EP 3: Razzlekhan and Crypto, Bored Ape Reveal, Binance and Forbes, and Peloton’s CEO

Welcome to the third episode of Three Cartoon Avatars. I'm your host, Logan Bartlett, and I'm joined today by my esteemed co hosts, Nikita Beer and Zach Kukoff. How are we doing, guys?

Good. A lot of travel so far this week. Well, Logan, where are you? That's a different background than we normally see.

Yeah, exactly. I am currently in San Francisco. It's 78 degrees right now, record highs. And it's actually pretty pleasant. I don't know, everyone talks about the impending apocalypse that's going on in San Francisco, but walking around right now, I've been able to mostly avoid the Zombieland situation, that is homeless people walking around and all that. And if you told me it was 78 degrees every time I came out here, I would definitely sign up for it.

So it's a sunny hellscape.

Sunny hellscape, that's right. It's actually hell. It's warm and there's zombies. So, yeah, it's actually hell itself.

Importantly, has the Redpoint office been broken into yet?

It hasn't, thankfully.

We haven't lived the full SF experience just yet.

Has that happened? Have you. I've heard a few venture firms that have gotten their office into broken into, no, but.

And that's probably why I'm so pro sf, as I've both venture firms I've been at. I don't think I've ever had break ins in sf. That said, friends homes, friends cars, all the time.

It's just the tax of living in San Francisco.

Isn't that L A to Nikita?

I've never had my car broken into in L. A. It happened really quarterly in San Francisco, so.

But you're a pretty big L A fan. Like, I think we all saw pretty notably on Twitter this week. Nikita wading into the fray. To defend. To defend Los Angeles.

I think it's the best place in the world. I think it has the highest quality of life in the world. 70 degrees year round, big houses, lots of space, amazing food. It's cheaper relative, I think, to New York and San Francisco. Miami might have us beat there. But, you know, I think the coolest part of la, though, is that like, people socialize where they socialize and it's at house parties, not at bars or clubs. And I think that makes it like a very intimate place to. To kind of build relationships with people.

Could I ask, do you always feel like. So we all saw on Twitter, the context here is Keith tweeting about how LA has no futures.

What?

Like when you, whenever you see Keith make that point do you feel like you have to wade in? What was the. What was the fight or flight there?

So I had to respond in Keith fashion, but with one word response wrong, because I knew that, well, it was engagement bait. I was being sarcastic, but. Because I think Miami has many redeeming merits. But Keith respects the game.

When Keith sees just one wrong, one word back at him, he's like, touche. I. I recognize a similar foe now. I. It's interesting. Nikita, have there been a bunch of. Did you move during the pandemic? Before the pandemic, when was your move to la?

I moved two months before the pandemic. Bought a house with, like, perfect timing and really lucked out. Yeah, it's. I've been here two years now, but I grew up here. I mean, that's part of the reason I wanted to come back. But LA Tech is growing la like a ton of engineers, ton of consumer companies.

Do you think the reason it hasn't been broken, your car hasn't been broken into might be. Not the city, but the fact it's a G wagon. And people just assume that, you know, it's like an intimidating. This guy's pretty serious. I wouldn't want to fuck with his car.

They probably assume I'm a diplomat or something.

Diplomat's not the word I would use. I assume anybody with a G wagon is a different kind of foreigner. Not necessarily a diplomat.

Mafia, something like that.

Yeah, that's what I was thinking.

Maybe. I work at Stripe.

All right, well, that's actually a great segue to my favorite topic this week. It felt like, as it was happening, I wasn't really sure what was going on initially. And then as I dove deeper into it, I just got more and more excited. Sort of felt like our super bowl here. So for those that don't know a husband and wife combo. Ilya Dutch Lichtenstein and Heather Morgan were arrested on Tuesday for trying to launder $4.5 billion in cryptocurrency that was stolen from Bitfinex. It seems like the DOJ recovered about $3.6 billion worth. The couple's facing 20 years in prison. Lichtenstein actually had gone through Y Combinator, so he had mob ties and presumably could have been better at laundering money. He passed their muster, while Nikita did not.

Hey, hey, hey, hey.

In fairness. In fairness to Nikita, Nikita has not yet turned $70 million into $3.6 billion. So why Combinator's judgment continues unchallenged?

I actually wonder if we. If we were to check the timestamps on it. Nikita, it might have been a similar time that they were accepting you. Accepting Lichtenstein over you. I don't want to pour salt in a wound here.

Well, they clearly deserve the spot more than me.

We should all hope to be as

good pickers as Paul Graham one day. That's aspirational for all of us, honestly.

Talk about Midas List investors. So they took $71 million of Bitcoin, which is now worth 4.5 billion. So they actually, at the time of the, the, the original heist, it was worth $592 a bitcoin. The whole thing itself was fairly entertaining. These Brooklyn hipster looking couple arrested for the largest seizure in federal government history. But what made it really a humor was Heather Morgan was a surrealist rapper. Any of our hip hop aficionados probably know her better through her stage name, Razzlekhan. We'll link in the show notes some of her best rhymes. She had an amazing TikTok that featured a bunch of different things about fluffy pancakes. Why Apple doesn't track AirPods. There were videos of her drinking beer with her feet. Um, so not exactly the, the criminal mastermind.

