. So you put in the name of a company. So I'll put in Maple, Maple Finance. Let's say the sales team is going to talk to Maple today. It looks at the whole website, it looks at all the company details. It has all the information in our HubSpot. It has all of our pitch documentation, all of our sales numbers, metrics, pricing. It's got our pitch deck, it's got all of our product information, and then it generates a whole talk track and then it gives you. Objections that it thinks Maple will have. It's like, okay, well if you're talking to Sid at Maple, I bet he's gonna say this. If you're, you know, maybe talking to someone on the growth team, I think he'll say this. How does Blockworks compete against, you know, X, Y, and Z competitors? It gives you all the information here. So, and this is a tool that I built in an hour on Replit. You can do the same thing with Create a Proposal. If you post-call, you can actually upload your, your call notes from Granola. So the whole sales team uses Granola. You can just copy paste the Granola transcript, put it into this, and then it'll do the same thing and it'll actually generate a proposal for you. Again, these are— the sales team should not read the pitch word for word. The proposal should not be sent to the client right away. You gotta review it. But it's crazy how much time and honestly extra people this has saved us.

I will say, uh, what you said around like prototyping, like that time if you think about like what needs to be done to reach a conclusion, it probably would have taken— this would have taken a long time for us. Like, as we evaluate companies, like, we're able to do analysis on so many companies very quickly. But I will say a lot of times at the very beginning, one of my analysts would come to me and say, I've created all this, and then I would ask him hard questions and it— nothing. I, I still think on certain disciplines it will not replace the judgment piece and there's just some things that you need to spend time doing yourself, whether it's writing it on paper or just looking at it. And I worry that, I don't think it's, it places more value. I was thinking like it probably places more value on judgment. And so for instance, Claude, I think it's AI-assisted, but that engineer that like architected and like created the prompt. That was probably a 10x engineer that is now like a 100x engineer because he knows how to architect. He has so much experience that is kind of letting the AI like write the code, which is not— it's like the Albert Einstein famous quote where he says like, spend 90% of your time focusing on what the right question is, right? And then 10% and the answer comes much faster. I think that like if you have that skill of judgment, of knowing how to prompt, Or just have a lot of reps in you, like Rob, you understand the payment space so well that with AI, you can just probably not need an analyst because you could just like use AI to like effectively be that analyst for you.

Uh, but nothing really, I think today still replaces your understanding and knowledge of payments or, you know, yeah, I mean, I do think that's true, especially for like complicated topics, but you can get up to speed on a complicated topic a lot more. I, there's, I think especially in the Valley right now, people do, I think, undervalue experience and they undervalue still just like ingrained institutional knowledge about like being able to understand where the potential, you know, hidden issues are, right? Or where there might be, you know, the, the question you need to ask to pull on a certain string to get to a certain value lever, a certain type of, you know, diligence, um, area where like you can kind of start to understand some of the inner workings of business. Like, I, I actually think, like, I use AlphaSense, uh, as well, which I, in the past, I kind of felt AlphaSense was a little bit, you know, wasn't that helpful. And recently it's gotten so much better where I'll say, okay, listen, I want to go and I want to understand everything that's been happening with, uh, Interactive Brokers for the last year. I want to understand, you know, what they're thinking about in terms of, you know, future strategy. I want to know um, how each of the lines of business are being talked about, whether that's publicly, whether that's at the analyst level, whether that's, uh, in, you know, kind of a quarterly earnings call from one of the CFO or CEO. I want to understand the, um, the lines of business, how they're growing, you know, what the, the makeup of the revenue is, what the makeup of, um, the, you know, the EBITDA is, and how we expect that to grow over time. And it'll go back and it'll— they have this kind of this version that will take 10-ish minutes maybe, and it'll come back and it'll probably give me the single best sell-side research report that has ever been written about Interactive Brokers. And it'll include everything I possibly need to understand that business. And yeah, if you read that and you don't have any kind of context or knowledge already, like, you're not going to really understand the kind of some of the main points. But if you already have that institutional, like, level of knowledge and context, like, that is all I need to get up to speed on a new company today, right? And it's, it's incredible, like, how much time that saves you and how much manpower that saves you.

Rob, maybe a counterargument to that would be like, there is a fine line between being too much in the weeds and analysis paralysis. Like, like, Soros, some of the best traders, traders, investors would tell you, I don't really need to understand everything about the company. I just need to understand what the market sentiment is and like have a, have a very strong point of view. And sometimes it It hurts you to know too much. Um, I wonder like what would, what would, uh, the next Soros or the next Drunken Miller, you know, like, like they probably would tell you like, we don't need to know everything, but this could allow us to be way more effective.

Well, Drunken Miller, what's the quote, right? Um, you buy first and you research later.

Exactly.

And, and, but again, these guys are, are more. Traders than they are like long-term fundamental investors, and they're, I mean, they're macro guys as well, right, depending on who we're talking about. Um, so I, I think it really depends on your investment style, time frame, context, all of that, right? But when I'm doing an investment, I'm not actually investing in public companies, right? I, I research public companies as a corollary to, or for me to think through, like, how my companies, which are earlier stage, high-growth technology companies, can potentially go after traditional markets. And so it's more about me understanding those markets and how these, you know, traditional incumbents are thinking about, you know, the IBKR example I gave specifically because I've just been thinking about it because they're doing, they've been talking about prediction markets more, right? And so, but, but I think the, it really depends on the type of investor you are.

Yeah.

And I want to ask you a question because I think you were, you're pretty up to speed on AI. Like you poke around on the weekends, you build stuff. Um, what is something that you've changed your mind on recently about AI, positive or negative?

Um, I think that I always thought that as companies— there's a couple things. One is, I think, as I, I thought of the connective tissue of a company as being like an ops layer, and like, uh, you know, you got to get people to— as companies scale, you need this like connective tissue. And I think what Mike and I have both realized recently is adding people to be the connective tissue just adds a layer of, an extra layer of people. And you can use AI to basically be that connective tissue. So that's how we think about it at Blockworks. I think another thing I recently changed my mind on was I thought memory was an extremely, was going to be an extremely good lock-in for the platforms. So I thought once you went really deep with chat, like ChatGPT, you'd be locked in because it knows all my health data and it knows everything about my personal relationships and knows everything about Blockworks. Um, I have found zero lock-in, memory lock-in. Um, I'm now completely off chat. I was, I was, I was all in on ChatGPT. I didn't use, I didn't use Claude or Google or even really Perplexity that much. Um, and I'm one, I, I haven't pulled up, I haven't used chat in about 2 weeks. I'm 100% on Claude now. So I think the, it's made me think about, uh, the lack of lock-in for these providers and like where they'll sit in the stack. And will you even ever go to Claude? Will you go to all of them? Will you just go to these like things that sit on top? And yeah, I think the memory lock-in was way, uh, way weaker than I thought it would be.

I'm, I'm still using ChatGPT. Gemini. I'm using Gemini the most at this point still. Uh, I've used ChatGPT a little bit. I, Claude Code, I've been, I've been playing around with that, but I haven't been using Claude as much otherwise. Um, I don't know. It would you, Gemini feels to me still like it gets me the right answer quicker. And I, I will say today it feels like Gemini gets me the answer more robustly, more deeply. It seems more thoughtful. Than ChatGPT by almost 100% of the time. Yeah.

