Finding Alpha In Crypto, Mamdani Wins & The AI Gold Rush | Weekly Roundup

I went to the Liquid Fund dinner thing last night and it was like I have never seen a more distraught group. I shouldn't say this because good, good people and I'm sure some of them listen to this. People have no clue what is going on in this market. Guy to my right dumped everything. He's out the whole market. He's out. Guy to my left just levered long. Market's down 25%, levered long. Guy across from me, He's raising for a DApp. Guy— the other guy across from me closed all of his DApp, isn't allocating to it. Like, I've never seen more dispersion between investors in the cycle, which is great. It means a lot of money will be made. Yeah, but it's like there's, there's really no consensus trade right now. This episode is brought to you by Zcash. You'll hear more about them later in today's episode. 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. All right, everyone, welcome back to the Roundup. We are— we booted Rob for the day, so we got Rob out of here. After, you know, a lot of— Rob's been talking about how people really like him. We're hearing different things on the show. We, we hear that people don't like Rob, actually. So we've replaced him today with Pranav from VanEck. So Pranav, welcome to the Roundup.

Very high chance people like me less, so still try it though.

Oh, I don't know about that.

It all depends on what you're going to say, because everything we're going to talk about for the next 45 to an hour is, uh, state of the markets, if you're bullish or bearish And whether you get invited back or not will strictly depend on your answer here.

Yeah, exactly. Or maybe Santiago just gets booted after this haircut. What do we have going on here, Santiago?

Oh man, you ruined it. I was going to say my favorite movie in the past 10 years, one of my favorite movies is The Big Short. And there is a scene where Michael Burry is meeting someone and he is, I like your haircut. Did you cut it yourself?

The whole episode.

I like that, guys.

Listen, the good thing is next week my hair grows fast enough, so, uh, this will not be an issue next week. But I was in New York and, um, you know, you know, the haircut's bad when people notice. And I've got now 3 people that have told me that I've gotten a haircut.

It was terrible.

This is really just a big way to get more people to watch us on YouTube, drive the listeners into YouTube, you know.

So self-deprecating is always a good strategy, you know? So yeah.

So Pranav, how you been, man? It's been a while since you were on Empire.

Good.

Um, I was actually meeting someone who's in town for, I guess, the Ripple conference. And this person was like, I haven't seen you at a lot of the crypto conferences this year. And I'm like, you know, uh, in our, in our fund, especially our strategy, we're kind of like evolving our thesis a little bit and trying to see where the world is going. And I just don't think you're going to find it at the crypto conferences. I know you run a great conference, but. I don't think, at least in my opinion, you're going to find alpha at those conferences anymore. So trying to do something else.

So where do you find alpha, just out of curiosity?

Yeah, so we've been thinking about this a lot. It really started with maybe post-election, which was we said, OK, the first thing that was going to happen in the world of crypto was legislation around stablecoins. And everyone is obviously going to gravitate towards the most obvious winners, which are the stablecoin issuers. But we said, OK, well, the real winners economically are likely going to be the ones that use stablecoins the most. And where if you look at their cost structure, they have a great underlying business, and then interchange is a big part of the cost structure. And to the extent they can really push stables through that cost structure, these things will see margin expansion and grow. So our fund can do a lot of things in public equities as well as tokens. We're kind of agnostic to the underlying instrument. So we made some bets around that, which are winners of stablecoin adoption and That has more or less started to play out pretty well for us in some of the bets we made. And so then the question we then ask is, okay, what's next, right? So the next thing is obviously Clarity Act. And even with that Clarity Act, you might get this innovation exemption, hopefully, from the SEC. And all that really means to me is that kind of the Web2 fintech world can start to really engage with crypto or things that are on blockchains. And obviously everyone's excited about tokenization and all these things. But the big unlock, in my opinion, is really going to be when great businesses can start to tokenize their stock, especially if they're kind of B2C, and they can then use that tokenized equity instrument to really grow that underlying business in ways they couldn't have. So I look at it as like a quasi new customer acquisition lever for people.

So can you, Pranav, can you explain that actually? Can you go one level deeper there? So by tokenizing your equity, you can do things that you couldn't have otherwise done. Maybe go one layer deeper there. What does that mean?

Yeah, so, so I'll give like a really kind of dumb example of what's possible, right? And then we can kind of look at every company and say, why, what could these companies do? Um, so we've all probably gone to Starbucks. I go to Starbucks every day. Um, I get a coffee and my coffee prices have gone up. Uh, Starbucks has a ton of competition. Just pull up a chart of Starbucks equity and you'll see that company isn't doing really well. Everyone's now saying Luckin Coffee might be disrupting Starbucks cuz I guess you did a bunch of Luckin Coffees opening up in New York. So long story short, Starbucks is like an interesting business, a lot of of mobile app users, which is kind of like a mobile wallet, um, but maybe losing market share, uh, maybe stagnating as a business. And one of the things I think could be interesting for them is, you know, whenever I buy coffee, I get stars and rewards, and then I have to then get a free coffee eventually with the stars and rewards. And then I essentially ask, okay, one way to maybe revive that business model is by starting— is, is by essentially Instead of giving people stars and rewards, maybe you can start giving people stock. Well, in the current way stocks are traded, it's very hard to do something like that where you programmatically, based on a set of rules, give people equity, customers equity for being a customer, a loyal user, referring users, all these types of things. Your typical business, especially if it's B2C, generates revenue a certain way and then does sales and marketing a very specific way, which could be mostly digital, taking Facebook, Google, whatever ads. And then has some weird loyalty program that kind of is baked into that marketing and sales and marketing kind of business model. I essentially think if companies are able to tokenize their equity and if the regulatory framework is there such that these companies can programmatically give people ownership in the underlying thing for being loyal users, that might be a better closed-loop mechanism to drive a business. Again, I'm just giving you one through this kind of Starbucks example to make it clear.

There's actually a podcast I reference all the time, which was a very formative podcast for me thinking about the world, which is, um, or at least crypto, which was Marco Santori. If you remember Marco Santori, lawyer, him and, um, uh, this other one, I think it was Josh Clayman, uh, who was a, yeah, also, also a lawyer. She's also a lawyer in crypto. It was, she was, uh, they did an episode with Laura Shin back in like 2017 and they were talking about this idea of, hey, imagine they use Nike instead of Starbucks. Imagine Nike drop shoes but instead of, hey, the first 50 people to get on the waitlist get the shoes, it's shareholders of Nike. Well, right now those are two totally disconnected worlds, um, but one day you can connect them.

So yeah, totally. I, I think there's many other angles to kind of look at too, right? Which is, if you talk to most public company CEOs who, who kind of, you know, understand markets and things like that, the smart ones will say, I wish I can really have a big retail audience that follows me, right? Everyone's seen what Elon has successfully done, and everyone wants to sort of build a retail following. Why? Because Historically, money made its way into equity markets through a set of intermediaries. You had a financial advisor channel, or you had a hedge fund you would allocate to, or you'd buy some mutual fund, ETF, whatever, and you would make your way into the markets through those sort of venues. Increasingly, the younger generations, millennials, Gen Z, they like to directly allocate to companies they like. So they load up a brokerage account, and they buy the stocks they like, right? So the holy grail for most public companies, in my opinion, is to get a retail following because that means a lower cost of capital. What's a great way to get a retail following, especially for a B2C company? Well, make them owners of your thing, like for being users of your product.

