Winning the Degenerate Economy with StockTwits CEO Howard Lindzon | Masters in Business

0:00 [music] Bloomberg Audio Studios podcasts, radio, news.

0:10 This [music] is Masters in Business with Barry Ritoltz on Bloomberg Radio.

0:16 This week on the podcast, strap yourself in for a banger.

0:20 I welcome back my old friend, uh, degenerate gambler, Howard Linden.

0:25 We talk about stock [music] twits, about social leverage,

0:28 about his early investment in Robin Hood,

0:30 about why he's concerned about the degeneracy economy uh

0:36 between memecoins and end of day options and parlays.

0:41 He's concerned about what the next generation is doing.

0:44 I thought this conversation was hilarious and I think you will also.

0:48 With no further ado, my sit down with the one and only Howard Lensen.

0:54 Wow.

0:54 If only my kids could hear that.

0:56 I know.

0:56 They think you're just an old man.

0:57 They have

0:58 They wse.

1:00 Show use the finger and ask for pity.

1:03 Surgically reattached.

1:05 Surgically reattached is a lesson of how lucky we are.

1:09 But we're yours.

1:10 I've lived without acute pain.

1:14 Like first of all, when I when I cut it off,

1:17 it's amazing how many people do do that.

1:19 Was it still dangling on or was it severed completely?

1:22 You pick it up, you call 911, and you go.

1:25 As a Jew, I wasn't sure if I boil it or freeze it.

1:28 [laughter] So, that was the question I asked 911 cuz this never happened.

1:31 Well, as a Jew, you're only supposed to take the tip off.

1:33 I don't know if you cook it.

1:34 I don't know if you freeze it.

1:36 [laughter] It's like a lobster.

1:38 So, uh, the woman on 911 said to please don't bleed out.

1:42 I go, that is not helpful right now.

1:44 [laughter] Now, as luck would have it, I live on Coronado.

1:48 Good advice.

1:49 Don't bleed out.

1:50 Good advice.

1:50 I'm like, the one time I got a call 911, I go, "Let's not talk.

1:54 Get me a machine over to my house.

1:56 Get me a robot." So, living in Coronado is a magical place.

2:00 You've been there

2:01 a couple times.

2:01 And the great news about Cornado is the Navy bays, Navy Seals are there.

2:04 It's like the It's the greatest place.

2:06 They have a hospital right there.

2:08 They do.

2:08 But I'm saying there's cops and firemen everywhere.

2:11 Right.

2:12 So, literally, as I'm dialing 911, I It's like they knew I cut my finger off.

2:17 So, so as a miracle would have it, uh, the the the young,

2:22 um, I've never really had to be in an ambulance, so again, I'm lucky.

2:26 And, um, they took me off island cuz they found

2:28 a hand surgeon who turned out to be 30 years old,

2:30 which freaked me out cuz I thought he'd sew it on backwards or whatever.

2:34 Anyways, long story short, you know,

2:36 I was at peace once you realize you're going to live.

2:39 Yeah.

2:39 Cuz it's I've never had that happen.

2:40 Like something like that happen.

2:42 Were you gushing blood?

2:43 Was it frightening?

2:43 Yeah.

2:44 Yeah.

2:44 I to as a favorite of my wife, I went to the neighbors to bleed.

2:48 [laughter] So it was like the next day it was spotless in front of our house.

2:51 But um as luck would have everybody did a great job.

2:55 The the amazing thing we make fun of so many things in America these days.

3:00 The emergency system.

3:02 I needed it.

3:03 I don't care what I pay in taxes.

3:04 It was it was amazing.

3:06 Right.

3:06 And yet you still have 10 fingers.

3:09 Yeah, I have 10 fingers for now.

3:10 The joke in the family is I don't want it

3:12 because it's kind of like a dead finger at this point.

3:14 Oh, really?

3:15 Will it be functional?

3:16 Will you regain function?

3:17 It feels like if if I'm using it, it just feels like a a wet skin,

3:23 right?

3:23 And so I'm not happy.

3:24 But the doctor was like, you can decide later.

3:27 It was his You want a prosthetic or No, not a prosthetic.

3:31 If you just want to work with a nub, it's only a third of the finger.

3:36 Right.

3:35 So anyways, it's it was traumatic, but here we are.

3:38 Wow.

3:38 All right.

3:39 Yeah.

3:39 There's great stories.

3:40 If you're a storyteller, cut a finger off.

3:42 [laughter] I mean, if you want traffic on Twitter, bleed out.

3:48 Um, yeah, you you get traffic, but no engagement.

3:51 That's the problem.

3:51 I want to go viral.

3:52 I got nine chance as well.

3:55 Uh, 21 if you want to be accurate.

3:57 Toes are not good in the opportunity.

3:59 Fingers are good.

4:00 And 21.

4:01 The 21st.

4:02 No go.

4:03 The 21st he could be president.

4:06 [laughter] So, let let's roll back a little bit

4:09 and and start with your your early uh education.

4:15 Bachelor's from commerce uh university,

4:19 bachelor's in commerce from the university at Western Ontario.

4:24 Yeah, it's a famous business school for

4:26 NBA Arizona State and famous for uh bums.

4:30 Arizona State Business School.

4:31 What does that even mean?

4:32 and then masters at Thunderbird School of GL global management

4:35 which was a great school now owned by and a great animated cartoon in the 60s.

4:40 Correct.

4:41 Um so what given all that what was the original career plan?

4:46 Comedy.

4:46 Yeah.

4:46 I grew up uh you and Martin Short right out of Canada right?

4:50 Not much.

4:51 He was already older.

4:52 But I grew up in Toronto and that was so

4:55 when I was 75 watching Johnny Carson on my first TV.

5:00 Um, you saw everybody and it was like

5:03 your living room and so it's Toronto had Second City.

5:05 John Candy, Martin Short, Eugene Levy.

5:08 Second City was before Saturday Night Live and and so I grew up to surround

5:12 around the same time, weren't they?

5:13 Little earlier.

5:14 Yeah.

5:15 So I'm like 12 years old giggling, you know, and there was no internet.

5:20 So you were like, "Go to the comedy clubs

5:22 with your friends." Toronto had this club called Yuck Yucks,

5:26 which was a famous chain like the improv but of Canada.

5:29 And you had Mike Myers, another Canadian.

5:32 Yeah.

5:33 Everybody exploding onto the scene at the same time.

5:37 And so I was doing standup in high school.

5:39 Get out.

5:40 But not good obviously.

5:42 But Mike Myers would come up.

5:44 Mike Myers would come up and kill.

5:45 He was like 17 years old.

5:47 Jim Car's 14 years old, killing,

5:51 right?

5:50 And so everybody wanted to be a comic.

5:52 No different than like the web 2.0.

5:54 Everybody went to Stanford to be an engineer.

5:57 Certain in '90s it was investment banking.

5:59 Now it'll be robots and AI.

6:02 It's just what's in the water.

6:03 And I grew up with comedy in the water.

6:06 And so that was the goal.

6:08 And obviously, you know, with Jewish parents at the time,

6:11 that ain't flying, especially I wasn't good, right?

6:14 And so I went to school.

6:15 You you dropped that you weren't good as like an afterthought.

6:19 I think if you're successful and earning a living,

6:23 well, I wasn't.

6:24 Even a Jewish parent will put up with you.

6:27 It would be nuts.

6:28 Jerry Seinfeld's mom is fine with it.

6:30 Yes.

6:30 But I'm saying now if my son came to me and said,

6:32 "I'm going to go hit the Comedy Tour." I'd warn him how dark it is.

6:35 But I'd say, "Go make it.

6:36 Go on YouTube.

6:37 like right 10,000 hours you don't have to live in motel 10,000

6:42 hours get the faster you get those 10,000 hours in the better

6:45 that's right so you grow up in Canada you start your career

6:48 in Phoenix and San Diego and New York City I'm curious that's an interesting

6:55 you know uh Toronto Phoenix San Diego New York how did that geographical

7:03 um upbringing affect your perspective as an investor Who was it investor?

7:08 I don't know.

7:08 Because as a kid, I was lucky.

7:12 Yeah.

7:11 Because if you're Jewish in Toronto or New York at that area, you go to Florida,

7:15 you know, the original Deloka Vista.

7:18 And um but my dad was different and he discovered Phoenix.

7:24 Uhhuh.

7:24 And so in the 80s, like Phoenix was

7:26 like swamp coolers and he just liked the weather.

7:28 And I don't know.

7:29 I'll let you in on a little secret.

7:31 The weather in Florida ain't great.

7:33 It's humid.

7:34 It it to my dad obviously that's what he

7:37 Yeah.

7:37 So that's way he discovered Phoenix and bought

7:39 a home and I liked golf and biking.

7:41 And so lucky for me,

7:42 we had a I went instead of going to Florida, we were going to Arizona.

7:47 And so I would go to the football games as a kid and I was like ASU.

7:52 That was my dream.

7:53 Just get just just go to Arizona State University, which I ended up, you know,

7:57 doing for grad school, which isn't a great grad school, but it's party school.

8:00 But that was my dream.

8:02 Get out of Canada, right?

8:03 So I got lucky.

8:04 I, you know, my parents exposed me to, you know,

8:07 Arizona and I went to ASU had the time.

8:11 It was amazing.

8:12 And then if you're Jewish in Phoenix,

8:16 cuz the summers,

8:19 right,

8:18 it's it's like New York goes to Florida in the winter.

8:20 Jewish people in Phoenix go to this go to San

8:23 Diego in the summer to get out of the Right.

8:25 They want to closer to the ocean.

8:26 It's a nice weather.

8:27 6 hour drive and it's 70°

8:29 and I love La Hoya and that's the whole it's called zonies.

8:33 So Arizonans flood San Diego to to Delmare.

8:38 I wish.

8:39 So we grew up Coronado.

8:41 Not grew up, sorry.

8:42 I I my in-laws had a place in Coronado.

8:45 And so when we had kids, I'm like, get out of the heat if you're not rich.

8:48 Summer in Coronado.

8:49 Yeah.

8:49 We not summer, but a week here, a week there.

8:51 I wish California wasn't 6 hours away.

8:54 If it was two hours away, 100%.

8:57 We were just in San Francisco.

9:00 It's fun again.

9:01 It's a boom town.

9:03 Tales of an apocalyptic hellscape have been

9:05 wildly exaggerated.

9:06 It's still not my fave, but it's cool.

9:07 It's less homeless than New York.

9:09 Yeah, I'm I'm not just talking about homeless.

9:11 The people are still

9:13 They're educated.

9:14 They're intelligent.

9:15 I mean, if you're if you lose, if you're not New York City, it's not New York.

9:19 You could, you know, when you leave New York, I I don't know about you,

9:26 I make a conscious effort to not be that New York abroad,

9:31 even out of out of town.

9:36 Yeah.

9:35 California, especially San Francisco.

9:37 S doesn't feel like you've left town.

9:41 I love it.

9:43 Yeah.

9:42 I mean, I just have the California bug.