Hold on a second, hold on a second. I. I would say anyone who can successfully drink beer with their feet is a mastermind of some kind.

Like, I didn't say she wasn't smart. I just said she wasn't a criminal mastermind. Honestly, that kinds of intelligence.

Different kinds of intelligence, Logan. Okay, it's time to be inclusive.

Yeah, yeah, yeah. The foot desk Dexterity. Intelligence is like, you know, everyone has their own.

Not everyone can be book smart. Okay.

I had a really fun time linking through all the, all the different videos and spending time. I don't know if you guys had a chance to, to go through and watch any of the, any of her videos.

It was the cringiest thing, like, I've ever seen. Like, you know, you have these, this view of these crypto hackers like Bonnie and Clyde, but they look like the most San Francisco couple ever. And then you have her making the. The most cringy tiktoks ever. But, you know, she's now the wealthiest rapper in the world. Or as of two days ago, she's

also the most successful Forbes unpaid contributor probably in the world. By. I have to say, I feel like being an unpaid Forbes contributor is marginally worse than stealing billions of dollars in crypto and far worse than being a bad rapper in terms of, like, things I would never want associated with me.

So. So cringe list of this whole story. Zach, what's your the the most cringy of all of this is being a Forbes unpaid contributor.

Yeah. Cringe power ranking by far. Forbes unpaid contributor then stealing $71 million which now is worth billions then being a rapper. Honestly I can sort of get my head around surrealist rap. There's no world I could ever get my head around being an unpaid Forbes contributor.

I'm just a little shocked. Like if you had $4.6 billion. I think if I was to rank the things I would do with my time, the last thing would be a Forbes unpaid contributor.

I think that's right.

I'm just like what?

And she clear it was only 71 million when she was posting those articles.

If I had the If I had $71 million in cash, I still would not be with much love to our friends at Forbes. I would still not be a Forbes unpaid contributor would be on my radar.

I I I will say it was the videos themselves I couldn't tell. Clearly there was some level of like in on the joke, but I actually couldn't really figure out to what extent she was laughing with us. Justin, maybe you can queue up this video of it was called Crocodile on Wall Street. We can just play the for people to get a little bit of a flavor of what we're talking about.

Wrestlecon livers such you better win come real far but don't know where I'm headed. Motherfucking crocodile of Wall Street.

Silver on my fingers and boots on my feet Always be a goat, not a goddamn sheep.

Email me fuck your message at the

beep beep beep beep beep beep.

So yeah, that is a real hit at hip hop shows I've been to.

It's the number one most played rap song at the Battery in SF by far.

I respect her surrealist rap. She's actually the number one surrealist rapper. When I think of surrealist rappers, Razzlekhan's like immediately what comes to my mind.

I think it's a I think this is a pretty inspiring story. You have the cringiest, most, least self aware people on the planet managed to steal $4.6 billion worth of crypto. Honestly, it means all of us have an opportunity to make it.

It's pretty impressive, honestly. I mean just from an investment standpoint that they bought Bitcoin at 592 and now it's worth $45,000. I don't know what the CAGR is there, but they would definitely be raising some type of rolling fund or something on that at a Minimum.

Don't you think it's sad that they turned 70 million into 4.6 billion? And Logan and I, who go to work every day trying to make money multiply, have never gotten even close to that return on investment.

Well, I mean, Fang has outperformed vc, right?

Okay, well, fine. Nikita, because of which firm? Maybe.

Nikita, if you're looking at numbers, then maybe that's the case.

But there's different kinds of generations of intelligence, Nikita.

Remember, it is a generational return. 71 million to 4.6 billion. Like, joking aside, a lot of firms would kill to have that level of return. The one thing I sort of thought the whole point of this was like, the whole point of the blockchain was being able to launder money through it, right? And so now I just have kind of lost my faith in all things blockchain related. If you can't even launder $4.6 billion cleanly, like, what's even the point?

Are we hearing there's going to Redpoint, Maryland? Opportunity for Razzle Kahn after she gets out of federal prison.

Logan, listen, that's. It's a no comment. I don't want a. I don't want a recruiting frenzy for Razzle Con. But we will take anyone that can consistently deliver 71 to 4.6 billion.

It is true though, Logan. Like, if you can't launder money and bitcoin isn't anonymous, I don't know what the whole point of it is. I know, Nikita, you've been thinking about this a lot.

And to be clear, Nikita, you've been thinking about anonymity and not money laundering specifically. Right. Like, we just want to clarify. That's what you've been thinking about.