Totally. I'm actually reading Andrew Ross Sorkin's book 1929 right now. Have you— I don't know if you guys have seen this, but I started. Yeah, I'm like 3 chapters in or something. And they just started talking about this guy, Charles Mitchell, who was like an American banker. He ran First National. First National City Bank, whatever it's called, which became Citi. And he's widely regarded as like his securities policies are basically like very risky securities policies led to this, the speculation which caused the crash of 1929 and the Great Depression. And one of the things that he did is he made it— he basically privatized shares of the bank and made it so that the only way to buy and sell the shares were if you talk to salespeople at his bank, right? So instead of trading publicly, it was so his sales guys would go around to their customers and be like, hey, you should take a loan out, you should get a mortgage with us, all the normal things, and you should buy our stock. Um, yeah. And so it'll be interesting to see what happens if like, yeah, I don't know, your sales— imagine Salesforce had to like, I don't know, imagine Salesforce salespeople were selling the CRM and selling the Salesforce stock.

So yeah, I think it's going to be harder for B2B because it's less of a relevant factor, right? Yeah. B2C is kind of like where I think the unlock could be. So anyways, back to where I think things are kind of going and where it's interesting to spend some time. We laid the case that half of all US companies, public companies, are tech companies, and a third of the S&P is tech. A lot of them are B2C. Most things happening around AI today is also B2C. And to the extent these companies are able to tokenize their stock, perhaps they can grow differently or grow faster. And I would rather sort of focus on those companies to maybe look to invest in those things than token number 25 or 30 or whatever. Yeah.

Let's shift gears a little bit. I want to— we're all— Santosh, I don't know if you're still in New York, but we're either all in New York or you were at one point in New York semi-recently.

West Coast.

West Coast. Nice. What's going on on the West Coast?

A lot. Elections are not as dicey as in New York.

Santi's like, if Ronny wins, I'm never stepping foot in New York again. I'm moving to Palm Beach.

Not a bad area, but you could have seen Polymarket last week and you would have been right. So again, it was great tweet by Shane. I think it was Josh Wolfe, who's been on this podcast. Much respect for Josh, who's a great investor, but he was being a bit critical of Polymarket and Prediction Markets. But again, Polymarket called the election, I think, was right across all 5 counts, particularly in New York, which is— we should talk about that. Are you guys, are you guys going to move over to the West Coast?

Just so— so were the polls. The polls were right too. It was just that Josh said that there are big foreign buyers, like, you know, tipping the skit, which is—

that's right. Josh seemed to insinuate that there was market manipulation and like foreign, like Russia and China interfered with the market. And it's like, let's—

if you guys are game. Let's talk about—

dude, just for a second on that, like, yeah, in either prediction market platform, you know, for these election markets, you tried to buy more than a certain amount, you would meaningfully move the price because the order books aren't that liquid, you know, because like most market makers, like traditional market makers, like to provide deep liquidity when you can hedge that risk away. And in, let's say, non-sports markets and these things, you can't actually hedge that risk away, right?

No, but that's what he was saying happened. He was saying you a small amount on Momdani made it so that Momdani was sitting at 95%, which then dissuades people to vote for Cuomo.

I would take the other side, which is if, like, the Momdani market was completely, completely mispriced for some reason because someone was messing around with it, like someone else, like they're rational enough actors out there that will take advantage of that because, you know, so my point is like, yeah, I can make this either way.

Yeah, that's why he was wrong. Yeah. All right. So Momdani won, obviously. He got— he got 1 million votes, about 50% of the votes. Cuomo got 42% of the votes, 850K. And then Curtis Sliwa, the Republican, got 150,000 votes, 7%. I love that there's 150,000 New Yorkers voting for Curtis Sliwa. What are you guys doing? Anyways, Purnav, I would love to just as a— as a person who lives in New York, like, you know, you don't have to say like who you voted for or anything like that, but just would love to get your general take on Mom Donnie winning, if you're comfortable to go there.

Yeah, no, I won't make any political kind of statements. I, um, just, I observe and I kind of like, let's just say from what I see from the observation. So there was an Atlas poll out over the weekend that I think was like on social. I was going through it and one of the questions that kind of was interesting was, you know, what are the issues that people are most, people most care about in New York City? And the top 3 were like inflation, cost of living, crime, and housing affordability. Right. And, uh, I know we were just talking about this, you know, before the pod started, but we're talking about that old Peter Thiel email that's, that's being circulated now on social media, that the Peter Thiel email to Zuck, which basically explained why, um, yeah, there we go. That one. Right.

Um, maybe let me read it for now for, for people who are listening on, um, like Apple and Spotify and stuff like that and can't see it on YouTube. So Peter Thiel, there's a Peter Thiel email to Zuckerberg, Nick Clegg, Antonio Lucio, Sheryl Sandberg, and Mark Andreessen. January 2020, subject line is Millennials. Says Nick, I certainly would not suggest that our policy should be to embrace millennial attitudes unreflectively. I would be the last person to advocate for socialism. But when 70% of millennials say they're pro-socialist, we need to do better than simply dismiss them by saying they're stupid or entitled or brainwashed. We should try and understand why. And from the perspective of a broken generational compact, There seems to be a pretty straightforward answer to me, namely that when one has too much student debt or if housing is too unaffordable, then one will have negative capital for a long time and/or find it hard to start accumulating capital in the form of real estate. And if no, and if one has no stake in the capitalist system, then one may well turn against it. So yeah.

And I think my, my sort of common thread between the election and this email was sort of this observation that the younger folks who have a lot of student debt and can't afford to pay for a nice apartment and kind of are living paycheck to paycheck and whatnot have maybe two outlets. One is go vote a certain way, and the other outlet is gamble your way out of your situation, right? And then gambling can take form in the form of prediction markets. Used to be tokens, used to be meme coins. Now it seems to be potentially in AI equities, right? So there's always sort of this gambling energy that's coming from the younger people. And so my market observation is when I think about where are the best trades, when I look into the future, it's really around finding situations and narratives that potentially have good fundamentals but are about to get that retail attention. And that's what's going to drive flows because there is that really high level of leverage energy that wants to get into these types of situations.

There's a, um, there's a similar tweet that Naval, um, posted yesterday, I believe, and he said, um, it's not the politicians, it's voters, and says, importer— importing voters is a loophole in democracy. And the last one, it just tied to this, says, I fear the day when the majority of voters don't have children. I think about that a lot. I think you could have diagnosed this phenomenon. Purnav, you and I privately have spoken about like, okay, if you're an investor and you look at this rise of socialism, how do you translate that into expressing an investment thesis? I think that's perhaps a more relevant discussion for this podcast because we're not a political podcast. I don't want to get into the politics of why he got elected. It's more of what do you do with that? How do you express a thesis? Um, that's sort of what I was thinking about. Okay. It's like, what are the sectors that are going to do well if this, if this microcosm of New York is a pretty big hub, if that is true for the rest of the country or in the world, what are the sectors that do well under this regime? What are the sectors that definitely don't do well? There's another tweet that said, gosh, I think it's Rex Capital. It's a bit unhinged account. I said, uh, I can't believe they elected a terrorist communist in New York and Bitcoin's not at like a million dollars. Interesting take, a bit taken to the extreme, but you know, yeah, again, maybe the first question is, does this make you incrementally more bullish or bearish on an asset like Bitcoin? And then what about stocks and other sectors of the economy, of the market?