Gemini is better. I think Gemini is better for answering just like questions like, hey, what is this thing? I think Claude is now the best for projects. Like, hey, I want to build this sales ops tool for the sellers to like do this. And I also think Replit, um, which isn't talked about that much, like Replit is an incredible tool, um, as well. So that's what I would say. Yeah.

Can you, on Replit, you can bring any other, any of the foundational models in? Or are they using someone specific? Okay.

Yeah, exactly.

Yeah. What do you, can you, can you say a little bit more about the connective tissue? Because that's something I think about a lot. Um, you've heard like, um, I recently hired this guy from like Palantir. He used to work at Palantir and he was telling me, look, for the first, like, but even for like right after the IPO, we still had a super flat organizational structure and we didn't have OKRs. Like it was just super like just. Fast sprints and, um, the Airbnb guy talks about like not ever having like one-on-ones. Like how, how does AI fit in that? Like, cause there's still some, we're, we're still humans at the end of the day. Like, so like when, when you think about like leading a company like Blockworks, you and Mike, like, what do you mean by the connective tissue being replaced by AI?

Yeah. So, um, here, here's like a place where connective, where you need connective tissue inside of an organization is between finance and sales. There's like a lot that happens in between finance and sales. Discounting. Hey, this, this client wants to do a 2-year, a 2-year thing. Like, can we discount? Hey, my sales commissions are going out. Hey, there's this custom deal. Like, am I going to get paid on that? Hey, there's so much that happens between sales and finance. We're now, uh, using a tool called StreamOS that just automates basically everything between sales and finance. So what traditionally companies do is, and I think StreamOS is built on top of like all of, all of the models. So it, it sits on top of mainly, I think, ChatGPT and Claude. Um, so instead of hiring, what you would traditionally do is hire a revenue ops team, a rev ops or a sales ops team. And instead, and then that adds, that adds a person that the team has to go to. Hey, it's, you know, commissions are sent out on January 31st. Like, are my, is this included in my commissions? And then the rev ops person has to go to finance and be like, hey finance, like, you know, this seller's at, it's all, it's all in StreamOS now. Um, yeah. So I think there's different platforms like that.

I, there was somebody on, I blank on who it was, on TVPN, maybe it was end of last week or earlier this week. I think it was earlier this week who said, you know, large, uh, portion of these like large tech organizations has been people who can essentially, uh, translate between like product and technology, right? And translate between those two parts of your organization. And now essentially what Claude is doing is it's doing that for you, right? You no longer need that translation layer because somebody in product can just tell Claude what they want and then they can go and do it and Claude can help you build it.

Yeah.

And you need, you need some tech and some software engineer to go and make sure that it's right and to, and to utilize AI to build this thing. But it's doing basically most of that translation for you today. And so this whole like translation layer that exists at these tech organizations is probably just going to get completely hollowed out over time.

So Rob, what is the, what is the role of a VC when, like we talked about the cost to start a company went from like 1990s, like millions of dollars, software as a service lowered that dramatically because you didn't have to, like pets.com went bankrupt because it had to spend millions and millions of dollars to do what effectively costs zero today, spin up a website with Squarespace. And now you can do that even. Vastly cheaper. Um, what is the role of venture? Like, if you take a super cynical, like, cynical view here, it's like, does— are we at a point where you're going to see the second-order effects are way more innovation, way more folks starting their own companies because now they can prototype and they can build apps? And what has been the— probably the biggest, um, barrier to innovation and entrepreneurship has been stopping capital for a long time, and, and now is like probably more like technical expertise. Like, if you know how to code, I was like, you know, like, I need You have a co-founder that is technical now. You could argue you don't. Um, and then like, what is the role of VC in that world? Like, what is the, how do you think about your edge and like the value that you bring to the table for entrepreneurs when you have all this access?

Yeah, my, my, my belief is that, and I, I know I disagree with some people on this, but my perspective is that What's happening in AI is not displacing people in terms of, you know, there's still gonna be a lot of workers. There's still going to be people, uh, who they need to have jobs. There's still gonna be inventing things. There are go— there's going to be more businesses. There's going to be more innovation. There's gonna be more people trying new things. There's going to be a, uh, significant amount of more productivity if with any single individual. And there's going to be a, we're going to have to put a lot more emphasis on creativity and ability to sell and distribution. And, you know, the, the business aspects, the, the intangibles of, you know, those founders, because what's going to get commoditized is the software engineering, right? That's the commodity now. That's, it's no longer that, that is the, the edge, right? Oh, they, this is the best software engineer I've ever met and they're going to do something better than somebody else. That's going away. Right. And so people are just going to be that much more productive. And so for VCs, that means that there's going to be a lot of things to fund. We also, most likely there will be a, you know, businesses are getting bigger, right? We're going to have trillion dollar IPOs in 2026. Right. We're going to have multiples of them. Right. This is going to continue to happen. And we're also seeing a, you know, I think we're seeing a resurgence of, you know, funding of hard assets. right? Or of hardware. And that's not my business. Right. But we're going to see that. I mean, we're seeing all of the large platform VCs, you know, kind of lean into that as well. So I don't think there's a, you know, a dearth of capital to put to work. And I think expertise to our point earlier still matters. Knowledge and expertise are not the same thing.

Yeah.

Tell you the truth. It's like, uh, one note on that, Santi, to answer your question too, is venture will move away from the thin software layer. Right? Simple workflows, another enterprise SaaS tool. And I think venture will get even more important actually in like, let's call it 4 buckets. Fixed costs or high CapEx, scarce or privileged companies with scarce or like privileged data, people who have like extreme distribution moats and real-world execution. So CapEx, fixed costs, this would be like, I don't know, anyone from like NVIDIA to, I don't know, like Groq or any, yeah, any of the big, I mean, any of the models, like any of the model companies. Um, distribution moats would be like, or, and, and/or scarce or privileged data would be like, I actually think there'll be a bucket of enterprise SaaS that does. I know there's the chart that Chamath posted of enterprise SaaS is falling off a cliff. I think there'll be a, I think that'll divulge, like, I think everyone's bucketing all SaaS together right now. There'll be a bucket of enterprise SaaS that does extremely well. And they, if they own the the distribution moat, if they have basically scarce or privileged data or they own the distribution and they are the system of record for a company. So the people like this who will do well is like Rippling. Like if you own the payroll data, the HR data, the— your whole company set— Salesforce, HubSpot, ServiceNow, Oracle, those guys will do well. Who won't do well is like monday.com, Asana, like just this thin SaaS layer. And then real-world executions like robotics, hardware, climate, energy, logistics, like anything where like atoms and safety and like basically dominate the, the cost stack. So yeah, should we—

yeah, there, there's a lot of, there's a lot of conversation right now about basically the hollowing out of like middleware.

Yeah.