Yeah, so I saw a tweet, actually, the, the. The other day, which was like, if you had stolen, you know, $4.6 billion of Bitcoin, how would you. How would you get it out? And there was quite a few interesting comments. I mean, back like seven years ago, there used to be tools called bitcoin tumblers. And it was a great way to obfuscate. If you were like a drug dealer on the Internet, it would obfuscate the source of the funds. But those don't really work anymore because there's so many forensic tools like chainalysis to find out the source of where something came from. So it's starting to seem like, yeah, you like all these ransomware attacks, they're not going to be able to actually liquidate their money. So I think it's now starting to seem like this is a milestone in the crypto conversation because it certainly is going to deter hackers and ransomware attacks in the future. And I think it's starting to indicate that crypto might be safer than we previously believed, or at least it's safer today than five years ago. And in that it's also a priority for law enforcement. Like I thought, if you go to the cops after your crypto gets stolen, they tell you to get lost.

But that's only, that's only crypto San Francisco, where the cops tell you to get lost when you, when a crime is being committed.

But I, you know, it's, it's cool that they also had the know how to like investigate these crimes. When they published that PDF explaining like where the money filtered through, I was actually kind of impressed. I was like, wow, like this is more than, this is better than I could do. But honestly, I. It doesn't solve the more heinous crimes that we're seeing with NFTs, which is people, you know. Right. Clicking and saving.

Oh, oh man. Yeah. I'm surprised that you're not able, like there's not a way to get through doing this here and that they, I mean, they actually were fairly sophisticated. If you listen to the FBI press conference on this, the police were very, very proud of themselves. Like she used the term good old fashioned police work help solve this. Right. And so they were clearly viewing this like criminal masterminds. I don't know to the extent they went down the TikTok rabbit hole like I did for Razzlecon, but it was pretty impressive to see all the linkages and all the identity ties and all that stuff that they were actually able to pull off here.

Nikita, it does feel like there's sort of a Rubicon crossing moment here. Right. Like, it probably was easier for them in some ways to solve this crime that was committed via crypto than perhaps like a lot of traditional money laundering schemes that are involve actual cash in the real world. And I wonder, you know, part of that probably was because they stored their private keys in Google Cloud or whatever. And that's not a genius move, despite the beer drinking from your feet kind of intelligence that Razzle Khan displayed. But part of it also is that crypto as a whole is becoming safer and safer institutionally.

Yeah, I think for law enforcement, like solving these crimes is. Might actually be easier now because they can just sit at their desk and just look at the blockchain records and before they had to, you know, get in their car and interview people and do Real investigative work. But yeah, so I think actually it's. It's starting. Like, I'm actually more comfortable now holding more crypto. I certainly am not going to hold it on a. On a hardware wallet where someone could rob me, but I think holding it in a centralized exchange is pretty safe these days.

California.

Yeah, I actually saw the. There was a funny tweet out there of like the. A bunch of FBI investigators, like, standing there very proud of their loot. What would normally be like stacks and stacks of cash and bags, bags of drugs. And it was just like a little USB drive sitting on this huge table. Right. For what they captured. Well, yeah, we'll link that in the show notes as well.

But I mean, did you read her bio though? Her expertise was fraud and infosec. And I was like, oh, my God.

Do you remember in her bio, said she went to the. She went to Egypt during the Arab Spring as an economist. I was like, how many economists were instrumental in the Arab Spring? I don't remember that being a particular point of contention in that revolution.

Honestly, Zach, do not hate on Razzlekhan in my presence right now. She is a legend taken before her time to jail.

Like, all the best.

Yeah, honestly, I want one of the Draco the ruler style, like through the prison phone mixtapes that she's gonna release. Basically, you know, drop it.

Yeah, I can't wait for the surrealist wrap. I actually think certainly it's always sad and there are victims of a crime like this, but I think if anything, the upside here is we are going to have years and years of post federal prison razzle con rap. And I just can't wait to see the artistic leap that we know she's about to make.

This feels relatively like a victimless crime. And sometimes the universe just throws us a bone every now and again. I'm sure someone actually lost these bitcoin, but they moved on. It was five years ago. I'm sure it was a big group. It was only $592 a bitcoin at the time. This feels like something. After the last two years of stuff we've been through, this feels like something we really deserved, earned by all of us collectively.

We all suffered. And now we're being rewarded by so much Razzlecon content.

Well, our second crypto topic this week, Bored Ape Yacht Club. I don't know if you guys. I assume you guys saw this, but a Buzzfeed article came out last week that revealed the. The founders of Bored Ape Yacht Club. It turned out to be two pretty Normal looking white guys, honestly, you know, we could have got them involved in our podcast as well. They would have fit right in.

So wait, the guys who started Bored Ape Yacht Club are exactly the guys who you think started Board eight?

Yep, that's right. Yeah, they are the exact. Prof. And they're also from Florida, which I honestly, if you had given me like any chance to bet on where they're from, 100% of my guesses would have gone to being from Florida.

Absolutely.