Yeah, I think There have always been these geopolitical events that happen and people are like, this is bullish crypto, right? I don't know if that's always the knee-jerk reaction. It's like, COVID is happening. This is bullish crypto. And it was. Yeah, I guess it's just all about time, right? Like February of 2020, nobody wants to go buy crypto when there's a lockdown coming. But I think one knee-jerk reaction might be this is potentially bullish things around privacy and crypto. Because, you know, um, there might be a cohort of people that think that they want to have assets in self-custody that, um, they can also have privacy with.

Oh, I don't know.

My case would be that, uh, people are very disillusioned with the system and that they've— there's people are really losing faith in capitalism. And part of the, uh, the backbone of capitalism is Uh, slow and it's kind of like slow and steady, like S&P, you know, goes up 7 to 8% a year. If you just put your money in both, in two things, real estate and the S&P, then you'll, you'll be fine. And clearly there's, um, A, people can't access the money to get into real estate and B, uh, you don't have the, people don't feel like the 7 to 8% gains a year in the S&P are enough money. So the things that I think, like to answer Santi's question, in my opinion, it's like fast money. Like, clearly society wants fast money, perps, gambling. Like, I don't actually think this, like, financialization of everything is good for society necessarily, but I do think it's going to play out because people just— people want the 100x. They'd rather— they'd rather have the 1 in 200 shot of getting 100x, which is bad odds, but they'd still rather go for that than just put their money in the market. And get 7%.

Let me, let me maybe say, I think we're all kind of maybe saying the same thing. So, so, um, Howard Lindzon, who's I think pretty good, you know, VC, has a thesis which is he kind of wants to invest at two tails of the market. One is what he calls the luxury economy, the one that's like the degenerate economy, right? So you can take the same framework here, which is, okay, this election happens, what does the luxury economy do? The people that live, you know, live well, that have wealth, you know, they look at this and say what could come in 2028? Could you get a socialist president? You get a socialist president, you get, I don't know, a Bernie Sanders equivalent who wants to do a billionaire wealth tax, those types of things, then that market might want assets that are privacy preserving. So that's one angle. And you're kind of pointing to the degen economy, which is— that's been there. It's going to continue to persist, which is people want to express their dissatisfaction with the system by gambling out of their kind of situation. Yeah, yeah.

Um, speaking of, uh, I mean, anything else on Mondani or this kind of stuff?

So just in summary, Pranav, you both are saying, look, this, this with the Peter Thiel commentary is markets on everything. That's bullish because people will always want to gamble, um, to get out of their situation because this, this is, uh, this election highlights the dissatisfaction with the establishment, whatever the current regime is, you hate it because your situation has not improved over the last 3 or 4 years. So you're going to vote for something that represents the opposite, whether without thinking much of is this person actually going to help? It's just I'm so dissatisfied because over the last 4 years my wage hasn't gone up, inflation's gone up, my situation is not improving. I see all this wealth inequality and like engineers that are making $1 billion and I am actually can't go to Whole Foods or whatever, like the supermarket. And I'm feeling the pinch. And so that naturally translates into deep dissatisfaction with whoever the current elected official is. But you're always going to go and gamble and take the 100x, 50x perp because I'll just roll the dice and hopefully get out of this rut.

Right. And I think maybe to add to that, AI is going to make this problem potentially way worse because this is a young people problem today, right? The 20-year-olds and 30-year-olds especially. Feel like they are worse off as a generation versus their parents.

But emphasis on feel worse off, but not— Is that more of a social phenomenon of social media and your perception? Because the comparison is so much in your face, but the reality is I think there's a great book, The Better Part of the— which I forget the name of the book, but it talks about objectively the world is a safer place. You know, like technology has been disinflationary, it's abundant. Like our condition is actually way better than our prior generation. So you shouldn't actually feel dissatisfied, but because you're comparing yourself constantly with people, you just feel miserable and you feel like you're actually worse off.

I think it could be both. I mean, there's like sort of like, I've seen some data around, you know, homeownership as an example, right? Because homeownership is used to be viewed as sort of the, you know, the thing that you should aspire for. And like the prior generation probably bought homes at a younger age than the current generation is. And maybe that's like shifts in behavior. People would rather rent and go to Coachella than, you know, um, buy a home. But yeah, it could be both, right? Social media making you feel like you're always kind of behind, and but also that people don't feel the upward mobility because that's what people want. They don't want to stagnate in some ways. Do you guys—

you guys are American, but maybe just round out this discussion. Do you feel like the American dream is alive and well today, or has that been not as alive as it was 50 years ago?

What do you think, Jana? You're younger.

I mean, I don't think it is. I mean, isn't it— what's the American dream? American dream is a white picket fence, a home, and you know, 2 kids and a nice family, right? And you can't get that anymore. For most people in America, you can't get that anymore. It's very hard, right? Like, it's very hard to have to— I mean, you definitely cannot buy a home. Like, then the data shows that. And even having kids, like, I mean, I don't know if Pranav sees this, but like, at least my friend group in New York, like, I'm, you know, I'm around the age when people are starting to have kids. I think when my parents were our age, it was very normal for people to have 3 or 4 kids. Now, like, if you, if you have 3 or 4 kids, like, if it definitely, if you have 4 kids, that is like, you are rich. Like, that is a luxury. Like, it is a luxury to have 4 kids. It is like a status symbol. And it didn't used to be that way. Now it's like, I have a lot of friends who are like, I'm just going to have 1 kid, or maybe I'll just, I'll stop at 2. And that's a money thing.

So, but you know, you're, most of your friends cluster in the, in New York area.

Yeah, that's the, that's the counter is that, uh, I'm where I'm in New York and San Francisco, which are, which are such money-focused areas that people obsess over money so much that it actually inhibits them from, like, whereas, you know, I have friends in like, uh, middle of the country too. Um, like I have a, I have a friend in, um, in, uh, kind of outskirts of Ohio and that dude's going to pump out like 6 kids and he's not thinking about it. He's not thinking about it.

And so I think there's a couple of theories I have. One is like home ownership and like the willingness to have a family is alive and well. You actually can. I think the American dream is very alive. I personally was a benefactor of the American dream. I went to college in the US. I got a scholarship from JP Morgan. I worked my tail off there, and then I ended up doing other things after that. And that to me is alive and well. You talk about immigration, you talk about visas that on the margin are a bit more difficult, but I think America continues to be the best place in the world because you have upward mobility like no other place in the world, and you have this cultural willingness to take risk without being totally detrimental if you fail. That is not true in Japan. That is not true in Europe. That has not innovated over the last 100 years. That is not true where I grew up in Mexico. So that willingness to take risk is why people immigrate to the United States and decide to build their companies there. And I do think like this, I mean, JD Vance, Your current vice president has a great book. Go read it and talks about this idea. I think people just have now this sense of entitlement, which is social media for better or for worse. People are willing to— they feel that they deserve to have the vacation in Europe and they feel that they deserve luxuries that is like, no, dude, go fucking work hard. And maybe, maybe, and it's not just working hard. There is luck in a lot of these things, right? I'm not trying to be harsh or anything, but I do think that there's this prior generation. The biggest problem with our generation is this lack of committal. We're non-committal. We're always trying to optimize, but we're not willing to commit. You're not willing to commit on a partner. You're not willing to commit to have a family. You're not willing to commit to settle down because there's always the elusive, can it be better on the other side? So I think that phenomenon has been pretty detrimental to our current generation versus our parents.