Right. And I think like that, that's probably right depending on the vertical in the industry. There's, but there is going to continue to be, I think, a somewhat of a data moat and a distribution moat, especially for, you know, very— to your point earlier, Jano, but there's no lock-in right now with any of the chats. That's not going to be true on the business side. There is going to be lock-in because people are going to integrate your proprietary information into then something that they're fine-tuning over time. Right. And so we are going to see lock-in on certain types of businesses. But to the point again, like we were talking about, okay, there's all these people So many people work at large organizations that exist to just answer questions, right? You know, there's the whatever. There's— so Salesforce is in every single company, or many, many large companies in the world. It's basically a CRM software. They— and a lot of people are employed at companies that are basically answering the question, what does Salesforce say? Like, where, you know, what does our pipeline look like? You know, where are we in the pipeline? Who is moving, uh, down that pipeline? How is our success rate? Like, what does the funnel conversion look like? You know, what do we expect revenue to be over time? And that question can now be answered by, you know, a model, right? That, that question does not need two people on your finance team now to do that question. Yeah. And you don't necessarily need Salesforce in the same way because you just need the data, right? Yeah. And so that's the, that's the type of stuff I think is gonna be really disruptive.

Uh, just to round out this conversation, I saw, I think it was, um, Andy Jasper, I think it was the CEO, the COO of Amazon said, hey, look, we, no surprise, like Salesforce, like has all, it's not very custom. It's just kind of like we need a, there's all this training that needs to happen when you're onboarding and your team and training your team to use a solution that is a lot of it out of the box. 'Cause SaaS would rather sell you out of the box software, not super customized 'cause it's a professional services just blows up and it's at lower margin. And they, I think it was the CEO of Amazon that just, they built their own CRM and he's like, honestly, better for us. Cause it's like way more customized for our needs. And so if a company of Amazon that scale, I don't know if it totally replaces Amazon, but I think like, sorry, Salesforce, but it definitely begs the question of like, I've interacted with Salesforce a ton. It's not as customized to like your needs. Like we're using it at like Sage and you're like, shit, man. Like all these unnecessary fields is not really relevant. So I think I don't, I actually don't necessarily agree with you, Jano, that like Salesforce may, like, unless they change their pricing or their type of business model or really want to like re-architect and like be more custom customizable for clients, I don't see that much lock-in, to be honest, for something like Salesforce. I do think if you own data, then that's a real moat, especially like that will continue to be a moat. Salesforce, I don't, I don't just don't necessarily think the lock-in is there as much.

Okay, here, here's how I think about it. If you want, there's a, there's a bucket of things that your team does, right, Santi, that like, uh, they, that AI will end up doing, like an agent filling out notes from a user's client, uh, Aaron Levy, who's the CEO of Box, had a great post on this. He called it non-deterministic systems. You want AI agents doing the non-deterministic things. So an agent filling out the notes from user-client meeting, generating a sales presentation for a new customer, answering a customer support ticket, doing research, providing analysis on on a set of documents, that's all non-deterministic work that an AI agent can do. Um, but if you ask the agent to generate more outbound emails, create the sales presentation, do the— create the pitch, send the follow-up email, that all, all of that has to pull from somewhere, right? It, it almost certainly pulls from some sort of CRM system. So like when an agent processes and reviews like invoices and transactions, like they have to kick that data into a system. So it's, there's some system of record that will do well. I think your point is, well, should I just build a perfect system of record for Inversion?

Yeah.

Like if you can export, but if you can export all that data and you, and you can move, pack your stuff and just plug it into a, a, a model and say, hey, listen, this is our Salesforce instance. Build me something that, you know, optimizes for across these different things. I think you could do that. I mean, that was the whole point of the Amazon goal.

I, I, well, this is why, but this is why businesses like Databricks are gonna continue to really do well.

Mm-hmm.

And Salesforce doesn't necessarily need to, 'cause what Salesforce is more of a, a layer to help you understand what is happening versus like the system of itself, right? It's a translation layer, right? And so I don't necessarily need the translation layer anymore. I need the data layer, I need the data indexing, I need the data lake, but I don't necessarily need the translation layer or the translation software anymore.

Oh, I think I disagree. I think Salesforce is the system of record. I would disagree. Uh, we should talk crypto at some point.

Let's, um, all right, before we do that, before we do that, we need to make a bet. So Rob, are you taking a long Salesforce, like short Salesforce? Jan, are you taking long Salesforce?

So I mean, Salesforce is a system of record. I just want to make that point, uh, for him on like a lot of customer data, but you don't, it doesn't need to be, it's a system of record that then translates for you. The thing is you don't need a lot of what Salesforce does, so it shouldn't be, it shouldn't cost you as much because the value isn't as high.

Correct.

Uh, yeah. Okay. That I agree. That I agree with. I do. But that's a business model question. That's, you're talking about the business model of software that will 100% evolve. Like the seat-based model is horrible. Seat-based model should go away immediately. It should all go to usage-based. Like anyone who's used, people should really use Replit and see how Replit is charging. It is amazing. The more they charge me, like, they'll be like, I'll do a task and be like, all right, that task cost you 14 cents. I'll do a bigger task, walk away from the computer. It works for like 30 minutes. They're like, hey, that cost, that task cost you like $6.17. Like, okay, this is clearly where the, it's better for the customer. So that's where it'll go.

We're moving on. Before we do that, ladies and gentlemen, please click on the link below if you want a referral link to Replit. Jano, uh, They should really be sponsoring.

I've never talked to them. You want to know the craziest? Okay, the other crazy thing is I've never talked to Replit, and no one at Blockworks has. There's no— they don't have a sales team, and we're still— so that's also how enterprise SaaS could change too. Coinbase crypto-backed loans powered by Morpho empower users to borrow up to $5 million using Bitcoin or $1 million using ETH as collateral. Loans originate in seconds with no additional credit checks and competitive rates typically between 4 to 8%. Use USDC for down payments, debt refinancing, unexpected bills, and more. Repayment anytime with no fixed deadlines. Over $1 billion in loans have been opened through Coinbase to date. With the Coinbase app, you can manage crypto-backed loans with ease. To learn more, click the link in the show As always, investments in blockchain technology involve risk. Terms and conditions apply. Anyways, let's talk about Clarity. Um, this is a crypto podcast after all. So, uh, the House passed its version of, uh, Clarity, which is the market structure bill. Um, Senate Banking Committee was preparing, uh, this markup. This is, this is kind of what I know. Um, they're preparing a markup based on this like heavily rewritten draft. There's a lot of like debate over tighten rules on stablecoin yield and interest. And on the eve of the markup, basically Coinbase said that they could not support the draft as it's written. Company formally withdrew its support. I think in response, the Senate Banking Committee postponed the markup and said there's broader work that needs to be done on the market structure bill. And it's— we're going to delay this for weeks or maybe even months.

Um, what I'm just, uh, just to clarify there, the, the Banking Committee put out their draft of the markup. The Ag Committee was also supposed to put out a draft, and people had originally thought the Ag Committee was going to be probably the one that was more likely to get— make it out of committee and be the one that was going to, um, take, you know, or at least be the more, the, the more influential version. And after the Banking Committee draft came out, Coinbase came out and said, hey, we, uh, do not— we cannot support this. And so then the Ag Committee postponed their new draft because of the yield piece specifically. Uh, now it's been about a week and they haven't come out with their new draft. I've been told that maybe the Ag Committee draft was supposed to come out, uh, next Tuesday, but now people are worried about this historic ice storm that is coming across the US and that that might push things. As well. So we might have a few weeks, you know, past when their draft was supposed to come out, which if anybody knows anything about Washington, losing momentum is always a bad thing. Yeah.