9:45 Yes.

9:44 But coast to coast is a dream and I get to live it.

9:47 So,

9:47 it it's just a lot of travel.

9:49 The thing about and I do like Florida a lot but same as you

9:53 six hours like Phoenix or San Diego Florida is like not on the map.

9:57 It's no one does it like it's not a thing

9:59 right.

9:59 No Phoenix to San Diego makes sense.

10:02 Phoenix to Florida just like New York to Florida makes sense.

10:07 Correct.

10:06 New York to So you ask So you ask how'd that happen?

10:09 That's the right of passage.

10:10 Instead of Toronto, Florida my whole life I jumped to the west coast

10:15 and then I discovered San Diego through my in-laws and my wife and man.

10:20 Well, you've been to Coronado.

10:23 Yeah.

10:23 So, let's let me let me wrestle this back into submission.

10:26 So, you've worn a lot of hats.

10:28 You're a hedge fund manager, a founder,

10:30 a CEO, a seed investor, a media personality.

10:34 How do you describe to people who don't know you what you do?

10:38 It's a great question.

10:39 My in-laws are in their 80s and they they still ask me,

10:41 "What do we tell people you do?" And I'm like,

10:44 "Who the hell cares?" And the world's now decided that for you.

10:47 No one cares, right?

10:49 So, what do you do?

10:50 Right?

10:50 Like I think we're getting back into like where it's you should

10:54 be proud to have like a um what do you call profession?

10:57 I don't have a profession.

10:58 So, you asked how I got started as an investing.

11:01 I got started as investing because I failed at everything else.

11:04 Uh-huh.

11:05 And which is kind of the Larry David part of it

11:07 is like I stumbled into it because the internet is like water.

11:12 It'd be like discovering California.

11:14 Like internet was like tech.

11:17 So the '9s were like I didn't understand it was semiconductors.

11:21 We're full circle.

11:21 Right.

11:23 Coder.

11:22 I'm not a coder.

11:23 I don't even know how things work.

11:24 I never did Radio Shack.

11:26 Right.

11:26 Right.

11:26 Like so the odd I like walkietalkies were freaking me out.

11:30 So the odds of me being in tech are are are part of the comedy.

11:34 Full circle.

11:34 We are now back in a tech world.

11:36 Robots, chips, like real stuff.

11:39 Glo.

11:40 A little secret.

11:40 We never left.

11:41 It just kind of fell.

11:42 No, but I I found the goofball era.

11:44 Web two was the goofball era where you and I or social media.

11:48 You could be the class clown and have scale.

11:52 Okay.

11:51 Now that's gone again.

11:52 And class clown.

11:53 You now you need to be a bully again.

11:55 It's it's you need to already have distribution,

11:59 right?

11:59 It's hard to build distribution today.

12:01 So I'm saying being an early adopter is certainly an advantage.

12:04 Super.

12:05 But now it it doesn't matter.

12:06 You have to have real tech chops again.

12:08 You can't pose like I am.

12:09 Like I have imposttor syndrome for the right reasons, right?

12:12 Because I'm an impostor.

12:14 Meaning the internet left a little opening in 2006 for goofballs.

12:19 And we got to participate in an era of free growth when

12:24 Facebook didn't charge you or have an AI algorithm that blocked you.

12:27 You could say whatever you want.

12:28 And people go, "He's funny." And you could scale for free.

12:32 Which is why we had an internet boom,

12:34 web 2.0 internet boom right after the internet cris.

12:37 Now we live in an era where those people

12:39 are confusing their genius for a bull market, right?

12:43 And we're all sick of those people.

12:45 Can can I push back on you a tiny little bit

12:47 cuz I know you for so so well for so long.

12:53 Hold the imposttor syndrome aside.

12:55 Um, the early internet rewarded people who could communicate effectively,

13:07 be it work your way through the media, be it blogs

13:12 or short form blogs like Twitter or other

13:15 social media or uh podcasts or video and YouTube.

13:21 There's a whole run of different um ways to use the internet to scale.

13:31 Yeah.

13:29 So, it's not an impostor.

13:32 You basically just kept tacking into what was working.

13:35 Oh, this works.

13:36 Let's do more of it.

13:37 Of course, but the era was free.

13:40 So, you had that great financial crisis.

13:42 No one thought the internet was going to happen.

13:44 So, meaning Uber couldn't be possible without Google Maps.

13:48 Like, people say Uber is great.

13:50 It wasn't possible unless there was an iPhone, the cloud,

13:54 media, global be typing, "I want a taxi." Without Google Maps,

13:58 no one would know where to go.

13:59 That's right.

13:59 And all of that only worked because of the bubble

14:02 and the buildout of Global Crossing and Metro Media Fiber.

14:06 So, I'm saying $1,000 a mile bought for pennies.

14:09 No, but my imposttor syndrome is born of course I have an ego

14:13 but my imposter syndrome was surrounded by crazy people who who are

14:16 mistaking as I was talking to Tim O'Brien if this was we went

14:21 from a world where strength mattered not that long ago where this matters

14:26 right no

14:27 and I'm like people just the humility is gone and I feel

14:31 it's with my kids and everything it's with the injury and everything

14:35 you have to have some humility we need to get back to having

14:38 some humility and laughing at our success and going, "Wait a minute.

14:41 It was a bull market, zero interest,

14:42 there was Zerp, there was the free internet,

14:45 AWS, you had YouTube, you had if you did, here's my question.

14:51 If you aren't successful,

14:53 that'd be more interesting." I want to talk to the guy like

14:56 the Larry David commercial with FTX when he's like, "Oh, the circle.

15:00 Who fire?

15:01 Who needs a Who needs fire?

15:02 That was such a great commercial because only Larry David

15:05 or you know I know the guys who wrote the commercial

15:09 that what made that commercial great is Larry David gets the joke.

15:13 You idiots on it.

15:14 You're in on the fact that of course you made money.

15:17 You worked at Facebook.

15:19 It grew because the product was genius and tricked people into signing up.

15:24 You did nothing except ride the the train.

15:27 Now I'm not saying smart people didn't work there,

15:29 but let's remember Game of Thrones were all dead.

15:31 The people that are successful today are Mark Andre and Chamat.

15:34 The people that I can't like are hilarious to me.

15:38 They have no humility.

15:39 Is that Game of Thrones are we're all dead first, second, first scene.

15:43 There's a hammer in our heads.

15:45 And and you and I might have a chance cuz we're the court jester.

15:49 That's right.

15:49 And if we dance well enough,

15:51 dance for me, monkey boy.

15:52 But Andre dead.

15:53 Jamaat dead.

15:55 There's just a pitchfork in their foreheads on the first scene of Gladiator.

15:58 Well, if you you know, so that's the

16:00 you have people like Da Vinci that were consultants

16:03 to the king to help build weapons and things.

16:06 So unless you can you know early days of Palunteer,

16:10 unless you can say, "Hey, here's how to make a better catapult."

16:15 Sure.

16:15 You know, those guys survived.

16:16 So I'm saying I come along like tweeting

16:19 stock twitch like it was just enabling communication.

16:22 Listen, I'm very proud of this stuff,

16:24 but I'm also can laugh about how stupid it is.

16:27 Like I don't have another trick.

16:29 Like the internet left this opening kind of like discovering California.

16:33 If you're early to discover California and made it past

16:36 the Indians and the mountains and didn't get robbed by like murdered, stampeded

16:41 cash like let's carry all our money in a stage

16:43 coast pulled by horses at 3 m an hour.

16:46 What are the odds we get killed?

16:47 Right?

16:48 It's impossible.

16:49 So the internet left this opening and I snuck through it

16:53 and it's fun to look back with some humor at the whole thing.

16:56 you going to let

16:56 I think the hole's closed up.

16:59 Elon owns the pipes.

17:00 Zuckerberg owns the pipes.

17:02 Uh True Social owns their version of a pipe.

17:05 Uh Tik Tok has an algorithm.

17:07 How do you break through?

17:08 Cuz those things get tired and the next gen

17:11 says just the way fa just the way Facebook became,

17:15 oh, my parents are on Facebook.

17:16 I'm out.

17:17 I'm going to go to Insta and then I'm going to go to Tik Tok.

17:20 And so there'll be something new.

17:22 I'm not questioning that.

17:22 I'm just questioning it'll never have been it'll

17:26 never be easier than when I made money.

17:28 And I'm cool with that.

17:29 Like that's the imposter.

17:31 I don't dis completely disagree with you.

17:33 And you're touching on a pet thesis I love to ask.

17:37 What would have happened to you had you been

17:40 born a 100 years earlier or even 25 years earlier?

17:46 Right.

17:46 If you're born in 1940.

17:49 Mhm.

17:49 What happened?

17:50 I'm a furer.

17:51 [laughter] Look at my aunts.

17:55 Moa.

17:57 I have all these beavers.

17:58 I have a a cafe that has so many dishes on it that make no sense

18:03 and I'm selling furs or something.

18:04 I mean, I had no shot.

18:06 I have no strength.

18:07 Right.

18:07 Just think about how fortunate.

18:08 I cut my own finger off, right?

18:11 So, if you didn't bleed out, you're nine fingers that way forever.

18:14 No, you should have that off.

18:16 You stick You stick your finger into the fire and you corderize it.

18:19 That's what the old-timers would tell you.

18:21 Get a B get a piece of steel in the in the fire.

18:24 They'll heat up the iron.

18:25 You just burn it and that's your All I thought about was like how

18:30 what's the what's the is the ambulance going to charge too much

18:34 and should I bleed at the neighbor's house?

18:36 Those were my first two thoughts.

18:37 My wife will kill me that I'm bleeding in [music] our yard.

18:39 Coming up, we continue our conversation with Howard Linden,

18:43 uh co-founder of Social Leverage,

18:46 discussing what he calls the degenerate economy.

18:49 [music] I'm Barry Rholz.

18:51 You're listening to Masters in Business on Bloomberg Radio.

18:55 [music] [music] I'm Barry Rholz.

19:06 You're listening to Masters in Business on Bloomberg Radio.

19:10 My extra special guest is someone I've known for too long.

19:13 Howard Linden, co-founder of Social Leverage, uh,

19:17 one of the earliest seed investors in Robin Hood, which is a chapter in my book.

19:21 Howard, let's do segment two.

19:24 And I have to start by asking

19:27 about social leverage.

19:28 You you've been doing this for

19:31 20 years.

19:31 Yeah.

19:31 So how from the first seed fund you did

19:34 to today where you have a portfolio of 150 plus companies, how has this evolved?

19:40 First of all, what was the first company you invested in?

19:42 So the first company I invested in was the was so dumb.

19:47 Car cars direct 1998.

19:50 The tippy top as my wire left digitally

19:55 my fingertips or whatever bank it was coming from.

19:58 It was worthless.

19:59 meaning like it was a series Q, [snorts] right?

20:02 But this you were just early.

20:03 This is Pets.com eventually became

20:06 but I was late in that cycle cuz would have been

20:09 Yeah.

20:09 So I was the retail idiot.