A lot of people were debating though, I don't know if you guys have an opinion on this, like whether or not, I mean, these guys obviously wanted to be anonymous. They were outed against their will by buzzfeed. And I don't know if you guys have a take on whether or not they have the right to remain private in this type of situation. Is this notable something that that should be reported on? I saw a bunch of backlash on both sides, both from people saying Buzzfeed shouldn't have done this, people saying, hey, this is in public interest to do this. I don't know your guys opinions.

When I skim through the comments, it really seemed like sentiment was against buzzfeed that like this was a breach, this was unethical, but I don't think it's so black and white. Anonymity is core to the crypto ethos, but this was like one of the largest scale web three companies out there. I mean, billions are being transacted in these NFTs. I mean, they aren't like Daft Punk or something where they're just musicians wearing helmets. So this is a massive business. And I mean, how long were they going to stay anonymous? Until ipo? I mean, mean, I don't feel strongly that like either way, but I just like, I think they should have been a little more realistic about like when this would happen.

Why not until ipo? Like this is the thing that kills me, right. You're making when you say that the billions of dollars are being transacted. Yeah, billions of dollars are being transacted across JPEGs of apes. Right, Sorry. This isn't healthcare. It's not defense tech. It doesn't impact people's lives in a substantial way. Nikita, ultimately, I'm with you. They should have expected to get doxed well ahead of time. But does it really matter who's in charge of creating the JPEGs that people buy or sell? Like do you care who the people are behind fucking Pokemon cards? Like, this just feels like a, perhaps an overblown thing to me.

But but doesn't. I mean, the fact that people like the response to it, isn't that evidence that people do care? Like, no one gives a shit about the government contractor and who the CEO of businesses they. But they should. That's what matters. Gunn is getting a government contract or company tattooed on his arm. Or like, I just. I mean, maybe. Maybe we should have more public interest in what defense contracts are being being passed around. But this was like, you know, Jimmy Fallon's promoting it on his television show. Paris Hilton has one. Steph Curry has one. Ghana gets it tattooed on him. Like, this is. It's culturally relevant. And so I think the fact that it is newsworthy and was interesting to people. This isn't like some random blog. This is like a zeitgeist. And so it's sort of like, does it meet the threshold of relevance to be reported on? And I think the response to it shows that it did in my mind.

Sorry, listen, if two random guys from Florida who were going under pseudonyms online, we're starting the next Blackwater, right? And we're building a mercenary firm, I think I would be all for going out and doxxing them as early as possible, right? Like, we have a. We have an obligation. We ought to know who those people are. If the big thing that makes these people irrelevant and newsworthy is that some random celebrities have a tattoo of them on their arm. And CAA has orchestrated like 15 people buying these things and doing wash trades on them. I don't know, like, listen, fine, they got doxed. It's not the end of the world. It is what it is. But was it new, newsworthy, Hard for me to really get my head around.

Isn't that. Isn't this kind of true of anything? Like, if, you know, this is almost like saying, hey, we shouldn't have reporters focused on reality shows. We should have them all, like, in Washington, focused on government. Like, the fact that people are interested in this just shows that it's. That it's relevant and therefore it meets some materiality threshold that it can be reported on.

Right?

And so I'm not saying, like, it totally makes sense or that, but the fact that there's interest in this when if there was an anonymous defense contractor building Blackwater, like, sure, I think as a civic good, some reporter should run that to ground and run that story. But this is. It's not substant for sure, but it's pop culture. It's interesting. It seems like people care. And I think it met a level of materiality to be Reported on.

I guess the thing that's. That's jumping out to me is that there's a norm of tolerance of pseudonyms in this community. And it feels, I would say not to me personally, but to people who I've spoken to in the crowd, it feels almost disrespectful in some ways. Like in the same way that, you know, when you have reporters years ago from Occupy Wall street, right, who were going up and being respectful of not reporting on pro protesters last names, right? Like, it almost feels as though there's an element of a lack of regard for the norms of this community, that somebody is coming in and doing it. Now, listen, I'm not making the argument that somebody has to respect the norms of the community they're reporting on, but to not respect those norms, it's not then surprising to me. You get a backlash from that crowd.

I wonder if the norms are changing, though, because I don't know if you guys saw the meme web to me versus web3me where they post their own profile photo and then post their NFT or their own actual photo. And it seems like there's this. The whole culture is starting to actually dox themselves. So anonymity, I think, is remnants of the bitcoin community, which is your classic neckbeard Redditor. But I think the community's evolving with Web3 with Ethereum, and you're seeing actually people being okay, identifying a lot of people's security or their info. Like their security for protecting their wallets has improved. So there's not that looming threat of someone coming in and, you know, taking hostage of your. Of your wallet. So I think that, like, this might be an inflection point for that. That norm.