So let me ask you guys a different question because I guess people are hoping to hear about crypto. But you asked the American dream.

Not passing the bar so far.

You asked about the American dream. You guys have been in crypto for a long time. Is the crypto dream still alive? And I'll frame it this way. So I've more or less kind of been in the space-ish since 2017. And it always felt like crypto had this great call option, like a lot of promise that was underpriced and a variety of catalysts in the horizon that could price it appropriately if everything starts to deliver. And until last election, the thing that was the catalyst was like regulatory clarity, right? So we're like call option on something great and clarity equals everything's going to be great. As we see here today, is that dream alive or was the option always mispriced?

For the first time in crypto's history, there are now two factions. There are, there have always been two factions. And for the first time in history, those factions have completely switched on how they'd answer that question, Pranav. So 2009 until 2025, uh, you had institutional traditional people and crypto cypherpunks and things like that. And we, we know how they would answer that, right? 2025 happens, we get regulation, this year happens. I think if you ask most people in crypto Twitter, is the dream still alive? They would say no. And I think if you ask the Collison brothers at Stripe and you ask the executives and you ask policymakers, is the crypto dream alive? They would say absolutely. It's actually never looked brighter for crypto. And that's why this is such an interesting year. And that's why I'm actually extremely excited about next year. And I mean, the next decade for crypto is because, uh, if you can just close down crypto Twitter, it's, it's— there's never been a more exciting time for crypto. And I know it doesn't feel that way. Prices are down. It's a shitty week.

I think I was, I was going to agree with this. Kind of goes back to what I was saying with where our fund is focused, which is perhaps the dream is alive, but it's not on CoinMarketCap's top 100. It's somewhere else, right?

It's on Blockwork. I mean, Pronov, you and I share this and we've had this conversation. I think the more value is going to be created in crypto, not necessarily in tokens, not necessarily in your infra play, but more so on companies that are using this. And you've spent a lot of time in the public markets. Companies like MercadoLibre, companies like Nubank, companies like Robinhood and BlackRock and JP Morgan, companies that have distribution. In the same way that people are excited about AI. Uh, again, question you have, would you rather invest $100 million in an AI startup and a basket of startups, or would you rather invest in maybe, uh, Google or a Tesla or companies that are going to utilize AI? And I appreciate like the name is the public names have all have different components, right? You've been a very big bull on Tesla in your private book, but I'm curious. What I'm trying to say is, do you think— pick today, would you rather invest in the top 5 crypto coins of your flavor or a public basket of companies that are going to utilize and become crypto-enabled?

I'm definitely in that latter camp, right? Find great businesses that have a great CEO founder that's you know, very focused on continually optimizing their business and then who can naturally use this technology to accelerate what they're doing. So like, there's a wrong way to do it. There's a right way to do it. If I keep it simple, right? The, the, the luxury brands in the last cycle that were like, okay, how do I do an NFT thing? Because it seems like, you know, everyone's doing NFTs. Like, that was the wrong way to do this stuff. And then the right way to do it is, you know, exactly what Jano said, which is, you know, what the Collison brothers are doing. Which is they understand this technology and understand their business and where that's going, and they understand how they can leverage pieces of the stack to just accelerate their thing. And so I'm very much in the camp of let's find those things. Um, you know, I think so we've been up and running now for 3.5 years, and I think, you know, the fund's done pretty well. And, you know, I'm not allowed to talk about returns and whatnot, but I look at sort of our annualized return, uh, since we launched, and I've set that as our hurdle, which is Any idea that I put in our book, I have to believe it's going to compound at least at that pace, if not better. Um, and when you look at tokens through that lens, when you look at these big companies through that lens, I think the world gets smaller and smaller. So you'll end up with like a more concentrated book of what you think are the winners.

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Let me ask you a couple series of questions. You tell me what you prefer, yes or no. Ethereum, $500 billion asset. PayPal, $65 billion. Which one? By the way, you can only hold for the next 5 years.

What?

My compliance people will tell me I can't comment on individual assets that way. I would just say most layer-1 blockchain tokens have valuations that make no sense to me, like relative to what they're going to earn in economics in the future, especially looking at what people with distribution like a Stripe are doing. It just makes no sense why these assets are valued where they are. Now, you ask a crypto person why they think it's valued there, they'll be like, well, there's a store of value element. I'm like, dude, nobody thinks about this thing as store of values.

So, so again, do you think— again, the question, Jano and I, you, you would refer to, say, 5 years ago saying, hey, the top 10 in crypto is going to totally change. But we're in a state of the world where Ripple just raised at a $40 billion valuation equity, uh, XRP trades at $150 billion, Ethereum trades at $500 billion, Solana is $100 billion. Um, do you think that people are doing the fundamental analysis? Do you think that, that will continue to be— these things are going to trade on some sort of cash flowing basis, or are people just gonna buy these things because they are going back to why people like to express their political views, because for them it's like a levered NASDAQ. I'm like, fuck, I'm going to roll the dice on this token.

It's an interesting question, right? So let's ask the question differently. So since, I don't know, pick a time frame, since 2022, pick a basket of your 10 favorite tech companies and then pick a basket of your top 10 L1s. My guess is those 10 tech companies' equities have just massively outperformed your basket of 10 L1s. Again, in like the last couple of years.

Highly subjective on like quite literally the month that you—

Right. If you picked from the bottom of December '22, maybe not, right?

On a risk-adjusted basis, 100%. Yeah.

So I'm less focused on whether people will own an L1 token for a variety of reasons. YOLO gamble, whatever. And I'm more focused on are there— what's the best asset to own from a compounding your capital perspective? And it's, in my opinion, not the L1 tokens.

No, I mean, is it any crypto tokens though, Pranav? Because you're just specifically talking about, like, if you say tech stocks are going to do well, well, are there—

is there a basket of crypto tokens that you think will outperform Yeah, I think when I look at the space today, I can probably name 2 or 3. Again, I'm not going to name it here because it's not worth it, but I could always find 2 or 3 that I think will perform better than most of my equities in my book, but it's very, very few.

Absolute or risk-adjusted?

Absolute. Risk-adjusted is a very different conversation.

Yeah. If you're an allocator, you're going into year-end, you're going to make a decision of how to express a view on crypto. These allocators make decisions on a yearly basis, maybe multi-year timeframe. They are still catching up to, hey, last November, Trump got elected. You got all this policy this year. You got Stripe doing acquisitions, BlackRock and Larry, really getting behind tokenization. What is your outlook for the next year, couple of years? Does that make you incrementally more bullish in the next year? Do you think the market's cooked now? How are you expressing your thesis? Yeah.

So as I mentioned throughout this conversation, I think the number one focus for us is let's look at the public tech companies that are doing their thing but could leverage pieces of the blockchain stack to enhance their core business, and as a result, use that as an accelerator, right? So that's where our focus is going to be probably for the next 24-plus months. But while that is happening, I also have a thesis that there are crypto-native projects that have tokens or are likely going to have tokens that are just potentially really good projects that are just mispriced completely. And I have a belief that those things will just asymptote down to a point where the cash flows they'll generate will be relative to their market caps, will be at a reasonable enough entry point where it will make sense to step in and buy those. I don't know when that will happen, but I think it's going to happen in the next 24 months.