So I was in Davos and I was on a panel in the CNBC house with the head of policy at Coinbase. And he said, anyone that is not familiar with regulation says every bill that has passed dies 3 or 4 times before it gets passed. So this is kind of normal. Um, in that same conference, Brad from Ripple was a bit more critical of Coinbase's, um, kind of stance and, uh, saying, listen, more of the tune that I don't know where you guys sit. You could argue, hey, listen, we finally have an administration that has, you know, put its best foot forward. Like, it's still progress is progress. Take the bill in its current form. It's still a win for the industry. Like, don't jeopardize, don't miss the forest for the trees. I will say, like, the point that, that I think Coinbase makes, and I'll just kind of reiterate, but you guys fill in, but there's a couple— I, I think there's one key issue here for them, which is kind of stablecoins, um, that would probably hurt them to be less competitive. Um, this idea of, uh, you know, effectively the bill in its current form would eliminate rewards or yield. Of course, we've always understood that stablecoins can't offer yield, but Coinbase kind of gets around that with the rewards. And so it's just kind of a very, you know, it's more of a mechanism. But obviously, you think about that is impactful for them because they want to continue to be competitive, like offering rewards to users for parking more stablecoins has a direct impact to their business. So that's, in my opinion, like probably their biggest concern. Issue with the current bill. There's always some ban on tokenized equities, so that obviously continues to be a huge kind of point. There's some stuff on DeFi that I, candidly, I don't know if you guys understand as well. Rob, I'm—

So I don't think there's a ban on tokenized equities. What there is is there's like a study that has to come out and like how— Yeah, right. Um, listen, I think in this draft, clearly Coinbase is concerned about, you know, the yield on stablecoins. And if you read the language, what it essentially says is you can't give yield on stablecoins if yield is— or if the stablecoin is just sitting in a wallet, right? But you can give yield or rewards if you're— it's tied to them doing something, right? So whether it's using the platform or transaction volume or whatever. And so most people looked at that and were like, okay, well, this is fine. Like, there's a lot of ways to build our business around this. Now, part of the issue is that it's so opaque that, you know, there's going to be a bunch of rulemaking after this law is passed, and you can drive a truck through these definitions. And so, like, I think people are worried about, you know, kind of the slippery slope. Coinbase, I think, is specifically worried because of the fact that they have this, like, new line of business where they're gonna you know, allow you to do like a white label stablecoin underneath. It's going to be USDC, and USDC is just going to sit there as a deposit probably. And the— they, because they have this rev share agreement with, uh, with Circle, which actually gives them 100% of all USDC revenue that's in on their platform, I think that's probably what they're, they're focused on most, most closely because they expect that to be a huge line of business. And then obviously today, like, they gave you a few points for just like You know, parking stablecoins there, but like there's very easy ways, it seems, at least on first reading, to kind of work around that. And so I think people were surprised that Brian would come out publicly like that instead of engaging in the normal course, which was, you know, to go and talk to the senators and say, hey, listen, like, let's, you know, negotiate something. And one of the things that, you know, it's clear when you talk to, you know, the staff who actually write these bills, is they much prefer, and they're usually much more amicable if you engage with them outside of the public sphere or public eye than if you do things through public. Like usually you want to be, that's like a last resort, right? And so it really threw this draft into a bit of disarray because he did that.

So where did this, I mean, Coinbase probably has the biggest presence in Washington where they, it seems to me like they were caught off guard in the latest kind of draft of the bill. What's behind that? Like, is it the banking lobby that obviously, you know, is like, why were they caught off guard? Because their whole point, I think, was we have like a couple of days to, before this goes vote, like we have to take an extreme measure of going public. I don't think their policy people and lobbyists like disagree with what you're saying, Rob. They just took an extreme measure because they were kind of blindsided, felt like.

You know, in my, so I'm, I don't have the apparatus. We don't have the apparatus that like a Coinbase does. And so my experience in DC is not you know, nearly what a lot of these people are, uh, have. What we have seen though is that like even the most well-connected lobbyists and a lot of the apparatus here, they don't, they don't exactly know where things are going to land until they actually come out. And so like they, they can, you can kind of get the wins and you know what, you know, you have certain, um, you know, relationships that allow you to understand where, you know, certain senators or, you know, one side of the aisle is thinking about a topic. But, you know, there's a lot of dealmaking that happens, you know, in these committees and in Congress that you're just not going to be privy to until the very end. And so you might know which way it's leaning. You can kind of, you know, tell the winds, but you don't know exactly till, till the end. I mean, the other thing I think people were really surprised about here, and I think the more, more problematic piece more broadly, is that there's the— this draft basically shifted a lot of the onus of regulating crypto back to the SEC from the CFTC. So the CFTC was, was kind of more of the focus in the Clarity Act. And I think the Ag Committee version will also probably be the CFTC primarily. And there's a very— there's a large concern that if you just say, okay, well, like, you know, here's a very high-level bill and then we'll leave it up to the SEC and the Treasury Department to think about how to regulate this over time. That there's just going to be a bunch of whiplash, right? Because we'll get to, you know, SEC was a lot less friendly to crypto, and then they'll kind of change their position, and that just won't cement the rules that we want in place. And I think that's probably, in my mind, the biggest concern, as we need more enshrined in law, and we probably— and we want the CFTC to be probably the default choice, uh, to be the regulator here.

You're the political expert here, man. What, what Um, you've been fairly quiet there.

I was getting messages about BitGo, which I now want to talk about. BitGo is the first crypto IPO of the year, so I was looking into it, doing a little prep for the next session, you know. Um, so yeah, I want to talk about BitGo. BitGo's— I mean, BitGo's been around for what, 20— I think they launched in 2013. Like, this is— Belshee's been at it for 13 years. Um, obviously started as a custodian, now kind of this full-stack institutional offering. Uh, they've got token— they do tokenization, trading, lending, borrowing, uh, custody. And, um, yeah, they IPO'd at $2 billion. So I don't know if either of you guys have looked into it or have thoughts.

Uh, I was thinking about Galaxy's back— like, what is Mike Novogratz thinking right now? Because they had an offer to buy— they were going to buy it, then I think it all— it was right around the time Terra collapsed, I believe, or FTX.

I think it was a $1.2 billion deal. That was deal.

Yeah. Do you think, uh, you know, obviously we ended the year, 2025, Figure and Circle were some of the best performing. I think Circle was the best performing IPO of the year. Uh, where do you think BitGo trades from here? And do you— I can almost anticipate the analyst saying it's not a defensible business model. Like, there was a lot of criticism about Coinbase having that issue as well on certain line items and fee compression. Um, does it deserve to be a standalone company? Can it be a $10 billion plus company? And if so, what's, what's going to take to get there?

I mean, I have a really strong opinion on this, uh, so I don't know.

Up to you, Rob.

Yeah, okay. I, I share.

Do share.

You share.

Rob, don't—

let's unshackle you from the Dragonfly, uh, uh, Yeah, this, this is one of those ones. I was at a dinner last night and, uh, to preface this a little bit, I know the, somebody who worked at a different company in crypto, um, yells across the table and was like, do you have a problem with this company? Uh, because they had heard me like say something like somewhat negative about, you know, or that, you know, about their valuation on this podcast. And so I got, you know, I got a little shook by that because I don't want people to think that I don't like them. Uh, because this is not, you know, this is not in any way personal.

This is such an amazing way to tee up your negative take on BitGo. So just hit us with it.

Which is going to zero.