I don't know if anyone's ever come at, like, I've ever thought someone was cooler when they went from like an anonymous account to their real account. I imagine like when we went from these cartoons to real people. Nikita, when you came out as not an Indian woman, you know, it's fascinating when that happens, but anytime an anonymous Twitter account or whatever decides to go from cartoon and no name to, like, revealing themselves, it's never been like, oh, this person I think is cooler now because, like, I actually know them. Right? And it's interesting. It's like sort of the crowd that you're going to, the reason people follow you, if you make such a big step change, you might lose the intrigue or the mystery of those people.

It kind of feels like that show. Do you guys know the show, the Masked Singer. I can't say I've ever watched it, but I've seen the ads enough to understand it.

It seems like it's targeting middle aged women in middle America, but. Yeah, so right up your alley.

That's right. I actually am. People can't see this, but I'm wearing a 55 year old sweater. And so I am aspiring to my middle age.

We weren't gonna say anything. If they're watching on YouTube, I guess they can say it. We weren't gonna say anything. But yes, your mom's sweater.

I had a little pretty woman moment.

Exc.

Instead of hooker with a heart of gold, getting a nice wardrobe, it was me walking in and now walking out like I'm dressed like a gp. The point of this is all to say, like, okay, the mask singer, the whole kind of thing that I think the works about that show, I can't say I've seen it outside of being very tired on an airplane once, is they get the people on there to put on their masks and sing and perform and the judges are like, oh, is it?

Is it?

You know, they're speculating who could be under the mask. And it's always these like outrageous people. And if you think about it logically, you're like, no, actually, you know, a Rod isn't going on a like 6pm singing show on Fox, right. Or no, actually it's not like Barack Obama, who's underneath the mask on the mask singer, but because they could, it could be anybody.

Right?

The audience gets swept up along with it. And there's the same sort of effect for these pseudonyms, right? Where you're like, oh, maybe this account that's tweeting like dumb bits on Twitter that I love could be anyone. But actually it's like some random, you know, IC APM who's like 22, fresh out of the underground ad.

Have you guys ever been accused of running one of these like Venture Instagram account or like making fun of tech accounts?

Yeah, literally every day, all the time.

Someone is. And I'm like, one, have you seen my like public feed? Do you really think I'm like saving some stuff and putting it like anonymously up there? Second, it's like it's never. It's never like someone. It always seems more random than whenever I find out like who X person is behind Y account. And it's happened probably five times Games. It's never like, oh my gosh, this is, you know, some Elon Musk's account that he's running on the side it's always like, yes, it's some IC at some random tech company or something.

I actually went to a party in la, was for all the fintech or fintwit meme accounts. And surprisingly all of them were consultants at like Ernst and Young. They were all like 21 and 22. And it was kind of funny. Like I thought like, yeah, I had the same idea. These are like people like MD at Goldman Sachs or something. But in reality, the people that have the time for it, you know, are generally these kind of entry level first years at a consultancy. And it's kind of like a labor of love because you can't really monetize these accounts. Accounts. That was one thing that I learned was that all meme accounts, like they, they barely break even.

Is that right? Really?

I. I actually think that's sort of a hot take and a wrong take. Like you can't monetize them directly, but having like. Okay, here's, here's an example of this, right? We all find out there's some new like hot meme account and venture and there's a million group chats happening about, oh, who's behind at such and such, right? On Twitter, Instagram, like that sort of feverish Nancy Drew esque sleuthing trying to figure out who's behind the account. Yeah, it's not monetizable in true sense, but I guarantee you there's career acceleration that happens from people, senior people at firms knowing who you are or caring who you are because you're good at posting jokes online.

So I actually have a story about this one account that most people that listen to this probably will know. I had a conversation with recently and they actually had gotten an internship. They started with their meme account that is big. And they actually got an internship into a full time opportunity from the meme account, which is fascinating. I. Nikita, I want you to know though, just backing up a second. No matter what, we're not clipping the fact that you were at a fintwit happy hour in L. A Like, that is staying in the podcast. Regardless.

Sorry. The worst part of that is that they're not even big three consultants. The worst part is you are to fintwit meme account happy hour with Ernst and Young consultants. At least McKinsey would have made it okay.

Yeah, I mean it was. I mean they were funny dudes, but it was definitely. Everyone had some social defect, unfortunately.

I do not doubt that. Yeah, no, that's. I believe it 100%. Okay, so Brantley Milligan I don't know if this story is broadly something that people followed, but I'll give a quick primer for the folks that know just to get everyone, or folks that don't know, just to get everyone up to speed. So, so sorry to be a little elementary, but bear with me. So Brantley Milligan was a member of a decentralized autonomous organization, a dao. A DAO is basically a company with an encoded set of rules. It's transparent, there's no centralized decision making authority, and decisions are made based on the token holders. They collectively vote and make decisions. So Brantley was director of operations at Ethereum Name service ens. ENS is a DAO that if you ever see in Twitter someone that dot eth LoganBartlett eth. I don't know if you guys have your dot eth. I've never gotten around to doing it, but they're the service.