So are you buying like all of DeFi and only DeFi?

No, no, no, no, no. I think there are things in deep end that actually will get to a valuation relative to that because there's a catch-up that's happening in both directions, right? I pull up any deep end token. Down only since the last cycle. And some of those are actually starting to generate cash. And there's going to be this inflection point where the market cap will get low enough and the cash they're generating will get high enough, and there's going to be a moat, hopefully, that you can say, okay, this is a pretty well-priced asymmetric trade I can step into. We're just not there yet. But I think— yeah.

As a fund, do you use Bitcoin as your primary hurdle rate? Or your historical returns. How do you think about, yeah, like Bitcoin in your portfolio and outperforming that? Because the reality is 9 out of 10 funds don't ever outperform Bitcoin.

Yeah. So, so we essentially have, um, two kind of benchmarks we look at, right? One is, uh, a market cap weighted top 100, which kind of ends up with like primarily Bitcoin, ETH, and a couple other things. Like that's because that's, if you look at by market cap, that's the composition of it. And the other one is altcoins, essentially, which is top 100 tokens equal weight. And we look at both. I mean, the benchmark we kind of looked at when we started the fund was the altcoin benchmark because I thought at the time it was going to be the harder one to kind of compete with because in a bull market, we always think alts outperform Bitcoin. Again, this was a different sort of cycle, if you want to call it that. So those two are my benchmarks. But as we are starting to kind of look at the public equity universe more and more, we are asking, is there a benchmark? Right. And I think the short answer is there isn't necessarily a benchmark at this point. I can only really compete with myself, which is I look at our returns the last 3 years. What's the compounded annual rate of those returns? And can I continue just compounding that? Because that's really what I think the greatest investors did. They just wanted to compound the care capital faster than most other available instruments on a risk-adjusted basis.

We've had a couple of investors come into this pod and say, hey, listen, I just put on a big position in Ethereum or Bitcoin and was patient over a 5, 6-year time horizon, took money out and called it a day. Then you have other very sophisticated intellectual fund managers that have done a lot of asset selection and haven't necessarily outperformed Bitcoin, maybe have traded in and out. What is— I mean, we can talk about what has been successful historically, but the more interesting question in my mind is what are the next 3, 5 years as an allocator mean for this space? You could over-intellectualize DePIN and DeFi and some other sectors, but the reality is if you look at the correlation between Bitcoin and M2 and all the other crypto assets, this is just a levered NASDAQ play. So don't over- think it. Like, if you're going to invest in this asset class, it is just going to be very volatile, and it is just going to, in the best times, outperform technology, in the worst time, meaningfully underperform it. So make sure that your fund is structured in a way where you don't get people calling for capital in the worst of times, and you can hold on and not have to sell the bag. Don't use leverage, have a 5, 10-year horizon, and honestly, just chill. Yeah, but it is so hard to do that.

I think you can manage risk around the margins and that has a meaningful compounding effect. So again, we've kept everything very simple, which is my job is to own basically 15 great assets and position them right in the book. My highest conviction ones I think will drive all my returns, position them bigger. One of the things we always do is in any given year, we'll have 15+ bets. And at any given time, 2 or 3 will really start to work for the right reasons. And what we then try to do is reallocate from the losers in the book to the winner, double down on those winners. Again, that has an interesting return effect in the book. But I think the part we do alongside that is ask, how much units of risk do I want to have in this market? And Santi and I have talked about this. When everything feels asymmetric to the downside, you want to have more cash than usual. You want to have hedges on, but you don't want to constantly keep hedging, constantly keep raising cash. So you try to do it a couple of times a year when things feel asymmetric to the downside. And hopefully you get them right. If you don't get them right, you make sure you have your risk back on. So it's not about the extremes of no risk, all risk. It's about reducing— if you're $100 long, maybe getting that down to like $70 long, having $30 of cash. If you're wrong on raising the cash, redeploying it very quickly, acknowledging you were wrong about it. And then if you were right, that's great because now you have $30 of cash to double down on the assets you believe in. And if you do that over time, and if the market just grows and you pick the right assets, that should have a compounding effect. But trading the market shouldn't be like the place where you— I mean, at least for me, it's not where I generate my alpha. It's asset selection. The trading is an accelerant. Yeah.

Um, historically, liquid funds have done very well because tokens have allowed you to have a venture-like, um, asymmetric return with liquidity. In a 2 to 3, 4 year timeframe. However, now you're seeing companies like Polymarket and Ripple, uh, really get much more interest from institutional money willing to express a thesis. In my seat as an allocator, I could tell you a lot of LPs, potential LPs, institutional folks have expressed hesitation towards tokens. And so now you have an incredible amount of interest in Polymarket secondary from everyone under the sun. At a $15 billion valuation, 9 to 15. Do you think that going forward venture-like strategies that are investing in equity, so now equity's more interesting for crypto and you could see more companies go public as you're seeing this cycle? I know your fund is structured more on— you have a very flexible mandate. You also have VanEck Venture Funds, which I'm an investor into, full disclosure, but I'm curious Does this warrant a shift in thesis? You're looking at Polymarket and Ripple raise these mega rounds. Does it make you incrementally more inclined to take the liquidity risk and invest in venture equity structures without the token?

Short answer is there's only a limited amount of that I can do because we are supposed to run a liquid book. So if we do illiquid investments, we have to do that as a side pocket, essentially. So you could do, but you could do a growth round.

You could invest in Polymarket right now, $15 billion. It's like the Mark Rowan Apollo, uh, commentary says illiquid markets are no longer that illiquid because there's a lot of interest in secondary.

Right. Right. But I think more from a fund structure perspective, this, uh, we don't, we don't try to do too many of the illiquid investments for, you know, variety of reasons. But one of the things we look at them and we've done a bunch in the past. Um, You're right. When I look at some of these equity investments in what I would say blockchain-adjacent businesses that are private today, I look at them as like, I think these companies, if my thesis is right, will actually exit as tokenized equities. So call it an equity, call it a token, I don't really care, but I think it'll be a programmable asset that is their equity. I know Jano and I talked about it. Um, what do you think about the—

yeah, now I'm just waiting for you to tell us if the market is topped or not. I'm kind of, uh, I just want to hear, am I buying the coins or selling the coins for now? Come on, get to the point.

Um, okay, so I, so I, I sent you this tweet that Hunter kind of put out there, right, which was, uh, liquid fund dinner thing last night.

I have never seen a more distraught group. I shouldn't say this because good, good people, and I'm sure some of them listen to this. People have no clue what is going on in this market. Guy to my right dumped everything. He's out the whole market. He's out. Guy to my left just levered long. Market's down 25%, levered long. Guy across from me, he's raising for a DAT. Guy— the other guy across from me closed all of his DAT, isn't allocating to it. Like, I've never seen more dispersion between investors in the cycle, which is great. It means a lot of money will be made. Um, but it's like, there's, there's really no consensus trade right now. And so that I was joking before, but I do want to hear your take about just how you think about this market.

Yeah.