20:11 So I grew up

20:12 like I said I went to ASU.

20:14 You're going to be a furer,

20:17 right?

20:16 That's your chance.

20:17 And so and a bad one cuz you know um so the internet comes along.

20:21 I fall in love with stock market because I had made some money

20:25 at my at my first startup and I had to be my own broker and so Yahoo Finance,

20:30 Jim Kramer, Street.com, like they're still around, right?

20:34 So So those were my onboarding.

20:36 You you were writing for the street.com.

20:38 They were the dominant like people who were younger don't realize still massive.

20:43 Kramer's still massive.

20:44 I I think the street.com doesn't get the traffic.

20:48 Well, yeah.

20:48 Well, he's on TV twice a day.

20:51 saying this is 30 years.

20:54 Yeah.

20:53 So that was my introduction to retail

20:56 investing cuz I couldn't afford a Bloomberg.

20:58 Still can't.

21:00 So the Drake I think you could afford a Bloomberg post

21:03 I could I wouldn't know how to use Robin Hood.

21:04 I wouldn't know how to use it unless there's a phone charge.

21:09 Especially with nine fingers.

21:10 How you need all 10 fingers for the terminal.

21:12 So I was inspired by you that street.com had murderers row of writers.

21:17 So a new investor.

21:19 Uh, I just would sit and wait for articles to come out and Yahoo Finance.

21:23 So, I was on the message boards.

21:24 Pearlman, you like we were on the message.

21:27 So, Cars Direct was your first investment

21:30 and 10 years later, I got 10% of my money back after it being successful.

21:34 So, so my first thing was a disaster.

21:37 What was your first successful investment?

21:39 So, my first successful investment was a cold call that I made pre- internet

21:42 in a in a company I probably talked about on the last show called The Grip.

21:45 It was the so I had the good fortune of being an hour before the internet.

21:52 Before the internet, an hour before the internet.

21:54 The thing before the thing was QVC, I recall.

21:58 Okay.

21:58 So before the internet still on TV,

22:00 QVC was the internet.

22:02 Meaning there was the whole of Philadelphia was

22:04 just old people on the phone saying, "Yes, yes,

22:06 we'll take your order and your credit card." And if

22:09 you were on QVC was a studio like this,

22:12 we had a product called the Grip.

22:13 I recall this

22:14 and it's in the QVC Hall of Fame.

22:17 So I made a cold call while I was a stock broker

22:18 to this kid thinking he was rich cuz back in the '9s

22:22 you it was just like the movie you would get

22:25 a newspaper and decide who you're going to cold call that day.

22:28 So I hated my job.

22:30 That was my first job out of college and I was cold calling to get rich clients

22:34 and I called this kid and he ended

22:36 up needing money like he was just promoting himself.

22:39 He reverse pitched you.

22:40 He he he reverse pitched me and and I and I had to cobble up

22:45 25 grand from my mom and friends and I had my and I'm like I'm in.

22:49 And then he paid off his AMX with that 25.

22:52 By the way, every every stock broker

22:54 and salesperson appreciates a good sales pitch.

22:57 They're sucker for a good sales pitch.

22:58 Well, he was promoting himself and I was trying

23:01 to sell him some and he sold me on his company.

23:03 Turned out to be a home run company.

23:05 It was it was he was a dropout.

23:07 Mark Scattered.

23:08 unbelievable entrepreneur and he had he made

23:12 this product with five balloons wrapped around this Siberian

23:16 millet and we were the largest Siberian millet orderers in the world in the '9s

23:22 cuz we were making millions of balls a month by by hand and selling them

23:25 with corporate logos on them during the whole

23:27 '9s runies and just a desk toy a squeeze

23:31 desk toy but our genius was putting corporate logos on it

23:34 nobody had done that before

23:35 well that industry was huge in the '9s corporate giveaways,

23:39 right, with trade shows and whatever.

23:40 And we just got the right product at the right time.

23:43 And did what?

23:44 Oh my god.

23:45 We were just We were the ball.

23:47 There's so many ball jokes, but they'd all get deleted here.

23:50 We were the ball boys of the '9s.

23:52 How many did these We did 60 70 million in sales.

23:55 Get out.

23:56 And the margins were crazy because unlike retail,

23:59 if you put Bed Bath and Beyond or Compact on a Ball, they own it, right?

24:03 There's no returns.

24:04 Uhhuh.

24:05 And so so we just had this pet rock business where

24:09 like compact would call and we need a million balls for comx

24:11 and we'd just hire people illegal aliens and they would come into Phoenix

24:15 and they would all cut their fingers off by making these things.

24:19 But you made it in the states.

24:20 We made it in the states.

24:21 We spent we all our money was trying to figure out how to machine make

24:25 these in the '9s and we wasted so much

24:28 money trying to like get humans out of the process.

24:30 Compact would order a million, pay you right, in advance to start.

24:35 So we'd be buying cars.

24:37 It was just two person company and like a bunch of like staff.

24:41 And so we'd go out to lunch and buy cars

24:43 because we were paid before we even started making the product.

24:47 And and so we were like that's how I learned business kind of like

24:51 And you started this on QVC?

24:53 No.

24:53 QVC picked us up and Mark used to go on TV and back back in the 90s in QVC

24:59 if it was selling they just kept you out there like a cartoon character.

25:02 They didn't they hadn't scientifically gone to the profit per second model

25:08 because they were surprised at their success.

25:10 So, the grip appealed to like 70-year-old women who had

25:14 carpal like they just like squeezing little arthritis, little arthritis.

25:18 So, we created this $19 threeack that had soft, medium,

25:21 and I swear to God, you can't make this up.

25:24 And soft, medium, and firm.

25:26 And QVC just kept Mark on stage all day and the numbers would go unbelievable.

25:30 And and um it was a miracle.

25:34 That was our first success.

25:35 So that was so I was very much that was my first internet success.

25:40 So when did sorry that was my first success.

25:42 When did social leverage launch?

25:44 So so so you you and I both lived through this the the great financial crisis.

25:52 Uhhuh.

25:50 And that was an era of so up until

25:53 2007 2006 we lived in a world of financial leverage.

25:57 Mhm.

25:58 Meaning, and we know what happened at the end of that, stacking,

26:02 you know, Excel came out,

26:04 people didn't have to, my dad, when I grew up with my dad in Toronto,

26:08 if you did an acquisition,

26:09 it was like 700 pieces of paper with pencil, taped together,

26:14 then Excel comes out, which of course nothing,

26:18 you know, everything's made up at that point.

26:20 And one one sell off can change the world.

26:23 But but we became a world stacking things financial

26:28 leverage right that was the banking era and the end

26:31 of the financial leverage era came in 2006 2007

26:34 at the same time that social media came out.

26:37 So the the play on words was I wanted to as an early

26:40 adopter of social media I was like if an idiot

26:43 like me so the idea was social leverage you can implode

26:48 with social leverage whereas it's financial of course well that was

26:52 pre-ancelled so I'm saying my thesis was oh my god an idiot

26:56 like me who knows the right three people can just grow

27:00 their network for free forever and so that was the birth

27:04 of the the name social leverage It makes a lot of sense.

27:08 Yeah.

27:08 It was just like a play on words.

27:09 Some some people will call me and go, "Oh, you guys do social investing." I go,

27:12 "That's the last thing I do." Meaning, I'm not There's no impact.

27:15 It was just the the play on words of financial leverage to social leverage.

27:19 I like it.

27:19 But good point.

27:20 You can blow up on social leverage.

27:22 So now you're up to fund four.

27:24 Fund six.

27:25 Fund six.

27:26 Wow.

27:26 I have the I and the V.

27:28 The good news, you passed on all of them.

27:29 I did.

27:30 So we continue to do well until you come in.

27:32 Soon as I come in, it's over.

27:33 Well, that's when we shut down.

27:34 and and I famously um or infamously was an investor

27:40 in Stock Twits and then when you pitched me on Robin Hood

27:44 Mhm.

27:44 [clears throat] It's a line in the book how that's

27:46 the dumbest effing idea I've ever heard in my life.

27:48 You weren't the only one and it was it was I will I will I will I

27:53 You're in the majority.

27:54 You were in the majority.

27:55 I own it in the book and between you and me I'll say a it was off brandand

28:00 and b no no doubt that the pandemic lockdown helped them dramatically.

28:07 No, no, no.

28:07 the the the thing about Robin Hood because I was there from day

28:10 one and by day one I mean they had it there was another company right

28:15 Kronos research before they were like high frequency guys and math guys

28:18 but um you could only this is about you ask about investing it's

28:23 you know the life I've led boots on like just curiosity your eyes

28:30 nose ears feet you you become a great investor by like touching feeling

28:35 right you got to be on street level.

28:37 The best investors are street level in I'm talking about private markets.

28:41 Public markets is a different thing.

28:42 So, let's talk about private.

28:44 Let's talk.

28:44 No.

28:44 So, we were talking about Robin Hood.

28:46 So, so the great thing about Robin Hood is it's not that I got it right.

28:50 It's like I was if I didn't get that right, I'm nobody.

28:53 Meaning I had to get that right as Yahoo Finance user,

28:57 Street.com guy, Erade baby, you know what I mean?

29:01 Twitter user, Stock Twits founder,

29:05 and and I if I had any nerve or any tech skills

29:08 or any like real balls or whatever we're going to call it,

29:11 I built my own brokerage.

29:13 Like we I was there to do all that.

29:15 But in 2010, even until till Robin Hood started, no one wanted to start it.

29:20 Brokerage ideas are terrible ideas.

29:22 So you have to understand that in 2013 when I saw Robin Hood,

29:25 no one in America, that's shocking that no one wanted to build Erade 2.0, right?

29:30 But what the venture capitalists were doing, they were enamored,

29:34 and this is where venture capitalists, I always goof on venture capitalist.

29:38 They were enamored with the wrong thing.

29:40 At the time, it was like Wealthfront betterment.

29:42 The the VCs were enamored with assets under management.

29:46 AUM.

29:47 They felt like Vanguard was the one to disrupt.

29:50 So, everybody wanted to be the next,

29:52 if you're a venture capitalist, you want to be the next Vanguard.

29:54 No one need And I thought that was flawed.

29:57 I thought that was flawed because their margins are tiny

29:59 and and you're never going to build something 10 times better than Vanguard.

30:03 Meaning, wait a minute, what's wrong with Vanguard versus E Trade?

30:06 I'm like, it's interface uh trade, you know,

30:09 it's just ripping me off and I was a I was

30:13 the right guy to get that pitch at the right time.

30:17 So, of course, I had to do that deal.

30:19 It would have been that's what that's why the podcast

30:22 with the guy who passed if I passed on Robert, I'd be a more interesting guest.

30:26 Like how much did you put into to

30:29 Well, we did hundred like I we had a it was our first fund.

30:33 Uhhuh.

30:33 So we were writing $100,000 checks.

30:35 So it was $100,000 at 8 million.

30:37 I thought it was expensive an 8 million valuation.