By the way, if you're listening at home, Please go Register LoganBARTLET ETH right now and redirect.

You know, one of my friends, I, I was having this exact conversation and one of my friends bought it was it was about websites and they bought loganbartlett.com so I, I don't own that. And he renews it every year.

Please go home and buy Logan loganbartlett XXX and redirect that somewhere funny as well, just for anyone listening.

Yeah, exactly. I'm gonna need to go buy all derivatives of Logan Bartlett here. So the dot ETH basically makes it easier to transfer assets between people, organizations, websites. It's also kind of a crypto flex because people can go in and see what you own. Hey, I have all these expensive NFTs or whatever it is. And so basically what happened, Brantley was at this organization and an old tweet came to light from him, 2016, that said homosexual acts are evil, transgenderism doesn't exist, abortion is murder, contraception is perversion. So is masturbation and porn. So that came to light. It kind of blew up, I think, on Saturday night and everyone was sending it around. Milligan didn't delete it, didn't retract it. Instead he doubled down and he said something to the effect of, I guess you guys finally saw the first words in my Twitter bio, which were, were Catholic. And so basically saying, hey, I believe these things and I'm going to be inclusive of other groups. I don't discriminate against other groups, but these are the things I believe. So the ENS Dow voted to remove Milligan and He was subsequently fired from his position as director of Operations for ens. So kind of a calamity situation based on one tweet, one person ironically being canceled if you will, because they wouldn't back off of their religious beliefs. Religious and air quotes here. So guys, I don't know any, any thoughts on this whole situation. Reaction, response.

I think it was an interesting demonstration of daos. I think like people were kind of panicking that he, he still today has the most voting power of any member in the organization.

And that's because he, he owns the most tokens. Right. Or people pledge their tokens to him.

Yeah. So people delegated their votes to him, but it's been dropping fast. I was looking at the chart as, as of this recording and a lot of people are converging over to and delegating to Coinbase. They're the other, they're the second largest

voting block, Coinbase, notoriously progressive in their, their views.

And you know, I think it's, it's. This is a really interesting moment because it is showing how Web3 is becoming more mainstream because these scandals and cancellations. This is not the first one. This is hap. This is like the third one this year where someone has said something horribly offensive. But it's ironic because of where crypto started. Crypto is like, started from the darkest areas of the Internet like 4chan and the Dark web. And I think this is like that moment where it's becoming less neck beardy. Cause I think they would have tolerated those opinions maybe just, maybe even three years ago. So I think that's what's kind of interesting. And overall it's a good thing. But I think it's shown that the culture has changed.

So another thing that happened this week, Binance invested in Forbes, they invested $200 million in Forbes and Forbes has the intent to spac in Q1. So for folks that don't know Binance is the world's largest crypto exchange by volume. They, they process the majority of derivatives trading which are largely illegal in the US because quote unquote, the danger they present to retail investors due to market abuse, financial crimes and the inherent nature of underlying assets which have no basis for valuation. Binance is actually one of the biggest. When you see ftx, when you see Coinbase like Binance's is just as big, if not bigger than those folks internationally. Now, now the CEO CZ was pegged by Bloomberg earlier this month. We can link in the show notes to have a net worth of $96 billion. It's actually likely far larger because it didn't include an estimate of his personal crypto holdings. And so basically the reason Binance is a little shady is they're being investigated by the doj, the irs, the CFTC in the US and a number of European and Asian regulators as well. They're being investigated for repeatedly withholding information about internal finances, misleading the public about their headquarters and compliance, conducting weak background checks on customers, actively recruiting customers who are known to be extreme money laundering risks from Russia and the Ukraine. They're accused by 30 German citizens that they were defrauded and they process transactions that are linked to an operation assisting an Islamist Islamic gunman who killed four people in Vienna. So I don't know your guys opinions or takes on this whole situation. Forbes, one of these revered business media companies now taking money from at a minimum a shady organization or at least a dubious one.

I can't wait to see the Forbes contributor headlines like maybe money laundering through Ukrainian hackers is a good thing thing. Which by the way would still only be the second worst Forbes contributor that we've seen in this episode so far.

Yeah I would. It's been a tough week for Forbes between Razzle Con and taking money from

Binance did they did. Is there any speculation on why they're doing this?

I think they needed, they just need the capital and their ability to go public. So no, no.

Why is Binance doing it?

That's my question.

I honestly, it just shows how, I mean I honestly think these crypto businesses right now are just printing so much cash. I think I saw an estimate that, that these guys, Binance were generating $20 billion in revenue last year and so I think they just all have so much cash pouring off their business. You look FTX is sponsoring every arena, every jersey, you see Coinbase all over NBA games. Like all these businesses are just, just trying to buy attention and licensing and all that. And so I assume this is a pretty direct play to set some crypto related agenda by Binance.