So, so we, in our strategy, have more cash than usual. Again, I don't believe in sort of being at those extremes of like levered long versus all like, you know, de-risked and like that, that's like too crazy. Right. I think. I think we're in a market. So there are markets where you'll have your 10 out of 10 ideas and there are markets, and then also you'll have your 7 out of 10 ideas and you're kind of fully invested. And your 7 out of 10 ideas are 7 out of 10 for a set of reasons, but then ultimately adds a little bit diversification and might have a different return profile. So you have it on, right? Since September, we've taken the stance that we only want to have our 10 out of 10 ideas and our 7 out of 10 ideas are worse, we would rather just be in cash for that piece. So we've been in that position. That served us well. I continue to believe that. Part of that—

Why would you ever want to own a 7 out of 10?

Because part of it is like, if all you're in is 10 out of 10 ideas and that's 100% of your book, then you might end up with like 5 concentrated positions for your entire book. Right.

And is that an issue?

For certain investors, it might be. Right. Again, like PA, like your personal account, people might have a completely different risk appetite, right? Um, but, but, you know, people have diff— like, I think people want some limitations in how concentrated each individual holding can be, because like, you know, you have a tailwind and then you don't want to get wiped on a massive amount of your book, right? So point is, like, again, like, the way I think about my 7 out of 10 ideas is that, um, I have less conviction in them, but that less conviction is made up for in a higher amount of upside.

So yeah, but portfolio sizing comes into allowing for that 7 out of 10.

Yeah.

Yeah. Do you think that that factors into how markets and how things get a catch a bid? Like you talk about units of risk, you are maybe in an environment where when there's abundance of liquidity, i.e., M2, rates go low, there's an excess of cash, QE kicks off or whatever, people want to go farther out on the risk spectrum, and so they're more inclined to bid that 7 out of 10. So again, if you think we're going into a prolonged and bullish environment macro-wise, which is kind of impossible, but say in the next 6 months rates continue to go down, people are going to want to go chase opportunities farther out on the risk spectrum. The 7 out of 10 from a return standpoint may offer more asymmetry. So you're going to be very compensated to put that position on and size it pretty aggressively if you think that's going to be the case. Yeah. But again, unless you think there's going to be continued volatility and you say, gosh, I'm taking way too much risk right now to put on a 7 out of 10 because I don't know how this market's going to go up or down. We're a tweet away from the market puking 15% or going up 15%. I just don't know. I don't want that volatility in my book.

So I generally agree with your framing on the macro, which is rate cuts, more liquidity, economy seems to be getting weaker, which means, again, great for risk assets if we expect central banks to react the same way as they always have. Trump's going to appoint a Fed chair, a new Fed chair at some point. All that, that looks interesting, right? I guess what I would say is the risky capital is not in crypto. Like that 7 out of 10 idea you want to express that in is somewhere in AI or AI adjacent. It's just not in crypto because I just think the story isn't that great in crypto anymore, right? For most of these alts, what's the most exciting story in crypto narrative-wise? Right?

Well, it's a good point because I guess prior cycle AI wasn't as much in the narrative. So crypto became that asset where people went to the casino to get out of their current financial situation. Right now, people would rather punt Nvidia and options around Nvidia and your incremental AI company versus go to the casino, crypto casino, right?

Or even I'll take it out the riskier for you, right? I think, uh, you know, Sam Altman's on every podcast and, you know, Satya Nadella is in every podcast talking about about the bottleneck in AI being energy and power. And now, as a result, you're seeing a lot of speculative money going to energy and power trades, right? Bitcoin miners is one example of it. It's the same theme people are looking at.

Galaxy.

Yeah, renewables, whatever. Just look at anything in energy and power. That's where people can use their imagination and speculate, even though it might never come to be real. Some of these things might never come to be real, like some of these nuclear stocks, like, I mean, like, you know, $0 of revenue and obviously like tens of billions of market cap, that whole thing. So that— so you might be right on the macro. It's just that if you're trying to express that view in altcoins, you're, you're expressing it in the wrong place.

Yeah.

I mean, could you then just be so— distill the thesis for crypto as It is a place where historically people wanted to express a long gambling view, and now maybe that's no longer going to be the case because people are disillusioned because, because the infrastructure sucks and pukes. At least when you're— you don't have to deal with the security nonsense, you don't have to deal with all on the margin. It's, it's just hard. So is it that Historically, I think a lot of the demand for crypto came outside the US where you didn't have the opportunity to invest in the US stock market and all the technology kind of wealth creation there or in the private markets. So two phenomenons, as people have more opportunity to invest in secondary markets, does that diminish the demand for crypto tokens? And more importantly, as kind of the rest of the world has more access or as the UI/UX the opportunity to invest in technology, ex-crypto, for the rest of the world improves, does the demand for crypto just go down in a way where it's no longer the venue where people express a long technology view, levered view? You just sort of lose 20, 30% of the demand that would always have been there. Now people are like, you know what, this shit's too complicated. I'd rather express it somewhere else.

I mean, feels like it, right? I think if I were to put it simply, objects in motion stay in motion, which is whatever area of the market is making people outsized returns, especially this, call it retail capital that wants to gamble, whatever area that market is giving them those returns, they're going to keep speculating in that area until they drive it into a bubble, and that bubble inevitably will pop at some point.

So, Purnav, let me ask you, what to do. Let me use actually my scenario as a real scenario, which I think is the scenario of a lot of Empire listeners. So you have things that you don't want to hold long term and that you do want to hold long term. Maybe the things that you don't want to hold long term are some of the riskier crypto assets. And let's say you're out of those already or you're not out of them, you just want to hold it. So we'll put those aside. But then you have assets that are really good or that you consider to be really good. I'll use Coinbase and Robinhood as two of those. Like for me, those are— I consider those— I want to hold those assets for the next 20 years. Right. So I love Coinbase. I love Robinhood. I want to hold both those stocks for the next 20 years. I think they're going to be huge companies. I also think the equities market is really frothy right now.

Yeah.

And it feels like a good time to get into some cash, but I don't want to— but everything I've read says trying to time the markets is a fool's game. So maybe it's better to just close my eyes, be okay with what could be a 50% drawdown. And just hold what I think is a generational asset. How do you— you're a professional trader and investor. If you're not a professional trader and investor, how should someone like me play that scenario?

So I should, I guess, disclaim not financial advice, like don't listen to me. Um, but, um, how I think about it is, is I have my 10 out of 10 ideas that I think are generational assets that will just keep compounding. Believe in the founder, believe what they're building, all that stuff. What's interesting about that is whatever those might be for you, whatever those might be, ignore that. But at least for me, those 10 out of 10 ideas have performed extremely well this year. So they're not the assets that are down 60%. So the world is rewarding good assets in some ways. So in my opinion, I have my 10 out of 10 ideas. And I'm going to let it be as is. I've cut all my 7 out of 10 ideas. I have a fair bit of cash. And interestingly, those are the ideas that have actually not done well. So I feel generally Okay. About how things are going. And if my 10 out of 10 ideas go down 50%, well, thank God I have all this cash. Hopefully I get to double down on my best ideas at a, um, at a, hopefully a better entry point. So it doesn't happen.

Yeah. Get the cash with the, with the 7 out of 10 ideas, even if they're already, even if they're down 20% already or something, because they could, if you don't have conviction in them, why are you holding them in the first place? And then if you've got 10 out of 10 conviction in something, Yeah, probably don't get out.