30:40 Like at the time we were doing three million valuations.

30:43 So you know like I met them

30:47 Uhhuh.

30:47 by Jeu and Vlad.

30:48 I flew up because they called me because of Stock Twitch.

30:50 So they called me and said we have this app.

30:52 They were they were out of they were out of money and I

30:56 flew up to Silicon Valley and they showed up wearing Google Glass.

31:01 [laughter] Two idiots.

31:02 Like I'm like immediately I'm out.

31:04 Like no one, you know what I mean?

31:05 Like remember that era?

31:07 Glass holes is what everybody

31:08 I don't know what it was, but I was immediately like what?

31:11 And uh two dorks.

31:14 But they showed me the app.

31:15 They had this guy this Joe who was their designer who had been

31:19 at Facebook and he showed me the app and that's when I knew it wasn't

31:22 live they didn't have their FINRA they didn't have their broker so it was

31:26 really early but because of stocks and Twitter I knew that if you build

31:30 it they will come if you build an a [clears throat] design like Uber

31:34 if you build Uber for trading okay what people didn't get again was they

31:39 were all betting hundreds of millions

31:41 have been invested in Betterman and Wealthfront

31:43 at the time so the the Silicon Valley was lean leaning into the Vanguard model,

31:49 right?

31:47 So, no one wanted to do the deal because who needs another brokerage?

31:52 And by the way, building a brokerage,

31:54 getting SEC approval, VCs don't like doing work.

31:56 They don't like waiting a year.

31:58 It's a grind.

31:59 VCs do not like doing investment.

32:01 Now, they do because there's so much money in in sovereign,

32:04 you know, you can get so much money and charge 2%.

32:06 But back in 2013, it was like, show me something that's working.

32:09 I want to be the Uber of that.

32:10 So to take a year off and go get

32:12 SEC approval to go do those things they deserve.

32:16 It was and you had to wait.

32:18 You couldn't just go launch it and get sued.

32:20 Th this is in hindsight.

32:22 If you want to be the next Vanguard, wait.

32:25 Their secret sauce is that they have such scale

32:29 they could charge four bips and still make money.

32:31 You you're losing money at 25 bips.

32:34 And if you switch, you switch.

32:35 But they have so much assets.

32:36 So switching costs.

32:37 So I could we could talk about this forever.

32:39 I was in the right place, right time,

32:40 right people pitched me, right valuation, everything worked.

32:44 I could tell you a hundred stories

32:46 of like everything lined up and it doesn't work.

32:48 Robin Hood would have worked whether I showed up or not, right?

32:51 So, we did a 100,000.

32:53 Now, obviously, we helped them tremendously with Stock Twits.

32:56 We were like responsible for hundreds of thousands

32:58 of early signups because Stock Twits users love the idea,

33:01 of course.

33:01 Free trading.

33:02 Free trading.

33:02 No, but also the API hooking into you could slide right on right over

33:07 and and trade.

33:08 Yeah, it's pretty funny.

33:09 Now, that idea in' 07 when I had it,

33:11 Jack and A, like as a Twitter guy, I went to Jack and Yeah.

33:15 and AB and Fred Wilson put me in the room with them and I'm like, "Guys,

33:19 what are you talking about?

33:20 Kim Kardashian taking a poop on Kanye West.

33:22 That's not interesting." You know what's interesting?

33:25 The president's going to tweet one day and the markets are going to move.

33:28 Like, this is literally my pitch to Jack and F

33:32 set up by Fred Wilson who was they were like Kumbaya,

33:35 plane lands on a Hudson, right?

33:37 Uh, you know, we're growing our beards.

33:40 Uh, no, you know, like I mean,

33:42 they were just the darlings of they didn't need ideas.

33:45 So, they were like, it was the town the town

33:48 they weren't mass financial guys.

33:51 They were kumbaya guys.

33:52 They were builders.

33:53 So, my pitch fell on like who are you?

33:56 They didn't get monetizing Twitter through

33:59 they didn't it's not about moni they

34:01 didn't understand what they had meaning selling ads

34:07 against something that Goldman Sachs will pay

34:10 infinity for meaning a new pipe where Bloomberg's

34:13 charging $2,000 to get real-time information now

34:18 like Osama bin Laden getting killed the future

34:20 with like in '08 whenever Osama was finally killed when he know where I was

34:25 because Immediately I checked the futures and they had already moved

34:29 and that's cuz of Twitter, right?

34:30 Cuz some guy in Pakistan saw it and the futures moved, right?

34:33 Like that's when it should have clicked.

34:35 It's like shut down everything.

34:37 Delay the feed 30 seconds and you know what's going to happen?

34:40 Goldman will call you Reuters Bloomberg.

34:43 They'll see that you're off by 30 seconds and they'll

34:46 pay you fortunes to get the real time feed.

34:48 Right?

34:48 You and me schmuck two and three don't need real time one second, right?

34:52 So my pitch to Jack and Evv with Fred Wilson was like,

34:56 "Slow down the feed because 99% of the population

35:00 and the way we're there anyways with AI,

35:02 no one no one gets realtime feed, right?

35:04 Slow down the feed.

35:05 Your phone will ring for the people that know that the feed's not in real

35:09 time and they will pay you infinity to get the pipe." And they were like,

35:13 "No, let's sell ads." So here we are.

35:16 [laughter] So, so you haven't talked about the cash tag,

35:19 which I really want to talk about something stock twitz invented.

35:23 Yes.

35:23 A dollar sign and then AAPL is the symbol for Apple or [snorts]

35:28 So, this is the jacking out story.

35:29 So, again, I didn't want to start a company.

35:31 I just sold Wall Street, which you know, which was my best work,

35:36 but again, stupid work, but my be No, personally, I'm most proud of it.

35:39 You sell a company to CBS when you are literally an idiot is the dream.

35:44 I think that's a fair disclosure.

35:46 Yeah.

35:46 Yeah.

35:46 Yeah.

35:47 They said, by the way, as they wrote, as Les Moonz wrote the check,

35:50 he goes, I can't believe we're writing an idiot like this, a check.

35:53 That was like that's the quote.

35:54 I said, "Please write that like you in your book.

35:56 Please write that you're so angry." [laughter]

36:00 So anyways, they had just uh bought my company

36:04 and literally a month later I'm like, "You made the wrong acquisition.

36:08 You need to buy Twitter." like Twitter to to Quincy

36:11 at at who had bought my company at CBS.

36:14 And I remember there was no iPhone yet

36:17 and [snorts] Twitter came out and I thought it was stupid.

36:19 You thought it was stupid.

36:20 We all thought it was stupid.

36:22 Andy Swan, an old friend [clears throat] was like, I get this.

36:25 This is financial cuz you know at the beginning

36:27 I'm on we all had our Blackberry.

36:29 It wasn't even it wasn't even a native mobile app.

36:31 It was just the web and it was all venture capital.

36:35 And my shtick in 2006 2007 was I just

36:38 peed at the grammarcy like so the VCs loved me.

36:41 They were like who's this idiot talking about was

36:43 bowel movements and and then Andy Swan said you

36:47 know this is like financial this is like

36:49 a new Bloomberg right and I said and I just

36:52 so so the hashtag was a thing and I'm like it was all spam like if you went

36:56 to Apple like# AAPL or Apple was like I

36:59 went to the store and bought a green apple.

37:01 Like that's literally what people were saying.

37:03 It was so now it would be like let's nuke apples but like

37:06 at the beginning it was like I bought a green apple and I'm like that's spam.

37:10 So I sent Fred Wilson the first message

37:12 and I'm saying like and back then Blackberry was

37:14 the hot stock and I'm like I just bought dollar sign R Imm and Fred Wilson who's

37:19 the godfather of all this and was an investor on Twitter sent me back a text go

37:23 this is genius you need to start a company

37:25 and that's what set me down the stock twits path.

37:27 Did was Wilson an investor in Stock Twits?

37:29 No because he was an investor in Twitter

37:30 and he thought there would be a conflict.

37:32 It's no conflict.

37:33 It's agree.

37:34 But Fred is the Fred is the heroic G.

37:36 Why?

37:36 Fred's the OG.

37:38 So Fred Fred's strategy is if he bets on one, he does.

37:42 And I I follow Fred's strategy.

37:44 There's other people who spray and pray and don't care who they and 90% do that.

37:48 But Fred was of the opinion back then is like, I work with you.

37:53 Um there's going to be conflicts are a thing.

37:56 Like no conflict, no interest.

37:57 that that's he's very cool that way,

37:59 but don't create conflict just to create conflict.

38:02 So, in his wisdom, he was like, you know,

38:04 what's going to happen if you guys get in a fight and yada yada yada.

38:08 So, he politely backed out, but we were backed by good VCs.

38:11 Raising money was not my problem.

38:14 The my VC should have said, "Har, you know, just not a good enough idea."

38:18 So, as an investor in Stock Twits,

38:21 I always wondered why the hell didn't Twitter buy Stock Twits?

38:24 Well, they don't understand finance.

38:26 They should have bought it.

38:26 You remember the last scene in Raiders of the Lost Art?

38:29 Yeah, of course.

38:29 The whole movie is about getting and then the last scene is this is

38:34 a very important why media matters to investing

38:38 and it's just a black hole forever, never to be seen again.

38:43 The best tech companies like Salesforce, he understands corporate dev.

38:48 Sometimes you buy something to kill it, right?

38:51 To say and by the way, it's not cost me a fortune.

38:55 They're like my Newman.

38:56 Twitter's like my Newman from Seinfel.

38:58 It's like Twitter.

38:59 Like, you know, now who's dating themselves?

39:02 So, no, but what I'm saying is they're my Newman like in Seinfeld.

39:06 Meaning these people, it was a clown car as Zuckerberg said.

39:10 There's so many people that got rich nonexecuting.

39:13 I love the line.

39:14 It was in one of your recent posts, right?

39:16 But Zuckerberg said it first, which was the clown car.

39:20 I don't know.

39:20 That crashed into a gold mine.

39:22 Yeah.

39:22 And so Twitter and the the real problem

39:24 with Twitter was it was a financial product.

39:29 Mhm.

39:28 And Elon knows that better than anybody in the end because although

39:31 he just well he monetized it by stuffing it in a shell company.

39:35 It's still like it's an asset and he's made tremendous mistakes

39:39 to to to think that Trump end around the whole thing.

39:43 Meaning Twitter's supposed to be a real time network,

39:47 right?

39:47 They have to pull True Social, right?

39:50 True Social is worthless other than one guy who sits on top

39:53 of Twitter and you have to copy paste his tweet like so Twitter

39:57 on a different platform

39:59 forgetting how bungled the company is.

40:00 The fact that they owned real time and do not own real time and that I'm

40:05 the schmuck that came up with the original like Trump is going to tweet.

40:08 Now obviously Obama was president when I had this idea but like

40:12 that the pipe matters and who is king of the pipe.

40:16 To think that Trump beat Elon at his own game is pretty insane.

40:20 He He is savvy in ways that people don't appreciate.