I, uh, I, I just, I just don't see how the business is worth $2 billion. So, you know, listen, like it's priced in the middle of the range, uh, about, so they priced it from $1.9 to $2.1 was the range they put out. They priced about $2 billion exactly. They, uh, it was almost entirely hedge funds. In the book, which that tells you a little bit about like, you know, where the fundamental, like long-term investors think about this business. They, uh, they were oversubbed, but you know, that's, that's, that's pretty typical. Um, they, you know, this is a business today that it priced at about, you know, call it, I think about 6 times, uh, what they expect '26 net revenue to be. Their you know, it's on an EBITDA basis, like, this is, you know, a very, very high multiple. I think it's— they did like $30 million of EBITDA last year. They'll probably do— I think some people think they'll do something like, um, 50— what, like, like 50, 60 this year, right? And so, you know, we're, we're talking about a, you know, 40 times EBITDA type business, right? And the all of the story here is actually not BitGo specific, right? So it's okay, well, there's going to be stablecoin proliferation, there's going to be more real-world assets, there's going to be this significant uptake of, um, you know, tokenization and, uh, these, you know, platforms like, like BlackRock and others now trading different types of tokenized assets. And all that will be good for this custody business, right? Uh, uh, and all that I can agree with. But if the entire story around this business is, hey, we have fee compression, we have margin compression, we have— we're probably, you know, publicly accepted as the third best tech of the three biggest custodians, uh, and significantly behind Anchorage and then a little bit behind Coinbase, and we are going to ride the wave of the market then the investors are going to sniff that out. And if they want exposure to, you know, these secular trends, they're going to go to the better asset, right? And so in my mind, this thing trends down to a more typical, you know, EBITDA multiple. And it probably— the chart probably looks less like Circle and more like Gemini.

I'll take the other side of that. Other side of this is going into Circle. I mean, we remember how much Circle ripped. Do you remember how much everybody was just destroying Circle's business model for being, you know, an archaic stablecoin that has only one, one, one product and revenues are going to go down? If you look at BitGo's numbers, yes, I under— the, the multiple is a little high. I get that. But their assets under custody grew 100% year over year. Their trailing 9-month revenue grew 65% year over year. Um, they've got a run rate of, uh, I think almost $250 million by the end of the year. That's up 85%. Um, and these numbers are actually greater than Coinbase, right? Coinbase only grew AUM by 60%, net revenues by 45%. So I think if you'd look at the growth rate of the business, yes, the multiple's a little high, but multiples should be high when you have 100% year over year growth. Um, as opposed to something like maybe a Coinbase or a, you know, someone else who's like maybe they're growing at 30, 40, 50% a year. So, um, yeah, I think you can actually justify some of the elevated multiples because of the growth rate. And also if you look at the percentage of their revenue that's quote unquote sticky revenue, it's like, I don't know, 70, 80%, whereas Coinbase's sticky revenue is somewhere around like 40%. So they also hold a This is not a reason to buy BitGo, but they hold a stupid amount of Bitcoin on the balance sheet. I think it's like 2,500 Bitcoin or 2,300 Bitcoin. So yeah, Bitcoin goes back up to 1, 120, 125. Like, you know, it's a nice, it's a nice little play there.

Yeah. So the difference with Circle though, right, is Circle is a, is a scarce asset. It's a unique asset, right? So everything that everybody said about Circle's, uh, just, you know, financial profile.

Oh, but it, but it got long because it's the stablecoin play.

It's a scarce asset. Yeah. That's, it's the only way to get pure play to stablecoins, which everyone agrees is, is, you know, kind of one of the technical revelations of the last couple of years. You know, crypto custody, you can already get exposure to that through Coinbase. Um, I expect we'll get an Anchorage IPO at some point in the next, you know, year or two. I, I don't think, you know, I don't think there's anyone, while Anchorage is a smaller business today, there's a general belief in the market that Anchorage has better technology. And is more secure. Uh, and I think, you know, you can debate more about Coinbase versus BitGo, but you know, Coinbase has, it probably has a better, uh, a better reputation there as well. And so I agree that if crypto does well, tokenization does well, stablecoins do well, this stock will do fine as well. But, uh, on a relative like pair trade, I would expect it to do a lot worse than, you know, these others.

Right.

And I think a little bit of what we might see here is probably somewhat similar to what we saw last year in the exchange space as well, which is that we got a few exchanges that came out, right? Coinbase traded well for a big part of the year, and then, you know, Bullish came out and did pretty well, and then Gemini came out, and Gemini was the only one that did poorly. But it did poorly because now people were comparing different assets, right? They had an ability to do, okay, I want exposure to this, and I have multiple assets where I can get that exposure to. It's different when you have a scarce asset like, uh, like Circle.

So I will say, I, I do agree on the technology. Uh, what was the last round for Fireblocks, by the way, on the private side?

Uh, $8 billion, but the, the, the secondaries have traded significantly below that for—

yeah, like $2 billion-ish, I would say, between—

it never got down that far. Um, but it, it's, you know, it was significantly down.

And there's not that many sellers, I think also. I, the, the saving rate, I mean, I think, I go back to my initial assessment. I think custody as a standalone, like it's still primarily a custody play and that's A, not as exciting for the market. To Jana, to your point, like if all markets are just momentum and skewed heavily towards momentum, I struggle to see that bid just because it's a more boring business. If they can somehow convince the market that it is something more than custody. You know, you don't see like folks getting super excited about being Y Mellon. Yeah, it's just, um, but I, I, I, I, I wouldn't necessarily buy it. It's just, it's just I struggle with the defensibility of it. Um, like what is the real moat? Um, and I don't want to play short-term games around like, hey, maybe it's an acquisition target. Maybe, maybe the more interesting question is like if it trades really poorly, goes below a billion, does it get acquired by a legacy player that wants to move into State Street or BNY? Yeah. Yeah.

I mean, I think that's 100% right.

Yeah.

Yeah.

I'll just say, I mean, so like, um, who was it? It was, uh, uh, it was Matt Siegel from, uh, VanEck who kind of put out a bullish, hey, we, we want to buy BitGo argument, and almost the entirety of his argument was about the market, not about the business, right?

Oh, that's what I, I got, I got a lot of the numbers I pulled were just directly from Matt's tweet.

Yeah, he talks about the numbers, right? And then he talks about all of the bullish catalysts are, none of them are BitGo specific, right? All of the bullish catalysts are stablecoin proliferation, tokenization. Yeah, yeah, yeah, right. And, and so when I see that, I have a natural aversion to that business because, and this, some of this is because of the type of investor I am versus the type of investor he is. But the, you want to buy, in my mind, the best asset. You always want to buy the best asset that has access to some sort of secular tailwind. And so the secular tailwind might, you know, be a rising tide, everything does well. But I think it's pretty clear that there are better assets to get exposures to stablecoins and tokenization.

On the business side, it's very simple. If you're going to have another trillion dollar, $100 billion that need to be custodied, where are they going to be split? Around, across Coinbase, Anchorage, Fireblocks, BitGo, someone else. And if the answer to that is—

If you look at the ETFs, right? All of the ETFs use Coinbase. All of them.

That's right.