Yeah. And then I'm not going to say where are we in the risk asset cycle, right? Because I think the entire market seems more or less held up by AI. So everything outside of AI just seems to be performing very poorly, right? I don't know. I was listening to the Cava and Chipotle earnings calls and the way the CEOs are talking about what's happening with the consumer is like, oh my God. The world's falling apart, right? So it seems like the market more or less is held up by people's excitement around AI. And at some point, whatever set of catalysts can change that, it doesn't seem like it's anywhere near current timeline. So it's more that, okay, so that's the way the market is. I want to have a lot of dry powder for if and when that thing changes. But It's all about how much of the upside you want to continue to participate in.

I listened to a great podcast by Shane Parrish on Farnam Street, and he interviews this guy called Anthony Sciplioti. He was the guy who exposed the Enron fraud, and he draws a lot of parallels on where we are in the market. His whole point is that there's just a lot of nonsense happening on an AI where like NVIDIA invests in OpenAI and OpenAI, like Microsoft invests in OpenAI and they're all kind of like, you know, it's a huge loop. He draws parallels on, he has a great line which talks about like Alcatel-Lucent, some of these companies that were all the rage when like fiber is being deployed, like these companies no longer exist. Yeah, maybe. So I thought about—

I'll give you that. So I've thought about this sort of criticism a fair bit because when everything's kind of like so frothy, it's always good to sort of think about what are the red flags and all those types of things. The two counters I'll make to this is that the people that are sort of, let's say, involved in these related party transactions are founders and CEOs that have been great allocators of capital and great managers and great builders of business for decades and decades. Like, it wouldn't make logical sense for me to all— to see all of them sort of engage in, you know, let's just say irrational behavior. I could be wrong. Like, you know, these great CEOs all of a sudden all like get deluded into believing in something, some great trade, and they all do something stupid, right? Could happen, but I just don't think it's likely. Um, the other part I would say is I just start top down, right? What is driving this entire thing? It's clearly OpenAI. How many, how many users does OpenAI have? How much is each— how much time does each user spend on OpenAI and how much they spend, how much they pay for their service. I just think OpenAI ChatGPT is massively undermonetized. So I think the better question to ask is if the revenue per user in OpenAI and ChatGPT was appropriately monetized, what is that number? And how much revenue does OpenAI generate? And what does that mean for the ROI for everything else in the stack? And is that unreasonable or reasonable?

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Yeah, I mean, look, just to put it in perspective, back to crypto, OpenAI potentially— there's rumors of it going public at a trillion-dollar valuation. It has 800 million active users. Crypto has 40 million active users, $3.5 trillion asset class. Jano, I can see him, he's going to say, wait a minute, active users.

No, no, I saw your response.

There's way more users in exchanges. I said, is different. Cash flow generation, blockchain, like stream of cash flow into apps and protocols. You got to look at the actives because if you're in an exchange, the exchange is just using their omnibus account list. Is that actually deriving fees back to the blockchain and the infra? Sometimes I look at that stat and I say, gosh, does that just make you want to close your entire book in crypto and say, look, maybe I'm going to sit this one out because things have just gotten wildly overvalued? Okay, if you buy Bitcoin, maybe Bitcoin, exclude Bitcoin because Bitcoin is a weird asset, commodity, sovereign store of value, but all the other shit, Ethereum's the current— like, you could buy secondary in OpenAI and SpaceX and Stripe and Revolut. Well, I think— or would you rather go buy Ethereum? Like, I guess, like, the number one construct for tokens has been it's liquid, so I can punch in and out. I'm gonna say, yeah, but liquidity can dry up really fast. Maybe not for Ethereum, but for your Ethereum x10, market cap, good luck. Good luck trying to offload that in a bear market. Yeah, you're not going to. So you could definitely offload secondary shares. You could transact SpaceX and Revolut and maybe not Stripe because they'll rofer, but pretty much everything else, it's super liquid, more so than your illiquid shitcoin.

I mean, Santi, to your other question, or at least the way you framed it, right? I started this fund in June of 2022. There were probably 10 million active users on chain then. You said the number is 40 now. ChatGPT went viral probably October '22, and it's now sitting at 800. Isn't the answer there, which is the world told you what it thinks is a killer app? Like, if someone downloading a self-custody wallet and flipping tokens around on a DEX was a killer app, it wouldn't be sitting at 40 million.

There's so many people that can, uh, gamble paycheck to paycheck, right? Like, there's just so much churn. It's definitely more than 40. You're just churning through that high base constantly because you got pretty much now every other— at least once a month you have these high vol days where people get liquidated and they got to get another paycheck or a stimulus check and then come back to the casino. It is very— it's a constant reset. I mean, I've always— I don't need to express why, but I'm deeply bearish on just that use case. That is never going to get us to 200 million, 400 million, 500 million actives. Like, no matter how much you tokenize, no matter how much is there— I mean, and maybe someone, a critic like Kyle or someone might say, dude, you're looking at it all wrong because the users that are in crypto are higher like are higher value, they're younger, they have more disposable income. Uh, it's a different demographic. You don't have to— let's put aside the active users, let's look at the TVL or some other metric. But I don't think you can ignore that metric. I, I think in— I'm deeply bearish if in 5 years' time we can't grow that number to at least 200-300 million actives. Like, that's— that would have meant that we— the app layer doesn't accrue value, meaning deep in applications don't do well. DeFi may or may not do well if you tokenize a lot of shit and maybe you have 10 institutions doing massive amount of volume. The question there is, is that value actually going to translate to public infrastructure or is it going to translate into Tempos of the world that may or may not— may be better off they're buying Stripe equity. So this is the point, I'm really struggling. Every month you want to re-underwrite your thesis. Go listen to We're jumping ahead to your content of the week, but there's a great Cheeky Pine podcast with, uh, the founder— used to be the ex-CIO of Viking, who now has— I think it's D1. You might know him. Phenomenal, phenomenal interview. Go listen to that. Re-underwrite your thesis in the light of the A16Z report. I get all these favorable trends for crypto and whatnot, but it's kind of hard. It's kind of hard.

I think I, you know, I used to kind of mentally have this debate, which is blockchain crypto touches a billion users one day, maybe two different ways. One is like the VC-backed founders, uh, pick your favorite VC in crypto, they backed a bunch of founders, those projects, you know, build something so great that it gets to a billion users. That's kind of bucket one. Bucket two is the rest of the world that has built a great business gets to adopt this technology and get it to a billion users in, you know, some indirect way. Um, I'm in the camp, firmly in the camp that it's that second way crypto makes its way into the user. It's going to be somewhere in that path rather than the crypto-native founder route.

Yeah.

Santi, just to play devil's advocate here, cause I, uh, the, I think crypto markets just go the way of traditional markets. Like if you look at traditional markets right now, a lot of the things are actually going down. It feels like a bull market. It feels like a big bull market for equities right now. But that's being driven by like, I don't know, 20 stocks. Like Purnav, you mentioned the earnings call of, uh, who was it, Chipotle? Like Chipotle.

Yeah, yeah, yeah.

Chipotle stock is down like 50% in a year, right? So it doesn't— and a lot of the market is down. And so I actually think like, you know, people who've grown up in crypto the last decade are used to all of crypto just going up at a certain point. It's not going to be that way because that's not how markets work. It's, it's going to be the— yeah, I don't know, 20 or 30 things drive the whole market and you got to be in those 20 or 30 things. And that's probably why buying the— there's going to be a Q's of, you know, an S&P of crypto and you just probably buy that instead of buying, you know, well, I sort of—

and maybe it's because I've been spending a lot of time just looking at like public equities that have like traded down or overlooked PayPal.