40:23 Insane that Truth Social exists.

40:24 It's worthless.

40:25 But for one guy tweeting, right?

40:28 Unbelievable.

40:28 It's inconceivable [laughter] to to bring bested my man of orange to to

40:34 So the poison cannot be in front of you.

40:37 So So now 2024, you come back to Stock Twits as CEO.

40:42 What motivated that?

40:44 Are the early investors gonna see an exit?

40:46 What's What's going on?

40:47 That's inside information.

40:49 No, it's not public.

40:50 No.

40:50 So,

40:51 it's not it's it's it's non-public information,

40:54 but it's not illegal inside information.

40:56 No.

40:56 Stocks is like a a corn on your foot.

40:59 You can't No.

41:00 I mean, listen.

41:01 Here's the thing about venture capital is

41:04 here's the thing about venture capital.

41:05 Not everything should be venture capital.

41:09 True.

41:08 Okay.

41:08 So I joke about this with with my finger like my

41:13 like whose fault is it?

41:15 Okay, I think Stock was a great idea.

41:17 The cash was a great idea.

41:18 I'm very proud of that.

41:20 I'm not proud of having to run a company 17 years later.

41:24 Not that it wasn't my dream when I started stock to is

41:26 to be sitting here answering questions about how am I going to make money,

41:30 but you right to do this.

41:31 So what I'm saying is I and young kids need to know this like math.

41:36 Not everybody gets to have a startup.

41:38 Of course.

41:39 Okay.

41:39 Well, my venture capitalist, if they're as good as they say, and they are great.

41:45 Should have stopped me and said, "This isn't quite venture capital."

41:48 Let me push back on that cuz I knew you were going to go there.

41:51 And you're venture capitalists and we know a lot of the same people

41:56 said, "Hey, there was a window to get out.

41:58 You wouldn't have gotten an FU number,

42:01 but you would have gotten a pretty good number."

42:02 No, I never got a number.

42:04 There was never I thought there were

42:06 discussions that just never came to fruition.

42:08 Discussions.

42:09 Yeah.

42:09 I thought you guys were on the one yard line.

42:11 I'm discussing it right now openly.

42:13 There's always a price.

42:14 Who which camera?

42:15 Camera two.

42:16 No.

42:16 Uh listen, we have never Some things are only fairly valued for a second,

42:23 right?

42:23 And some things stay overvalued or undervalued

42:25 forever as we know from the market.

42:27 And I think stock twits, I'll take full responsibility.

42:31 We've always missed a window of positioning

42:35 and but the good news is stock is thriving, right?

42:39 It's doing well.

42:39 This is a perfect.

42:41 So I'm saying like

42:42 Robin Hood should we were 10 years ahead of our time.

42:45 Mhm.

42:45 If you think about where public when when I started stock to retail

42:48 investing was a laughing stock and it still is to most institutions

42:53 much less so today than was now.

42:55 So, so again, if you look at my portfolio, the by the way, the private equity,

42:59 private credit wouldn't be so hungry for retail investors if it was truly Yes.

43:05 They call me every day, right?

43:07 So, there's two worlds that I live in.

43:08 The world where retail doesn't take itself seriously enough

43:13 and private equity guys call me,

43:15 CEOs of public companies call me to take like I'm in a crazy seat, right?

43:19 Because I'm a goofball, but I am ser, you know, like I am serious.

43:23 Like, I'm trying to be serious.

43:24 You used to be 6040 goofball serious.

43:26 Now you're 4060.

43:28 Yeah, it switches.

43:29 You're the new 60/40.

43:31 Yeah, I'm I'm uh I can laugh at myself,

43:34 but I'm trying to run a serious business, right?

43:36 Because because it's been a long time and we were just way ahead of the curve.

43:42 Like Jack and M didn't understand what we have.

43:44 Fred Wilson understood it,

43:47 right?

43:47 Um there very few people that understood.

43:49 Very few people liked Robin Hood until 2020 in GameStop.

43:52 Then they like it for the wrong reasons.

43:54 By the way, I don't like the Robin Hood that became

43:57 like I am not I call it the degenerate economy,

44:00 but when I invested in Robin Hood,

44:01 I didn't know the degenerate economy would exist.

44:04 I didn't know the prediction markets would exist.

44:06 I didn't know options would be their biggest product.

44:08 I was just wanting to see

44:10 options are bigger than crypto for Robin Hood.

44:12 Crypto's tiny.

44:13 Options is everything.

44:16 90% of their profits will come from options.

44:18 Any broker, I didn't realize that.

44:20 How are they going to make money on zero commission other than options?

44:23 People doing yolo trades,

44:24 payment for order flow, margin loans.

44:27 That's just that's just media being bad media.

44:29 I'm going to tell you that the big shops like Fidelity and Schwab,

44:33 the single biggest line item of profitability are credit loans.

44:39 Okay, it could be 90.

44:40 I don't know.

44:41 I don't I don't mean at one point in time it was over half at Schwab.

44:44 I don't know what it is today.

44:45 When we invested in Robin Hood,

44:47 here was my thinking is first of all, I love the product.

44:51 You got to be a user of the product to be a good investor.

44:53 I'm not the guy who's like here's space check and here's a biotech.

44:57 What do I know?

44:58 So the odds have to be stacked in my favor, first of all.

45:01 But second of all, and they were I was Yahoo, I was Yahoo Finance, I was you,

45:05 I was blogging, I was doing everything

45:08 and and they came along at the right time.

45:11 When Robin The pitch for me with Robin Hood

45:12 was not that they were going to make money.

45:14 It was an eight million valuation.

45:16 Like, you know, at my event, people are like,

45:17 "How are they going to make money?" I'm like, "Chill the hell out.

45:20 We haven't even launched this thing yet." The point

45:22 was Schwab was paying $150 to get a customer to acquire customer acquisition.

45:28 And my thesis was like Uber, Robin Hood would pay zero.

45:31 So, if you get a million people,

45:33 even if they're $4 in their account, it's a good arb.

45:37 Those don't come along very Did I think it could be a $30 billion?

45:41 I'm not so psycho that I thought I was

45:43 investing in a 30 $40 million company billion billion.

45:47 So of course I'm not that smart.

45:49 But what I'm saying is I saw the ARB

45:52 and all they had to do was deliver the product.

45:54 Now it went way beyond my expectations.

45:56 That's the Larry David.

45:57 By the way, you didn't give me that pitch.

45:58 The pitch was I I'm sure I did.

46:00 The pitch was free trading millennials, the whole next generation.

46:04 You're going to capture them before anybody else.

46:06 Well, I knew that from stock.

46:07 I knew I'd capture them.

46:08 But if I say if I mention the ARB trade, people are like, "Oh,

46:12 they're going to have to raise so much money." There was a lot of problem.

46:14 The AR trade in hindsight,

46:16 the ARB trade why I invested would would have

46:18 been compelling and and again I it's a chapter.

46:22 I'll tell you a great and it's so off brand.

46:24 One great story.

46:25 Go ahead.

46:25 Cuz because this is just an investing story.

46:28 So we're very small fund.

46:29 The first one was 6 million.

46:30 We've we've done now we run hundred million dollar funds.

46:33 And

46:34 you cap it at 100 or Yeah.

46:35 I don't think I don't think our returns would be good.

46:38 We like writing 1 to2 million checks.

46:40 We

46:41 stay in your lane is something everybody hates saying,

46:42 but I think in my world, unless you're fee gathering, stay in your lane.

46:46 Like people know what we do.

46:48 You're going to laugh.

46:49 I I believe in that.

46:50 I hate when people say it, but I practice.

46:54 That's an annoying way to say I disagree with what you're saying,

46:57 but but what you're saying is here's our expertise.

47:00 Here's my skill set.

47:02 I'm going to apply my the area I know best.

47:04 So with Robin, so occasional and again

47:07 And I had breakfast with Fred this morning.

47:09 We're talking about like you're a legend.

47:12 Josh is a legend.

47:13 Like I'm around surrounded by legends cuz I've lived long enough.

47:17 I've lived long enough and I'm curious and I'm

47:19 nice and I call people to say hello.

47:21 I'm a salesman.

47:22 So who do I see this morning?

47:24 Fred Wilson.

47:24 Like who did I rented?

47:25 Tim O'Bri.

47:26 Like I'm friends with like people that have

47:28 you have signal because you have what you've been on the street and you

47:32 have experience not maybe in space but in what you do you have signal.

47:36 So with Robin Hood and I had learned

47:38 from Fred Wilson like if you really believe in something

47:42 just

47:41 and I'm not a poker player.

47:42 I don't play ball.

47:43 You got to go in as a VC you have to.

47:46 So Robin Hood you're convincing me to throw money into fund

47:50 7 and that'll be the end of your run.

47:52 But that's different.

47:53 Every fund is like a crop of wine.

47:55 It could go depending on how you know we're wrong.

47:58 24 was a good vintage.

48:00 2020 2021 terrible vintage.

48:02 So, so, so when Robin Hood was doing very well,

48:07 but they the two guys were like it was not popular.

48:10 Everybody, all the VCs had committed to Betterment Wealthfront type model.

48:14 So, now they needed to raise another round.

48:16 And I'm like,

48:18 they wanted to raise.

48:19 This is 14 or 15.

48:20 14.

48:21 So, it was like I think that's when we spoke.

48:22 Yeah.

48:22 So, they were like and I'm like inexperienced cuz we write one check.

48:26 We don't have more money.

48:28 So, they call me up and they go, "Can you write us a term sheet?" It was very

48:32 sophisticated way of saying like you won't have to like

48:34 actually invest but if you come in like we

48:37 can shop like we can kind of shop it around.

48:39 So I'm like dude screw that.

48:41 I I want to invest.

48:43 So over like July 4th weekend Tom my partner and I was two of us at the time.

48:48 I'm like let's just write an 11 million.

48:50 They needed to raise 11 million bucks and they

48:52 wanted to raise it at some stupid valuation.

48:54 Let's it was 60 millionish.

48:56 And I'm like, well, we're never going to have to really write it,

48:59 but even if we do, I can convince my friends like, this is the one, right?

49:02 And I called Fred Wilson.

49:04 He goes, what are you calling me for?

49:05 You know what to do.

49:06 It's write a term sheet.

49:07 I go, but we don't have $11 million.

49:09 And Fred goes, you'll find it.

49:11 Just just do it like a six week, right?

49:14 Which is absurd.

49:14 Now today, people write billion dollar checks in an hour,

49:17 but like goes just ask for six weeks,

49:20 right?

49:20 So we, you know, word, you know,

49:23 whatever you're typing it up, send him a term sheet.

49:26 10 fingers.

49:26 So

49:26 yeah, back then more but you know 10 fingers more errors.

49:30 So anyway, so we write up this term sheet.

49:33 We send it to them and they shop it as they probably

49:38 and index ventures Yon Hummer who's like a like one of the best investors

49:43 comes back with a term sheet of 11 million on 65 million.

49:49 Wow.

49:51 And like a fiveday close.