What do you think the sum of the parts where Coinbase is on the custody versus trade, like retail institutional? Like if you were to deal with some of the parts at Coinbase, how much of that value, $65 billion, is attached to their coin custody business? And can you actually untangle that? Because I would say a large part of their ability to win business on the custody side is because they do so many other things that BitGo is catching up to. But it hasn't been the— in people's minds, both retail and institutional, it just becomes an easier argument to say, hey, you're already trading here, why don't you just kind of deposit more assets here? And you can also earn, you know, for me, the funnel and the ability to convert customers is easier for someone like Coinbase relative to some of the other pure-play custody folks. And moving up upstream is a bit harder when you also have like legacy players moving in that have way more distribution. So I see very little defensibility on the business model on pure-play custody or, or majority custody business. I just don't think that— this is a commodity in my mind.

I don't disagree with you. Like, I, I, I 100% agree with you. It's, it's a core piece of infrastructure. It has to exist. They were one of the first ones to do it. They deserve all the credit in the world for that. And in terms of winning new business, they're, they're behind Coinbase today. And, and, but around the people who really, really care about security, user experience, they're behind Anchorage. So Anchorage is a smaller business today. Coinbase is a bigger business. So they kind of sit in between the two. I personally, I, my expectation is that from a custody alone, they're probably the smallest of the three in 2 years.

Here's what I'll say, don't bet against Belshi. That guy's like, he's just survived, persevered and survived. And like, there's so many times BitGo could have died and so many times that people are like, oh, they're like third, third place. They just persevere. And yeah, if they're not as big as Coinbase, yeah, probably not going to be as big as Coinbase, but like I don't know. I think that business will just do well. Um, let's move on. You guys see Polygon bought two companies, Coinme and Sequence. Um, I thought this was really interesting. Uh, very, very interesting. So this is, I think the first time that a chain is now using capital to make acquisitions. And I do wonder if we're going to start seeing this more and more. Um, so Polygon bought two companies, Coinme and Sequence. I think the, rough dollar amount was around $250 million. So pretty, pretty decent-sized acquisition. This gives them the ability to be a regulated— to have regulated money movement in 48 of the 50 states, fiat on and off ramps, 50,000 fiat-to-crypto locations in the US, easy onboarding with wallet infrastructure, one-click crypto transactions across many chains. They're calling it the Polygon Open Money Stack. Um, and I think there's two interesting takeaways here. One is One is that you have this general purpose chain basically deciding to go all in on one thing, which is payments. That's an interesting thing for me. And then the second is, yeah, using, you know, Santi, I think you've talked at length about like, what are these guys doing? Like all these protocols doing just sitting on these ridiculous treasuries and mismanaging their treasury capital. I don't actually hate this. You gotta find something to do with that capital. And I actually, I, I actually kind of like this strategy by Polygon, by picking a lane, trying to own a niche and using some of their, a lot, you know, a lot, they have a lot of capital using that to make some strategic acquisitions. But, uh, yeah, Santi, Rob, tell me what I'm missing here. What do you guys think?

I mean, I don't think you're missing anything. Like, listen, they, they, this might be the first time. That the public looks at Polygon, they're like, oh, they're really leaning into payments. But the reality is like they've basically decided other than Polymarket that payments is going to be their main focus for almost the last year, right? They launched Katana, I guess, in, in May, was it? And the idea was they could do like interoperability between very focused chains, like there would be a DeFi chain and a payments chain, et cetera. But they decided over a year ago that like Polygon was going to be focused on payments, right? And they've had this, you know, really deep kind of integration in places like India. They've got, um, flows happening in places like Latin America. They're doing a lot of the remittance flows from Revolut are happening on Polygon now. They've done really good BD there. And so this was a, somewhat of a coming out moment, I think. But it's been, you know, a year's worth of, or, or longer strategy to focus on this. And so they've been doing a, a really good job. And I think they looked at what, you know, the opportunities that, that Tempo and Arc and Codex and Plasma and all of these guys decided or, or saw, you know, a while ago over the last few years. And they thought, well, why couldn't we use our war chest to go and do this ourselves today? And so they get the MTLs in the US, they get the, the, the business, they are able to directly interface with these customers now, and they're able to drive flow to Polygon. There's a, I think, a very interesting question still about like what this means for the value of the token and how it drives value there. But in terms of building a sustainable business and one of the fastest growing areas of our space, I think it was a smart move. And I think it's a continuation of what they've been doing well.

Let's not forget that they hired the head of crypto at Stripe, Josh Egan, last year. So that was obviously—

John Egan.

John Egan, sorry, not Josh. So I think they're smart in recognizing that payments is like, there's a lot of efficiency there. And I, again, Polygon is one of those that does not get enough credit in the space. It's not in the inner circle of Ethereum cabal, but I even go back to their acquisition of Hermès way back, like zero, like they've been focusing on zero-knowledge proofs for quite a bit of time. And I have a lot of respect for them, to be honest. I would preface, maybe you don't count Ripple and what they did last year and the amount of acquisitions. That they've done as directly like a chain doing it, but I think Ripple probably is the first in my book, like in terms of how they—

Moned also acquired a business last year as well. So there's been a few others.

Yeah, like there's been some acquisitions. I think you're going to, I mean, I sort of called it last year, like it just makes no sense to not be using these treasuries to solve the biggest problem that we have, which is finding demand. I think the strategy of both Ripple and Polygon deserve a lot of, probably the sharpest Uh, to date. Um, so we'll see, uh, silence on the token and the value accrual there. Uh, but it's sitting at like $1.3 billion fully diluted. Uh, I wonder how they traded up a lot on the news, right?

Did it?

Yeah. Yeah. Yeah. Yeah. I think it's been doing quite well. Okay.

It's down today, but yeah, I guess. Yeah.

I think it, let's see.

Not really. I mean, maybe I'm seeing last 7 days. Last 7 days down 13%.

Polygon.

It's the— they announced it on the 13th and—

oh God.

Okay. Can you guys see this? It's the 5th best performing token on the year right now.

Yeah, but that is like we outperformed the market, but we're still down 40%.

Yeah, I mean, it's up 24% this year. Everything else is—

take it, we'll take it. I figured— I was figured on this topic. How's Figure doing, by the way?

Let's go back. Why were you long or short Figure?

No, it's one of those that like when, when I go to traditional events, it is—

so you're up 40% the last month, 100% in the last 6 months.

Yeah, it comes up in the conversation again. Talk about long If stablecoins were the hottest, the second hottest, or now the hottest is tokenization. It's everywhere, right? Figure, I think, again, you talk about not betting against Mike, like Belshi. I don't think it's—

against Cagney.

You shouldn't bet against Cagney. I think he has it. There's— he was— he's very— in his communication, you read the S-1, he's like forthcoming, like, hey, we probably didn't have the best strategy for provenance. But like I could tell you, I think they're very focused on like now that they found a wedge with HELOCs, what else they can do. So it's a company that I'm paying a lot of attention to. I don't have a position on it. It's just out of curiosity, you know, I think they're worth paying attention to.

We've got Mike, we've got Mike Cagney coming on the podcast soon, so we'll, we'll be sure to talk to him. Let's talk about— I want to shift gears. Farcaster got acquired. So Farcaster, Andreessen-backed company had raised like $150 million, maybe $180 million at a billion-dollar valuation. Very hyped up, exciting decentralized social platform. Um, they are selling to, I think, one of the applications that had built on top of Farcaster, the Farcaster protocol called Neymar, not to be confused with soccer player Neymar. Um, and, uh, yeah, I want to get— I just, yeah, I mean, many Many takes here, I think. I've got a lot of thoughts, but curious to hear how you just, when you guys saw this news come out, I mean, it comes in about a week after Aave parted ways or abandoned Lens and someone else, Mask Network, I think bought Lens. So it's kind of back to back. The two most promising, probably decentralized social experiments of the last couple of years are now shut down or have now been acquired. So what do you guys, what do you guys think about this?