How much do you think it's his ego, right? Like if I had billions and billions of dollars in crypto but it was all earned in a way that gave me no social status or cache whatsoever. Which effectively is the situation we're looking at right now. Traditional media is like the inverse of that, right? Very little in the way of profit, but tremendous social cachet, social prestige, social status, status. It's like almost a like reputation laundering opportunity. Not that I, not that I think they're doing that with Forbes per se, but like associating yourself with legacy media when you've earned money in an unscrupulous way is a really effective way. Short of like donating a wing to the Met or something. It's about the best way of rehabbing your reputation that I could think of.

Cz, Forbes, Bezos, Washington Post. Basically, yeah.

Who's the billionaire in LA who bought the LA Times too? Right. Like, same thing. It's a lot of folks who I would imagine, you know, like the kind of people who made their money in ways outside of perhaps the east coast mainstream who now like get to go to the fun cocktail parties and whatever.

Did anyone tell him that Forbes is the worst publication out there? Like,

I have many. One friend that works at Forbes, so I will, I will defend. Yeah, Alex Conrad made it this far into this episode. I just want you to know I defended your honor there.

Just want you to know we love Forbes. Nikita. He was turned down from Zach and

I, basically pleading to be on the Midas list at some point. This is our like, shilling to get on it.

Please do not keep me from the Midas brink list. Alex Conrad, I mean, if he wanted

to get invited to like cocktail part, why don't he like, buy the Economist or something? I don't know, like, like an actual respectable publication.

Well, I think they actually went through. I read something. I. I read something a few that they, they, they evaluated all the options. I actually think they did look at Buzzfeed, joking aside, and they looked at Forbes and they were trying to find their play in all of this. So I think that was the case. And I have to assume, I mean, if this guy's worth $96 billion, he could do this at a personal level. Theoretically. Right. But this was actually Binance as an entity doing it. And so I have to think this wasn't like a total civic good. It wasn't Amazon investing in the Washington Post. It was Binance doing it. And so I have to think there's some strategic agenda behind it. Or at least they pulled enough.

I don't know. Do you guys remember that information article that came out a while ago that basically said that Amazon Studios is like an expensive loss leader for Jeff Bezos sex life. Like, in some ways this sort of feels like a similar bit. Right? It's like, I don't know that there is any strategy outside of inflating the ego of somebody whose ego is presumably already quite large.

So the other big news item of the week was John Foley announced that he was stepping down from peloton. So John Foley was the founder and CEO and now he's stepping up into the executive chairman role. Barry McCarthy, the former CEO of Spotify and Netflix, is taking over as CEO. In addition to this, the company is laying off 2,800 employees. Blackwell's Capital actually released a pretty eviscerating takedown on Foley's leadership. We can link to in the show notes, but there were definitely some pretty bad takes. Now a little bit of inside baseball here. I've heard Foley's like a fantastic guy and so I wonder these, these the quotes we're about to read sound really, really bad. I assume there was probably some level of deprecation in the comments when he actually said them. I didn't go back and link to the source, but in Blackwell's tear down. So on September 22nd of this year he said, or last year he said we think we are playing chess while others are. To be honest, they aren't even playing checkers. He also said that's a good. I think I'm not a very. What's that?

That's a good line. That's funny.

It's funny if your stock doesn't trade down 70% subsequent to saying that. So next he said, I think I'm not a very good manager. I interview almost nobody. In response to a question of if there's anything he doesn't like about being a CEO in that he delegates to others, he said finance our CFO does 99% of finance. I engage because I want to know how we're doing. But to say I don't add value to her operation is an understatement. You can also say the same with technology. I'll go sometimes months without talking to our cto, which as a CEO of a technology company, that's kind of rare. Also notably, there was a child that died in a tragic treadmill accident. It was really poorly handled after it happened. And they also pointed to his wife running the Peloton apparels business, which hasn't been a particular success. So I don't know your guys thoughts on all this.

Let's put aside for a second the horrible tragedy of the child. Which certainly goes without saying. Like my pro, I feel very sympathetic. Not only do I think, by the way, it's impressive that he built this incredible business and basically invented this category right on his own fully. But I have to say, like any of us could have the same compilation of self deprecating dry humor weaponized against us by some activist investor. I mean probably not because I don't know any activist Investors are going after VC firms. But point being, like anybody who has a yet one day when a VC firm goes public. But I can't imagine like having what seems like a relatively good sense of humor and being self deprecating and then having, you know, a business falter after building it in less than a decade and creating a category and having that completely weaponized, that makes me feel very sympathetic. As somebody who says a lot of self deprecating quotes, it's bold of you

to come out and support a founders. Zach, I. It's impressive that you're willing to take such a strong stance here.

I'm the only vc, in fact the rare VC who just.

The rare VC willing to. Willing to grandstand on behalf of founders. No willingness. Yeah, yeah, I agree with the overall point though. I mean now to say I've been so perplexed by peloton's operations over the last two years. Do you guys have a Peloton?

No.

No. Okay.

So I mean Logan, nobody here works out regularly. Okay, let's not pretend like this is some athletic crap.