49:52 So like you [snorts] know they got what they wanted.

49:55 Oh and by the way index in their term sheet index

49:58 in their term sheet like social leverage that's a typical like who are they

50:03 right?

50:03 Luckily by writing that term sheet vote and by did the right

50:06 thing and they carved out like as much as we could.

50:09 We couldn't even raise a million.

50:11 So when we so they carved us out we put 800 grand in the series A.

50:15 If we had done the 11 million I'd be a billionaire.

50:17 Right.

50:18 200x on on the Yeah.

50:20 That's unbelievable.

50:20 No, way bigger like at the peak.

50:22 But like um but we've had better investments.

50:26 We've had better

50:26 sitting with the Robin Hood shares.

50:28 A lot of my LPs we distributed the stock.

50:30 A lot of my LPS have not sold.

50:32 Nobody tolerate it.

50:33 Nobody says

50:34 I don't ask.

50:34 Our job is to deliver them.

50:36 There you go.

50:37 The the the the cash.

50:39 I want to start with a quote of yours that I really love.

50:42 Okay.

50:42 Quote, "The whole world has become a casino.

50:46 Thanks to AI and prediction markets,

50:49 we are all more productive and degenerate now.

50:55 Mhm.

50:54 Let's talk a little bit about the degenerate economy.

50:57 Explain to listeners what is the degenerate economy or the degen economy.

51:03 Well, I don't like the word degen.

51:04 So, when I say degenerate, I say it in the humoristic way.

51:08 You and I are degenerates because we'll buy a watch,

51:11 we'll bet on a game, we laugh at degeneracy.

51:15 We don't we don't we appreciate the art of degeneracy versus meaning

51:21 meaning laser eyes was dumb

51:24 right but degeneracy is an art form like speculation and I

51:27 live I own and I joke that I own

51:29 and operate two millennials and when you own and operate

51:33 two millennials you watch you look over their shoulders

51:36 those were your first startups?

51:37 No, my kids.

51:38 Yes, but startups my the only startups that matter.

51:43 And did either of them merge yet?

51:44 Do we have any M&A activity yet?

51:46 We need We need I'm not talking about I'm not talking about dividends.

51:51 I'm talking about Are they married?

51:53 No.

51:53 So, no mergers yet?

51:54 No.

51:54 My son was My son was in Are you on the board?

51:57 You should be chairman of their board.

51:59 Why are they on the board?

52:00 I'm trying to get them also.

52:01 I'm trying to get them fired.

52:03 [laughter] I'm trying to get medical checks to see if anything's working.

52:06 So, um, so degenerate economy was born of this idea that

52:12 I couldn't believe where we went like with GameStop.

52:15 Like I was so stressed during the GameStop thing because really

52:20 I hadn't monetized I hadn't monetized our investment.

52:23 I'm like there there was a weekend Yeah.

52:26 when Robin Hood was worth 40 billion, right?

52:29 And it could have been worthless.

52:30 Do you understand?

52:31 like I wasn't rich

52:33 and I'm like it wasn't even their blame whoever you want.

52:37 People lost their minds.

52:39 Let me annotate.

52:40 So So let me just explain to you if you have your phone.

52:42 Go ahead.

52:43 What Robin Hood perfected

52:46 Mhm.

52:45 which no one figured out.

52:46 It was like when we used to play pinball

52:50 Mhm.

52:50 everybody there was always that kid who was so good at it.

52:53 Crazy.

52:53 Bump it.

52:54 Well, he could bump it without tilting it,

52:57 right?

52:56 And he could just get the he could just get the machine to dance for him.

53:01 tilt happened.

53:03 Uhhuh.

53:03 Everybody the the app was so welld designed.

53:06 The app was so well designed that everybody

53:07 pushed the same button at the same time

53:09 and it couldn't carry the the I remember when

53:11 you understand that's literally what happened.

53:14 It was a design flaw.

53:15 It was a design flaw.

53:16 It wasn't the design flaw.

53:18 Nobody expected it to scale 10,000x.

53:21 No, but if you push everybody to one button or another button and then people

53:25 come on see me say push this button and everybody's like let's see what happens

53:30 and guess what happens crash not to be

53:32 repeated again hasn't been repeated again and that's

53:34 what makes the markets great that hole

53:36 was filled by the hole being created right

53:38 we haven't seen another thing like this although recently

53:40 with car Avis but like GameStop broke the machine yeah

53:44 and almost bankrupted the company right

53:47 and and it was many lessons in there the most important was Robin Hood,

53:54 not in their hubies or anything, they mistook success for a brand.

53:59 Mhm.

53:59 When you build a brand in four years, not 40 years,

54:02 you don't appreciate that you have no brand value,

54:06 right?

54:06 And I'm like, no one understands this.

54:08 Like, they were one of the first case studies.

54:09 I'm like, why?

54:11 It didn't deserve to be zero.

54:12 Who knows what all the things that went wrong?

54:14 But I'm just some guy who's like what the like

54:17 could how embarrassing would it be if it goes from 40

54:19 billion to zero and you know Galloway and all these guys

54:22 were piling on and show all these people piling on.

54:24 I'm like you don't even understand what's going on.

54:27 So wait let me let me tease this out of you a little bit.

54:30 I thought you were going in a different direction.

54:32 How degenerate the trading in things like GameStop

54:36 and when Hertz was bankrupt and or was it Avis?

54:40 I don't even remember which.

54:41 some really foolish,

54:43 reckless and and I I think those of us with gray hair looked at it

54:48 and kind of laughed because we knew exactly how that was apes and all the stuff.

54:52 I hate it.

54:53 But it doesn't that wasn't your concern.

54:56 Your concern was, hey, here's a fire hose of new clients, new orders.

55:02 This is the scale this company needs to become wildly successful,

55:05 and they're just not prepared to deal with the sheer volume.

55:09 And if this crash goes on more for a couple of hours,

55:12 two days from now, this is a zero.

55:14 It was a zero.

55:15 We can argue, I don't know the whole story,

55:17 but I imagine someone called someone at the options clearing firm and said,

55:19 "You're bankrupt." And the VC's lucky were in so big,

55:22 they had had to put in more money.

55:24 They didn't have the reserve cash.

55:28 We'll never know the real story.

55:29 So technically, SIBO is the counterparty on all

55:33 trades and they also own the platform.

55:36 So they demand a certain amount of capital if you're going to trade X.

55:40 Yes.

55:40 And they're trading billions of dollars.

55:42 They didn't have that capital.

55:44 So So this is why my degenerate economy index was important.

55:47 Meaning I don't think AMC's in what's in my index which

55:51 is outperforming everything is SIBO is one of my number one positions.

55:55 Who benefits?

55:55 So my degenerate economy thesis is finding

55:58 the companies that benefit from global degeneracy.

56:02 You created this last year, two years ago.

56:04 All right.

56:06 for free.

56:06 I had to share it just to put some numbers on this.

56:11 It's gambling.

56:11 It's day trading.

56:12 It's memecoin speculation.

56:14 It's vaping.

56:14 Unfortunately,

56:15 it's up 170%.

56:17 The NASDAQ 100 over the same time period isn't even up 100%.

56:21 It's up 94%.

56:22 Correct.

56:22 You're almost doubling the NASDAQ

56:25 and I give it away for free because and I share the Why isn't this an ETF?

56:29 Because Ben always talks to me always like why

56:32 do you want to be in the ETF business?

56:33 So do you know you use alpha ETF architect work with vanion product

56:40 again this is I think part of like you know the age I'm at is like

56:44 I don't want to be someone yelling at me that my that I Kathy what that I

56:48 as soon as I monetize it it'll go to zero like this thing will stop working.

56:52 I love the idea that I can give it away for free.

56:54 This goes back to the original social media meaning what am I going to make?

56:58 It's like as soon as I start charging

57:01 for it the whole thing becomes ads off the blog

57:04 cuz they were annoying and ugly and the amount

57:06 of revenue it made was just too annoying.

57:10 You're you're saying the same thing.

57:11 Yeah.

57:12 I'm saying like, "Hey man, I'm like I got a little thesis.

57:16 It's not that complicated." I I love this thesis.

57:19 I would I think people bit Hyperlid now is in there.

57:24 No one knows what Hyperlid is.

57:26 I constantly hyperl is the thing.

57:30 Meaning today all I get pitched on are by the next Robin Hoods.

57:35 And I'm like, the world doesn't need another Robin Hood.

57:38 But all they keep talking about is,

57:39 you know, we got pers trading 247 on Hyperlid.

57:42 It's it's it's the new salon, let's call it, cuz I'm not a crypto guy.

57:46 And I'm like, after getting a hundred pitches of the same product,

57:49 and they all talked about Hyperlid, I just bought Hyperliquid.

57:51 And what what's the market cap of that?

57:55 It's like 12 people in one of the most

57:57 profitable companies in the world out of Singapore.

57:58 Like the guy has no freedom because he's so rich.

58:02 Um it's like a system.

58:04 It's like a very fast chain.

58:05 What's the symbol?

58:07 Hy pe

58:08 hype.

58:08 What a great symbol.

58:09 Yeah, it's a token and you can buy it on Robin Hood.

58:12 I'm not promoting.

58:13 I'm just saying.

58:14 Wait, so this you can buy it on Robin Hood,

58:15 but does this not trade over the counter?

58:17 You can't get it anywhere.

58:18 You can trade it as a there's a DAT called Purr.

58:22 And again, I'm not recommending it, but I'm long a little is um

58:26 a way that you can trade it over the counter.

58:28 And again, you're betting on the fact

58:30 you don't know anything about supply demand.

58:32 You're just it's the system that everybody's trading.

58:34 Pure speculation.

58:36 Pure speculation.

58:36 On other people's speculation.

58:39 That's my squared.

58:41 So anyways, what I'm what So the degenerate economy is about picks and shovels.

58:45 Uhhuh.

58:46 We can't stop if if a young person like my son and again

58:50 I own and operate two millennials and and they'll I don't want them betting.

58:53 My son will call me and goes I can't believe I lost a 20 team parlay.

58:57 I go who are you?

58:58 Are you even of my This is why I have to do a step-in

59:01 takeover of my son's company cuz I'm like are you talking to me?

59:06 Like you asked me to NYU 50 bucks to put

59:09 on a 20 team parlor and you're complaining about three.

59:11 It's so idiotic.

59:12 So I'm like trying to teach them not to be idiots.

59:15 You can have a degenerate economy.

59:16 You just need a little bit of math.

59:17 The problem is not enough kids taking math

59:20 and you also full circle on degenerate economy.

59:23 You have the wrong teachers right now.

59:25 I got to brought on board by guys like you Kramer,

59:27 people who had experienced stuff.

59:29 Fred Wilson.

59:30 These kids are learning from Chamoth and David Sax.

59:32 These guys were born of one generation.

59:34 They worked at Facebook.

59:35 They worked for Elon.

59:36 You could if you're not rich working for Elon or Facebook.

59:39 That would be interesting.