Yeah, I read Dan's post. Was it an acquisition or was it some sort of weird transaction here?

I mean, look, Nainar raised $14 million, I think, and Forecaster's raised $180 million. So there's something, there's something going on.

How does the fish eat the whale here?

The Fish Ate the Whale. The Fish Ate the Whale.

Great book, by the way. I just, that's my content of the week. But anyway, uh, yeah, I don't know how they funded this or how it was like they folded some assets. Maybe it was some sort of tax structuring deal here for folks, but it just— yeah, if anyone has details, I don't.

But Rob, do you know?

Yeah, I don't, I don't know the details of the, how the transaction was structured. I mean, I, I, I think my only main takeaway here is like, you know, RIP Web3, you know, 2021 to to, to 2026, right? And now, you know, I think everyone's come to the understanding that blockchains, what blockchains are good at and what they're not good at. And, you know, what people, what allows for a better product and how do people build better product is on blockchains. It's probably not going to be social. Uh, it's probably going to be financial applications, capital markets.

Yeah.

Yep.

And so I think it's, or if it is social, it starts first with financialization and then you stem into maybe a little bit more social.

Well, yeah, like, like Polymarket is a social platform. People talk about Polymarket when they're on Polymarket, but it's, it's, you know, it's social with a financial aspect to it, right? The, I mean, the, the Farcaster guys, I think Dan announced, what was it, only 2 weeks ago that they were like going to focus on trading now, right? And so like they had already given up on it. And so I don't know if this deal was already in the works then. I would have assumed it was considering how close it was, but, but we're starting to see, you know, clearly. An understanding and a lot of consolidation around the ideas that people know are working.

Also comes at a time where crypto Twitter's dead. Yeah.

I mean, Nikita's trying to kill it. Public enemy number one.

Do you guys think, uh, do you guys think so decentralized social is dead? Like, would you, Rob, would you, would you even consider funding one of these? Santi, would you invest in it?

We have never funded decentralized social, uh, business because we've never believed in it. And, uh, I definitely am not changing my mind today. So, uh, listen, we fund really good entrepreneurs, so I never say never to anything. If what an entrepreneur came to me who I thought was incredible and said, hey, listen, I have an idea, it's kind of wacky, I want to do something in social, would I potentially fund it if I thought that entrepreneur was great? Sure. Uh, is that a category where I'm actively looking? To see deals and I want to talk to entrepreneurs building there? No.

I was talking to the other obvious category here is, so I was an investor in Lens, more so like, you know, relationship and a long time Ave, you know, supporter and whatnot. I sized it appropriately, I would say. I think the category is tough. Like gaming is an example. I was talking to someone the other day about it. Like, look, I made a number of investments in gaming. Some of them did phenomenally well, others that did not. The category as a whole has come down and it's a time where like it's grave dancing. It's like you should have never invested in this. I would say it pays to have an open mind. A, if the technology evolves, because prediction markets were like this, like in 2020, in 2019, 2018, like after Augur died and even Gnosis, like everyone was like discounting prediction markets and then Chain comes along. You needed to have like an unwavering founder, but also you needed to have stablecoins because without stablecoins, prediction markets don't work. You can't do betting without a stable unit of account. So it pays to re-underwrite the thesis under new environment. You could argue, is there going to be a new environment like a higher throughput blockchain or something? I don't really know if it's going to be a technological breakthrough, but gaming, for instance, it's like you have to, I think, tease out like, why is gaming not work? Like Axie. You could argue Axie was more like DeFi with a veneer of, of gaming, but it wasn't really fun to play. So therefore you can't call it a game. It's kind of like DeFi. It was like, it's like yield farming, like Yams, you know, that was, that was fucking fun. You didn't have to learn anything. You just had to click two buttons and you would be, you know, farming. Axie required a little bit more work. And so at some point I didn't have enough supply sinks. But also you have to consider like gaming as a category outside of Web3 is also in a really tough spot. Like the fast casual category is kind of dead. There's only very few games that like, look at Zynga stock crushed. Like unless you're like Grand Theft Auto, Call of Duty, and maybe one other two franchises, you basically incinerated money. It's kind of like movies, you know, unlike Rob, who's like investing in GoFundMe campaigns for movies. Most people don't make money on the category. So I want to like just, I think you got to contextualize it. I don't think social, like these, what do you call it? Decentralized social is dead. I think we got to probably rethink of how you get to a network, a social network. And I think the go-to-market just was failed, was broken, didn't work for a variety of reasons. You ran out of money. But I would probably take, be a bit more aggressive, which is I'm probably going to fund another centralized social application in the next 5 years. And I hope it kind of works because, you know, and it may be that it stems out of something that already exists, you know, but who knows?

Yeah. I mean, you shouldn't, at some point, some of these things will probably work just like a lot of the tokenization stuff is working now. But, you know, you guys remember all the 2017, 2018, 2019, like Ridiculous. I had basically written off— remember security tokens, STOs, and Harbor? If you guys remember Harbor, BitGo ended up buying Harbor. Yeah, it was just like a wasteland of company. And now it's the hottest thing. Now it's the reason BitGo is going public.

So also, I mean, forget about decentralized social. Social as a category is also really hard, like gaming. Like it's—

remember Vine? Did you guys ever use Vine?

Yeah.

Yeah.

Of course. Remember if you, if you wrote off short-form video after Vine kind of had like a failed exit, uh, you know, then you don't get TikTok. Yeah, exactly.

Yeah.

Yeah. It sucks. All right, folks. Um, anything else that, any other news we missed? Uh, New York Stock Exchange launched their tokenized platform. Uh, Gusto. We, we actually used to use Gusto. HR platform. They're rolling out stablecoin payments. Deal did the same. Um, I thought Interactive Brokers had some interesting comments around prediction markets. Robbie mentioned that Bermuda is fully moving on-chain with Coinbase and Circle, trying to become the first, uh, place for first fully on-chain national economy. I thought that was interesting. Both Larry Fink and Trump mentioned crypto at the, uh, World Economic Forum.

So, uh, the Bermuda—

Larry Finks, Larry Finks. Comments were incredible. Did you—

Eric's comments were amazing. Rob, do you want— yeah, I don't know if you have the tweet pulled or his talk pulled up, but, uh, I don't. He said— I can try to find it quickly.

I mean, he essentially said that every single country on Earth should be focused on bringing all assets on blockchains, coordinating across a single blockchain. Tokenization, stablecoins. He was basically saying right now the, you know, largest economies in the world are trailing Brazil and India, and this is a— should be a national priority for all of us here at the World Economic Forum because it'll make it— it'll create GDP, it'll make it easier for us to, you know, trade cross-border, it'll reduce the amount of, you know, inefficiency that exists in the market. and it allows for less fraud, allows for, you know, less, uh, waste essentially. And he was like, everybody should be doing this. It should be, you know, what you're focused on right now. And, and for him to go up there at the World Economic Forum and say that so explicitly, I just, it still feels like people do not understand the gravity of what is happening in that part of the market just because, you know, whatever, some meme coins not going up 100x.