So I have a peloton and I enjoy it. I use it fairly regularly. And it's hard for me to believe. I always thought it was kind of the perfect business in some ways that it had this big upfront capex spend that covered all the cost of acquisition of the customers. It was actually, I think profitable at first acquisition. And so that was like a big upfront cash flow payment and then there was a subscription to go after it. Right. And so you had the best of like perpetual license SaaS where it's like these big upfront cash flow payments and then the subscription and the annuity and then the pandemic hits and you think it's going to accelerate all these aspects of their business and the stock's actually down from where it was prior to the pandemic. And so it's actually just been baffling to me all the management issues that they've clearly had with supply chain. And not to say this is easy, no one saw a global pandemic pandemic coming. But it's always been super perplexing to me. Always. The last six months have been super perplexing to me that the stock has gone through all these issues. So in some ways I think like my understanding is Foley had the voting structure to totally block this and to keep it from happening. And so to some extent I appreciate the self awareness. Who knows what's going on behind the scenes. But for him to say, hey, I got it Here it's really special what he built into this iconic company that's still working, worth whatever 8 to 10 billion dollars. But to say, hey, I might not be the person to take it from here, I'm sure that was incredibly painful and incredibly difficult. But it kind of kudos to him for at least the recognition that maybe he wasn't the right person from here.

I mean, relative to all the other Covid stocks, he didn't perform that much worse. I mean, you look at Zoom, it has the same drawdown. I mean the guys, I mean aside from his crazy Adam Newman quotes, I think, you know, he has a storied history in tech. He ran a bunch of dot coms back in the day, headed Barnes and Noble's like consumer business. So I, yeah, I think, you know, he's probably getting a short end of the stick for building this company like he did. I mean he did a lot of work here.

I will say the thing that I'm impressed by is Logan, to your point, we don't often talk about the fact that the founder who starts the company and builds the company, even who takes it to ipo, like may not be the best person to go from IPO for the next 20 years afterwards. And so I think you're right. Like, I don't know, I will continue to grandstand for founders, but this founder in particular, I have a lot of respect for him having the either self awareness or at least awareness to step back and say, hey, even though I could keep doing this, perhaps I'm not the right person to do so.

Yeah, well, once upon a time, I mean that narrative has shifted in the last 10, 12 years. Like once upon a time that was a pretty commonplace narrative in VC that hey, the person that starts the business might not be the long term CEO. And so founders lived in, you know, paranoia of, of having this situation play out in the private markets, not the public markets. Like famously Sequoia and Cisco is, is one example of this way back when and more recently, I mean everyone sort of knows the Travis Kalanick Uber situation, right? And so VCs have had a reputation for this. I just feel like the dial has shifted to so founder friendly and founder should be the only CEO that's interesting to see the counter narrative or actually play out. The other thing that I found fascinating in this whole situation now, there were some self, there were some Ls that they took that were probably unnecessary. One of the things, when they laid off the 2,800 people, they gave them a year long subscription to Peloton, which just, it's like breaking up with someone and giving them a picture of you as you walk out the door. It's like, hey, you might want to keep this. Like, I'm sure it was very well intentioned, but probably was avoidable.

I mean, you can't even use your, like, if, you know, if you're getting fired from Peloton, you don't have a job, you're probably going to go then sell your Peloton. So I don't know what you're going to do with a one year subscription afterwards.

Well, I remain a happy Peloton user and hopefully this next journey they'll actually work together, Foley and the new CEO. And so hopefully there's a future path here that leads to some share price appreciation. My concern would be that CEOs are going to be worried about these types of things being weaponized against them in the future and that we're going to end up with people that are humorless. Like, once upon a time we had.

So wait, wait, one last question for you guys. How many of your friends were bag holders of Peloton stock?

I didn't hear from many, so if they were, they were not willing to profess it.

A lot of my friends, half my group chats are down like six figures.

I mean, honestly, is that because they were, they were owners and loved the product and, and just bought the stock as well?

I. They were just mindlessly buying meme stocks and they, they went all in on. On Peloton. For some of them, I think it was like 30% of their portfolio.

Wow.

Oh, my gosh. Wow.

Well, yeah, it was as though I

didn't, I was like iPad on a bike? No, thank you.

Yeah, WUZ is doing a lot of work in that sentence for their 30%

Nikita, once again preserving his ability to buy G wagons where others have failed.

Well, that'll do it for our third episode of three Cartoon Avatars. Thanks for joining us and making it through this episode with us, Zach. Anyway, any parting thoughts?

We'll be back next week. If you happen to launder billions and billions of dollars, please post some wraps now so we can just get those out ahead of next week.

Nikita, the listeners are anxiously awaiting. At least give one clue. We can't keep teasing that you're going to announce your app here on the show and people are going to listen all the way through.

I feel like this has been really unfair and I, I shouldn't keep teasing the audience. So I'm going to do the big reveal. What I'm actually building right now is.