59:41 If you are rich and you're kissing

59:42 the nipple of Facebook and that's not interesting.

59:45 You are supposed to be rich, right?

59:48 Have some humor.

59:49 Have So our job is humility.

59:50 Are you a little hubist?

59:51 So my job is my kid is like more humility.

59:54 Stop being a degenerate.

59:55 But the fact is you can't not be a degenerate

59:58 when prices are yoloing because they can and because and frictionless.

1:00:05 frictionless and they'll learn.

1:00:07 Some of these kids will learn how to be good put sellers, premium sellers.

1:00:11 I understand, but [music] the markets are very important.

1:00:14 Meaning having a price on everything is fantastic.

1:00:16 Coming up, we continue our conversation with Howard Linden,

1:00:19 [music] uh, co-founder of Social Leverage.

1:00:22 I'm Barry Rholz.

1:00:24 You're listening to Masters in Business on Bloomberg [music] Radio.

1:00:36 [music]

1:00:42 I'm Barry Rholz.

1:00:43 You're listening to Masters in Business on Bloomberg Radio.

1:00:47 My old friend Howard Linden uh of Social Leverage is here.

1:00:51 And when I say old, it's only partly because we know [music] each other so long.

1:00:55 It's mostly because he's an old man and is now 60 years old.

1:01:00 years ago, my wife and I, I I'm not a cruise person.

1:01:03 We were young.

1:01:04 We were broke.

1:01:05 We used to use this website called vacationstogo.com.

1:01:08 You book last minute.

1:01:09 It would cost you nothing.

1:01:11 Like a week-l long cruise through eight islands in the Caribbean.

1:01:14 500 bucks.

1:01:15 Food and drink included.

1:01:16 Booze included.

1:01:18 So, as soon as they hit international waters, the casino opens.

1:01:22 I am not a gambler.

1:01:24 We walk through and I just decide to look at the roulette table.

1:01:28 not bet.

1:01:30 Look at it.

1:01:31 And this is the difference between my wife who taught fashion,

1:01:34 illustration, and design is a visual person.

1:01:38 I'm a little more of a math guy.

1:01:39 And I say to her, so we watching 20 minutes of roulette.

1:01:43 And it's just it's so dumb.

1:01:46 Yeah.

1:01:46 I hate losing money.

1:01:47 It's for for random stupid reason.

1:01:50 But I point out to her, look,

1:01:52 the red pays or red or black or odd or even pay 2 to one,

1:01:57 but you have zero and double zero, so it's not even odds.

1:02:01 And then this group pays three to three to one,

1:02:05 but it's one in four chance of winning.

1:02:08 So, they're making money.

1:02:08 And I'm going over all the math with her.

1:02:11 and she listens to all the numbers and says to me,

1:02:15 "I don't know about the ratios or the math,

1:02:18 but all I can tell you is I see people um I see the Kier taking off

1:02:23 a whole lot more money than she's handing out

1:02:26 to gamblers." That That's the takeaway, not the odds.

1:02:30 Correct.

1:02:31 Be the house.

1:02:31 Don't be

1:02:32 CBOE hit alltime highs.

1:02:34 They're the house.

1:02:34 Yeah.

1:02:35 Have you ever hear anybody on social media talking about CBO?

1:02:38 They love that no one's talking about them.

1:02:40 So the other thesis that I have is trends with no friends.

1:02:44 Uhhuh.

1:02:44 Okay.

1:02:44 So, so I'm looking for trends because again

1:02:46 I run a huge social media site, right?

1:02:49 So I if I have a choice between Nvidia and SanDisk,

1:02:52 everybody's talking about Nvidia.

1:02:54 I'm not saying I know much about talking about Broadcom.

1:02:56 Same thing.

1:02:57 Same thing.

1:02:57 So on Stock I can look for tickers that are trending with very few followers.

1:03:03 No, it doesn't have to be.

1:03:04 I don't like small cap.

1:03:05 So I'm like early.

1:03:06 I mean before it really goes up 10.

1:03:09 I the one thing that struck us and I have AI.

1:03:12 Well, you asked me why I came back to struct.

1:03:14 It's two things.

1:03:14 AI and the fact that like I can now code with clog

1:03:18 code and so I can call on engineers a little bit.

1:03:22 Oh, this could take six weeks.

1:03:24 I need it by today.

1:03:25 Well, again, there's not today, but there's not six weeks, right?

1:03:28 Okay.

1:03:28 So, so there's that.

1:03:29 And then there's the fact that we have

1:03:30 all this data and we have a great community.

1:03:32 So, I wanted to come back and like see

1:03:34 this thing through and we're and we're doing very well.

1:03:37 The the the issue is now I can explain to people and I

1:03:41 can pull out the data to show people trends with no friends.

1:03:44 Meaning I want to f you want to find

1:03:46 stocks that are trending that have very little discussion.

1:03:50 Makes a lot of sense.

1:03:51 Yeah.

1:03:51 It's just intuitive.

1:03:52 Meaning IBD I I learned on IBD.

1:03:55 I love price relative strength.

1:03:56 We I've just added a layer to that that matches

1:04:00 high price relative strength with low social.

1:04:02 It's almost like the moosh of Vegas.

1:04:04 I'm trying to find the stocks that no one even though I run a social media site.

1:04:08 I'm like betting on the fact that like they'll discover this in time.

1:04:12 You should talk to Ben Hunt and what he's doing with Persant cuz they're

1:04:16 they have a narrative thing.

1:04:17 They're to but the combination of

1:04:20 where the narrative is just starting to tick up

1:04:23 and and where the trend is for that's why so I give it away for free.

1:04:29 He's quantified it.

1:04:30 I hate the quant side.

1:04:32 I just visually see it right from years of being a nonquin.

1:04:35 I went to ASU.

1:04:36 I don't even know Matt.

1:04:37 But but if you want AI to help you with this, yeah, I got to catch up with Ben.

1:04:41 Ben's awesome.

1:04:42 But but he also sees the world a little darker than I see it.

1:04:45 I'm a much more of an optimist.

1:04:46 Uh you and I both.

1:04:48 Yeah.

1:04:48 So, but but when I want to know what's the worst case scenario,

1:04:51 like when the tariffs were first rolled out,

1:04:54 uh not so much losing a finger, but his piece, the end of the Pax Americana,

1:04:59 it's true.

1:05:00 Was the end point where if this really goes off the rails,

1:05:04 this is how bad it could be.

1:05:05 It's delization, which But he he works out the details.

1:05:10 So, but again, you and I are both a little more of optimist.

1:05:13 I'm much more simple.

1:05:15 I hate it.

1:05:15 If I see something going up, you want

1:05:17 that's my cue to look and then if it's a certain market

1:05:21 cap and then I check stocks and I go, no one cares.

1:05:24 I love that.

1:05:25 Then I I need to tell a story.

1:05:27 Everybody needs to tell stories.

1:05:29 Stocks are stories and some people are great at storytelling.

1:05:31 The Palunteer guy there certain but again the numbers eventually matter,

1:05:37 right?

1:05:37 And I'm trying to find companies going up, right?

1:05:39 [snorts] And that's not complicated.

1:05:42 But then I have other layers to it and I need to understand the catalyst myself.

1:05:46 Like if it's just something I'll never understand,

1:05:48 it's hard for me to ride the waves.

1:05:51 So if I don't really understand and use the product,

1:05:53 the odds of me getting scared out of a trade are 99%.

1:05:57 So So let's talk about your

1:05:58 So that's my index.

1:05:59 Let let's talk about your startups who are becoming degenerates.

1:06:03 Your kids given social apps, zero commission trading,

1:06:09 uh all the option stuff that's going on

1:06:13 for your kids' benefit, what sort of guard rails,

1:06:17 I don't know if it's the product regulation,

1:06:19 uh educational, what do you wish was

1:06:22 in place to protect them that isn't there yet?

1:06:25 And and let's also add these are not minors.

1:06:30 These are late 20s adults out of school for almost a decade.

1:06:35 Real people.

1:06:36 What guard rail should they have to protect

1:06:38 them from their own [sighs and gasps] worst instincts?

1:06:40 Listen, we could argue that the B we put our our negative hat on.

1:06:43 It's like you can go buy bullets at Walmart.

1:06:45 So it's like what is a guardrail, right?

1:06:48 In a world where you can buy bullets and you know everybody's got drones.

1:06:52 Um, so I'm like more like, okay guys,

1:06:55 if I hear that you did a parlay, we can't be related.

1:06:57 So like stop betting.

1:06:59 Betting is different than investing.

1:07:01 So if if if Shane at at Poly Market and they're partners of ours,

1:07:04 if they if Shane or Tariq at at Kshi had pitched me

1:07:08 those ideas at the same time that Robin had pitched me their idea,

1:07:12 I would have passed.

1:07:13 Why?

1:07:13 I don't bet.

1:07:14 I think it's stupid, right?

1:07:16 Okay.

1:07:16 Like I think it's funny and I think prediction

1:07:19 markets are news better than the New York Times.

1:07:22 No offense because I like prediction markets cuz I don't have an opinion.

1:07:25 I just look at the price and I go whether I believe it or not.

1:07:28 I think that's the genius of it.

1:07:29 But if if Poly Market and Khi went out to VCs and said we're the new news,

1:07:33 their valuation would be a dollar, right?

1:07:36 Okay.

1:07:37 So, we know the real story.

1:07:38 They can't tell what they really are good at, which is news.

1:07:41 And by the way, they're not great at news.

1:07:43 I understand.

1:07:43 But either is news good at news.

1:07:45 It's probability of something happening.

1:07:48 But I'd rather not read someone's opinion.

1:07:50 I don't need to see Elon's finger on the news

1:07:53 because there's a sto there that's not the real story.

1:07:55 Give me the numbers.

1:07:56 I know it's fake, but I got a number.

1:07:58 If Montami is at 90% and my daughter's mad, I go, Rachel, here's what you do.

1:08:03 Then

1:08:04 bet the other side.

1:08:05 You'll make eight time or or put it's 10 to one.

1:08:08 10 to one.

1:08:09 But I would bet money on Madam.

1:08:11 And if you really want to change how you think about the world,

1:08:13 go help somebody on the other side who has a chance.

1:08:16 Go put in the time.

1:08:17 Go help Mark Cuban.

1:08:18 If you really want to be

1:08:19 I love what he's doing on the healthare side.

1:08:21 But when I said it to my daughter, I said, "Call Mark.

1:08:23 I'll get you in touch with Mark,

1:08:24 do something." But just complaining about the numbers that you see

1:08:28 and the numbers were right whether whether they whether they tipped it in.

1:08:32 Again, I don't want to get into all like

1:08:33 the fraud and all the fake stuff about it,

1:08:36 but the numbers much easier than reading an opinion piece.

1:08:38 I'm going to Can I tell share something fun?

1:08:41 Yeah.

1:08:41 So there were some of the early bets

1:08:44 about outcome of the war and different events happening

1:08:48 and I said in a quarterly call, hey,

1:08:51 I don't really know uh who's putting we don't know who's putting these bets in.