2 years ago that would have been taboo. Now it's surreal. Like, it's just the largest financial company in the world doing that, right? Or one of the largest.

Yeah.

Crazy.

Yeah. Good place to end it with hope.

Content of the week, Santi, you've got— you're talking Bananas. I know that book, dude.

So I'm going to pivot, guys. I'm going to go Bananas are fantastic businesses. I mean, my God, I've been surprised. They grow extremely quickly. They grow so fast that they make noise in the middle of the night and they produce year round. It's a crop that is incredibly— the yield is very high.

So anyways, people should go read this book, but they spoil too quickly and that means there's opportunity. And with Samuel, what's his name? Zamorai or something.

Zamorai.

Oh, I think it's one of the best. It's like that and Shoe Dog are like two of the best entrepreneurial books of all time.

100%. People should go read it. It's The Fish That Ate the Whale, how this guy basically built a banana empire. I really enjoy the book. Again, I'm mostly off social media these days. I'm just reading old school books. History does not repeat itself, but it definitely rhymes. It's just a great, a great story about just finding a com— it checks a lot of the boxes. It's a commodity industry. It's tough, but a guy building incredible value on like building a better supply chain for, for obviously a perishable good. So anyways, great book.

He would— a quick preview of it for people who haven't listened is banana companies at the time would, when bananas would spoil, because they grow really quickly but they also spoil quickly and they get too ripe, so he would take the ones that were about to be too ripe and he'd take them and then go resell them. And he started this whole banana empire and he, he ended up what, overthrowing the government of Uh, Nicar— was it Nicaragua? It was Nicaragua.

He just, yeah, I mean, this, this, he's kind of was the guy that like coined banana countries and like the US, the CIA got him all. It's the, the US and crazy story. Crazy story. Yeah, it's pretty, pretty awesome story.

Rob, what do you got for us?

So I, I just wanna preface this. Uh, today's actually a big day, which I think you guys don't realize. This is a really important day for me. Uh, today was Oscar noms day. So all of the Oscar noms came out this morning and I, I hold a big Oscars party every year. I, I really enjoy the Oscars.

Thank you for the invite. Yeah.

Well, I just haven't gone out yet.

Look at my spam folder.

Thank you for the invite.

They're not till March 15th. So, you know, check it out. Maybe, maybe you'll get invited if you are nicer to me on the next pod. But, but, uh, on the, I'm going to call out an older movie. Because I don't know if anyone here has seen Sinners. It came out like last February, but it shattered the record for the most Oscar nominations ever.

Wow.

And it's, um, you know, it's a movie. Uh, Michael B. Jordan's in it. There he plays kind of these twin brothers who are— I think it's supposed to be set in the '20s, and they come back to, you know, their hometown in the South from Chicago, and they try to set up kind of a um, like a dance hall, you know, kind of bar area during the Prohibition era. And they, um, uh, it's like an action movie. There's, you know, I won't spoil it if you haven't seen it. A really good movie. For that type of movie to like shatter like Titanic for the amount of Oscar nominations, got 16, um, it's actually crazy.

I want to be nostalgic about old movies, but is there this phenomenon that appealed It's always like, is music not getting better? And you're nostalgic about Avicii and like nothing ever came close to Avicii. Like, does every— like, as we grow older, do we grow nostalgic?

Or—

and we have an opinion that like new content is just not as good? Or is the voting just gone wrong? Where like, do you actually think it's better?

Is Dinner better than Titanic?

You know, I actually rewatched Titanic on an airplane recently. I hadn't seen it in a while. Titanic is still good. No, no, I didn't cry. But I— every time I watch Titanic, I look at the end and I'm like, why didn't she like try to make room for him on the door? Like, why did she let him stay in the water? Like, what is happening? But, uh, no, Titanic is still great. It's still a very good movie. Uh, James Cameron, shout out. Like, nobody has made more money, and by like multiples, than he has in, uh, in Hollywood. But I— listen, I really like Sinners. I did not think it would do this. I mean, also Formula 1, the F1, the movie got a Best Picture nom, which I also really enjoyed.

That's a horrible— that's a horrible— that's— that was a trash—

it did get a— it got a Best Picture nom.

That was a trash— that was a trash picture. That was a trash film.

Discussion resolved. The committee and the nominations are— there's no—

this is my point. There was a lot of kind of weird stuff relative to what the Academy was like previously that's been happening. And so I think it'll be an interesting Oscars. I'm— I think we'll see, you know, at the Grammys— or was it the Grammys or was it the Golden Globes? We saw Polly Market predictions, uh, at Golden Globes. Hopefully we see them at the Oscars too. Um, so that's my, my content of the week is go watch Sinner's historic, uh, Oscar nomination, 16 of them. It's great.

Who did you see? Uh, Marty Supreme.

I did. I, um, Or did we talk about this two episodes ago? Yeah, yeah, we might. No, I don't think we did because I saw it and I expected to like it a lot, and then I just could not like a single character. Every character in that movie is, uh, just a terrible person and like completely unlikable. And because of that, I just couldn't— I just, I just thought it wasn't as believable as— and I didn't relate to it as much as I would have liked.

Interesting. Isn't, uh, Kevin O'Leary in it? You didn't like Kevin?

You know, this is good for Kevin. He's got, you know, multiple sources of income. You know, he is trying to, I think maybe things are tough in, in, uh, in Mr. Wonderful land.

So yeah, maybe not so wonderful.

Oh, you're gonna get people to shout at you across the table on dinners. All right. So this is our cue to start that.

Yeah. I've got a podcast, Toby, on, uh, David Senra. Amazing episode. Um, I will, yeah. Amazing episode. There's also a podcast called Step Change. Which is, uh, they do these like 4-hour deep dives. It's, it's, uh, in the same way, I don't know if you guys like Acquired, but in the same way that Acquired does these like huge deep dives into companies, they do huge deep dives into industries and sectors. So they did one on coal. I realized I knew very little about coal. It's like 5 hours on coal, the whole history of coal. Thought that was good. And then there's one on data centers that they came out with a couple months ago that I've heard is fantastic. It's, uh, looking at it now, 4 and a half hours on data centers. So, wow. Good stuff. All right, folks. Good chatting. We have really good episodes coming out. We just dropped, uh, we did one with the Leiter founder, Vlad. Um, we've got Rain. Uh, oh, we actually have 3 coming out. I forgot I'm recording with Belshi tomorrow. So we've got Belshi coming out on Monday.

Uh, ask him about my opinion. See what he says.

I was gonna say, hopefully he doesn't listen to you.

All starts making a whole lot of sense now.

I was gonna say, hopefully he doesn't, uh, hopefully he doesn't listen to this episode. So we've got Belshee coming out on Monday. Then we've got the founder of Rain, um, who Rob has been mentioning many times, really hot, one of the fastest growing probably fintechs in the world right now. Unbelievable conversation with their CTO. Um, and then we've got a really good episode on vaults with, uh, uh, two, yeah, two, two, probably two of the best people to talk vaults. So very excited about that. Listen on Monday and we'll see you next week for the Friday Roundup. All right.

Thanks, guys. Cheers, folks.

Thanks, guys.