You missed the last episode where Santosh was longing Western Union. So that's—

listen, Western Union trades at 4x P/E ratio. I mean, I'm sorry, it doesn't take much to believe that that thing goes to 10x P/E ratio. They start doing right? If you replace a CEO, if it's some substance on margin growth because of stablecoin adoption, I think ultimately, what is your margin of safety? There is none with crypto. That's why you have so much vol in this goddamn thing. People don't know how to value it, but also, a lot of these things just depend on a series of stacked assumptions. You got to believe that macro is intact. You got to believe that there's going to be more Larry Finks of the world. You got to believe that sovereigns rally around this shit. You also got to believe that AI doesn't nuke. You got to believe 10 things for your thesis to be intact. I want to invest in stuff that I don't have to believe 10 things that all are deeply correlated, and maybe I'm missing out on stuff that intricacies of the world. I want to believe in an asset that I say, "Okay, here's a valuation story. I'm going to monitor and focus," and I can compound that. But I mean, Chipotle at 25 times earnings, maybe Bill Ackman has a different view. He's always been super bullish. I like the Chipotle bowls. I grew up in Mexico. The salsa is good, whatever. The average PE of the market is still inflated. The S&P trades at like 18, 19 times. So it's also like a reversion to the mean. Anything to your point around if your historical hurdle has been compounding at x and you're investing in something that has historically outperformed that, You could look at it both two ways. One is, hey, maybe I should be allocating this because clearly I've missed it. This thing is compounded at a better rate, like NVIDIA. The other part of your brain might say, well, wait a minute, is there going to be a reversion to the mean? Because things can't keep compounding at the rate that they do in perpetuity. So I've now, in this market environment, because I think that we're closer to the, like, the end of the cycle than the beginning, I want to be focusing on, like, mean reversion and things that are either widely outperformed or underperformed. In the case of Western Union, 4x P/E ratio, the market trades at 20. Anything above 20, I'm cautious.

I really need—

to your point of our units of risk, I really need to believe that that shit is going to defy gravitational pull to come back to 20 because most of the money that you'll make is on multiple expansion or multiple contraction. You either lose or make a ton of money on the deviation from the mean because it is so hard to move away from that.

So that's the point Dan Sundheim was making in that D1 podcast, which is a lot of the best returners are not predicting what revenue growth is going to be for some company relative to market expectations. It's very hard to do that. But what's easier to find is a repricing of the multiple. And I would put that as It's actually easier. There are parts of that podcast I disagreed with him on, which is how he characterizes retail investing and what retail has done to the markets and those types of things. I would actually layer that in here and say multiple expansion is easier to predict if you think retail is that marginal dollars that will come in, because that's what's going to drive a change in narrative, and that's going to drive a change in multiple.

Now, the best part of all this, we haven't talked about news. Is that crypto assets don't have a multiple because there's no way of valuing and the market doesn't know how to value them. So it's great. Don't ever show traction. Don't ever show— the Silicon Valley meme is don't ever show revenue. Sell the dream. Now, Ripple is in an interesting point now, which has just raised $500 million at a $40 billion valuation. XRP trades at $150 billion. You survey 100 people in the street, they'll know what Ripple is. They can't even pronounce Solana. Very interesting. So it's a social phenomenon, it's a meme, it's an attention economy. I get it. So yeah, it's kind of a very weird market.

Yeah, but I'll leave with one thing, Diana. I know you want to wrap. Um, I gotta jump, which is prices in general for alts and all these things are down, and we're all collectively talking about why they are and why we continue to sort of think the space is not— at least this altcoin space is not— maybe not going to do extremely well in the next several months. I'm of the opinion that if certain alts start to perform extremely well for a reasonable amount of time, I always want to jump in and ask why and what am I missing, and always just reevaluate, right? Because like, you don't want to be the guy that's obviously, obviously bearish at the lows kind of thing. Um, so at this moment, that's what I'm very hyper aware of, which is I am bearish as things in altcoins, as things drift lower. But if something starts to perform well for, let's just say, the right reasons that seem sustainable then you got to change your thesis.

You're like George Soros. Famously, there's a guy that says he would have— there's a— what is the book? His book called like Reflexivity, talks about reflexivity. And he said he would have called George at like 8:00, 9:30 in the morning. He said, I'm bearish the market. He called him before. He's like, what are you talking about? I flipped bullish at 9:37. And the guy famously made investment decisions because he had back pain. That's how he knew when to sell or buy. I will say, Purnav, I have an immense respect for you because I've looked at your letters. I've in conversations with you, especially in days— you can flip bullish and bearish very quickly. You're not afraid to change your mind. And even though you talk about compounding and long term, I think capital preservation is top of mind for you because you want to have that ability to express and step in with conviction. And I think that's like having those two skill sets is very hard, right? Because typically you hear hold, forget, or trade constantly, but Yeah, you're one that I think has not been afraid to flip bullish or bearish in a very meaningful way in your portfolio and re-underwrite. It's the true embodiment of re-underwrite your thesis and change your book, putting aside all other stuff that might— I think that's a rare skill to have.

Thanks, man. Appreciate it.

Yeah. I love you. Yeah. Content of the week, Pranav. We always do content of the week to wrap this up. Mine is— I mentioned it earlier, but Andrew Ross Sorkin. Yeah, reading. I'm like 3 or 4 chapters in, I think. Probably forget.

I don't know.

I'm audiobooking it, so I don't know exactly how many chapters, but yeah, listening to it on, on Audible. It's good. It's Andrew Ross Sorkin actually reads it. It's like, I don't know, I, I like these deep dives into financial history. He does a really good job of like personalizing it, I would say, where, you know, I read a lot of history books. Sometimes they can be a little dry. He does a very good job of getting into like the people behind the Great Depression and yeah, 1929 and the big crash and all that kind of stuff. So I'd recommend it.

Definitely read it. Yeah.

But I don't have any content.

I actually was going to say I've been listening to the Cheeky Pine podcast. They have incredible guests like every— I might have like, I think the— with the Bridge guys on the last episode this week. So I'm excited to listen to that.

Zach and the Henry, I think, from Privy, they're on.

Yeah.

Yeah. Yeah.

Well, I said mine earlier, so I'll—

Shane Perry. I'll give you one more, actually. Um, I don't know this person, but the guy from The Big Short, Steve Eisman, I think is his name, um, the guy who plays like Steve Carell in the movie, he's got a podcast too, but he's obviously like a trad fi guy. And like during earnings seasons, he does like a great earnings recap in like 40 minutes of different companies and why they're relevant to the markets.

Oh, interesting.

Great way to get a feel. Yeah, I would recommend that.

What's the show? What's it called?

I would just look up Steve Eisman. I listen to it on like YouTube. Um, Nice.

That's a great, great movie to watch in a day like today or yesterday. Fun fact, so that we— I know we've been talking about bearish and skewing bearish. In China, when stocks go down, they are green. Um, when stocks go up, they are red. This is because red is prosperity in China. But I think we should, uh, be like China, ladies and gentlemen. When you see something falling and it's a greater than 7 out of 10, you should like that asset more, not less. But very few people actually think like that. So again, flip, flip, flip the color on your screen.

Exactly. Santi, good to see you. Pranav, thanks for coming on, man.

Thank you.

All right, thanks, guys.