1:08:55 Yeah.

1:08:56 But if you stop and think about it,

1:08:58 if you're negotiating with another side, this being a SCOP cuz you spent half

1:09:03 a million dollars to move uh the outcome of something,

1:09:06 that's the least money the Department of Defense will ever spend.

1:09:10 and anybody on their side is looking.

1:09:12 Oh, they're they're really going to put boots on the ground.

1:09:15 That's Look at the track record here.

1:09:18 Here's a a a wallet that's 10 for 10.

1:09:23 Oh my god.

1:09:24 We have to stop and think about You don't

1:09:26 really know who's using this, who's betting this, who's manipulating.

1:09:30 That guy who got arrested, that was a throwaway.

1:09:32 That's a false flag.

1:09:33 It's still better than Russia and China using our social media.

1:09:37 Oh my god.

1:09:38 So, I'm very North Korea and Iran.

1:09:41 Yeah.

1:09:41 So, I'm not saying I'm for I'm an investor in Poly Market and Khi personally

1:09:45 at crazy valuations cuz I wouldn't have invest

1:09:48 like I just chased it in in SPV personally.

1:09:51 The co- um founder of uh Kalshi the woman what's her name?

1:09:56 I don't know but I know it's a woman I just can't remember.

1:09:58 No, she was a guest on the podcast and I she was really good.

1:10:02 This is years ago.

1:10:03 This is three years ago.

1:10:04 I should never even thought to put money into it.

1:10:06 So it sounded more academic than anything.

1:10:09 It was academic and it still is because there's very

1:10:12 few people using these products for all the free press.

1:10:15 It's like Twitter.

1:10:16 There was very few people using Twitter.

1:10:18 Um Twitter the drain at this point.

1:10:21 No, but I'm saying at the beginning it had

1:10:23 a lot of power even though there weren't that many users.

1:10:25 It was it was you know it was a fraction of Instagram or Tik Tok fraction.

1:10:31 It's a fraction of the news.

1:10:32 But I'd rather my son and daughter go

1:10:35 to page two of Poly Market because you know what?

1:10:37 They're going to see news that they didn't

1:10:39 would never look at in the New York Times.

1:10:40 They go look at the election in Peru and now at least they'll know the names

1:10:45 or Venezuela for that matter

1:10:46 or Venezuela.

1:10:47 So I'm super bullish for different reasons on prediction markets

1:10:51 and I know there's like obviously I have money on

1:10:53 this fits right into the degeneracy index

1:10:58 completely.

1:10:57 How long does the DGEN index run for?

1:10:59 Is this a short-term thing or does this happen?

1:11:02 That's why I don't want to charge for it because I think I'm a lack because

1:11:05 Google and Apple are my biggest positions because

1:11:07 they are the rails for the degenerate economy.

1:11:10 They are the front-facing tool of it.

1:11:14 Apple because of the phones and mobile

1:11:16 and Google because of the phones and YouTube and app store.

1:11:19 The casino games all run on app stores.

1:11:22 The free games that you have they make a fortune off that.

1:11:26 Why not Amazon or Facebook?

1:11:27 Amazon just added the beginning of the year because of robots.

1:11:31 Axons in not supposed to Amazon Web Service because of robots.

1:11:35 Yeah.

1:11:35 I mean it's just you can't not own Amazon at this era

1:11:38 in degenerate economy because they are the center of it.

1:11:41 Robot robot argue is of the degenerate economy but you have to own

1:11:45 any of the robot builders you like.

1:11:47 No cuz they're too early.

1:11:48 I'm a personal investor in a few but clearly give us some names.

1:11:53 Appronic which is just massive.

1:11:55 But again it's a personal investment.

1:11:56 Do you have any interest in what uh Elon is doing with Grock?

1:12:01 And

1:12:02 yeah, but it's a holding company.

1:12:03 Like I I don't know what this position it's kind of random.

1:12:07 So So

1:12:08 meaning Tesla is a holding company for everything.

1:12:10 But or is that going to be the entity that goes public for

1:12:13 I thought it was SpaceX.

1:12:14 No, but I'm saying to SpaceX, why does he need two tickers?

1:12:17 Like again, I don't understand what the final being is.

1:12:21 So why do I need to own some Elon holding company?

1:12:23 I think that's stupid.

1:12:24 So you're betting on him and you don't think who cares.

1:12:27 I'd rather bet on something I understand.

1:12:29 I'm with you.

1:12:30 I'm not I don't disagree.

1:12:31 I'm trying to Yeah.

1:12:32 Another recent ad is it's already doubled as clear secure.

1:12:35 You know clear when you go through it's just

1:12:38 so to me if the world's degenerates you need security.

1:12:40 So it's like so clear's been a home run.

1:12:43 They don't have a lot of tech but a great brand.

1:12:45 Yeah.

1:12:45 Uh and I thought they have tech is I think they license a lot of the tech.

1:12:49 Every Oh that's not theirs.

1:12:50 They don't own it.

1:12:51 Yeah.

1:12:51 So again, once you dig into a story,

1:12:53 my conviction comes like how much of this they own,

1:12:55 but they're a hell of a brand.

1:12:57 The company's been around forever

1:12:58 and they have the failed with FAA and the airport

1:13:02 and they can do so much more around stadiums.

1:13:05 The brand matters.

1:13:05 What are you talking about?

1:13:06 You go to watch a Nick game, it's clear on the way in.

1:13:11 That was my bet.

1:13:12 Um, it's just a clear trend.

1:13:14 No one ever talks about it too.

1:13:16 So, it's on a massive uptrend,

1:13:18 broke out, and you never hear people talk about it.

1:13:20 If you use either uh Chase Sapphire Reserve or MX, I want to say platinum,

1:13:26 you get a credit towards any travel, and clear is just an automatic.

1:13:30 It's no-brainer.

1:13:31 What is it, $150 a year?

1:13:33 It's fantastic.

1:13:34 It's My son would call me, goes,

1:13:35 "That's the greatest gift you ever got me." I'm like,

1:13:37 "Wow." When a 20-year-old knows something and an 80-year-old knows something,

1:13:41 those are good trends.

1:13:42 You know, that's a brand.

1:13:43 when it's just a 20-year-old knows it.

1:13:45 Not a brand.

1:13:46 Maybe it catches on, maybe it doesn't.

1:13:47 Yeah.

1:13:47 CBOE.

1:13:48 I love it because they power the whole thing.

1:13:51 You can't do this without CBOE, CME, the Merc,

1:13:56 you know, is you know, the New York Stock Exchange.

1:13:58 Let me ask you a question,

1:14:00 a direct investing question before we get to our favorite questions

1:14:04 that I I think a lot of investors have a hard time with.

1:14:08 I started on a trading desk, so I'm okay with losses.

1:14:11 It's a given.

1:14:12 Mhm.

1:14:12 But if you say to somebody,

1:14:14 I want you to put a little money into these 10 or 20 stocks.

1:14:18 Half of them are going to go out of business.

1:14:20 Maybe five are break even.

1:14:21 You'll make money on a couple and maybe one's a home run.

1:14:24 How do you deal with that really fathead long tail?

1:14:29 You're not a indexing.

1:14:30 I'm so into indexing.

1:14:32 No, I mean on your on your private seed state

1:14:36 like most of the seed investments you're going to make

1:14:39 aren't going to give you return.

1:14:41 I am bearish.

1:14:42 Oh, I'm wrong all the time.

1:14:44 I'm just bearish on my industry, right?

1:14:45 I never I believe it was a moment in time with Zerp.

1:14:50 I think it got the country through it's unintended circumstances.

1:14:54 We live in all these unintended circumstances, right?

1:14:56 Yeah.

1:14:56 Or circum unintended consequences.

1:14:58 Sorry.

1:14:59 By the way, now that wealthy that happens a whole lot.

1:15:02 I am wealthy.

1:15:02 Just born at the right time.

1:15:03 A lot of unintended circumstance.

1:15:05 Zerp is a good thing, right?

1:15:07 I'm not saying I'm not saying I shouldn't be ashamed.

1:15:09 But

1:15:10 if you have assets, if you're if you're working stiff, it's like I used to be.

1:15:14 It was tough.

1:15:15 Yeah.

1:15:15 S&Ps at all time highs.

1:15:17 Cash levels at all time highs.

1:15:18 If I hear those two things together, what do I think of inflation, right?

1:15:22 There's never been a better time to have assets, right?

1:15:24 Doesn't mean I don't know when it's going to end.

1:15:26 I have cash and stocks.

1:15:28 It's a double whammy.

1:15:29 The the So, I'm lucky.

1:15:32 I am so bearish on what I do for a living.

1:15:36 Meaning, what value do I add in a world of 6% interest rates

1:15:42 tying someone up for 10 years when I could go buy SanDisk, right,

1:15:46 in the public markets and get 6,000% in a year?

1:15:48 I'm not saying I'm smart enough to hold these things.

1:15:51 But in a world where Robin Hood and a thousand Robin Hoods are going to bloom,

1:15:55 if you're asking me, my biggest bet, public markets do the work.

1:15:58 You have an analyst in Claude, right?

1:16:01 You can go see beaten up.

1:16:02 No one's following any stock.

1:16:04 Everybody's momentum investing.

1:16:06 Go find 10 companies.

1:16:07 Why would you do a startup investing?

1:16:09 Every kid wants to be an angel investor.

1:16:10 I'm like, dude, do it in the public markets.

1:16:13 You have liquidity and you're not locking up your clients for 10 years.

1:16:17 But you're not answering my question,

1:16:19 which is how do you as an investor deal with the psychology

1:16:24 of knowing most of your seed investments aren't going to work out?

1:16:29 Is it just the nature of the beast or does that weigh on you at all?

1:16:33 No, I think it it aligned with how I thought

1:16:35 of the world as a as as someone who believes their high integrity,

1:16:39 who wishes who who wants people to believe

1:16:41 their high integrity for my kids' sake.

1:16:43 And you know, [gasps] the integrity of telling

1:16:46 my investors that upfront is the release.

1:16:50 Uhhuh.

1:16:50 Meaning, I'm not telling my investors we're going to be 90% hit, right?

1:16:53 If you give me money, you're going to hate me because [laughter] you're going

1:16:57 to think the idea that I love is the dumbest idea.

1:17:01 The Robin, quote unquote.

1:17:02 Yeah.

1:17:03 Dumbest idea.

1:17:04 You are betting on me to hang 30 pieces of art in Mahawi's gallery,

1:17:08 the Larry David Gallery,

1:17:10 and you will pick and if I gave you the choice to invest in all 30,

1:17:14 you would pick the two that went to zero.

1:17:16 So, you're betting on me to to see the world my way.

1:17:20 And [snorts] then I'm not telling you we're

1:17:22 going to make a hundred times our money,

1:17:23 but my job is to find one company that's a hundred bagger.

1:17:27 Okay?

1:17:27 So, I So, I have to know math.

1:17:30 I have to do this.

1:17:31 I have to have just get yelled at by my LPs when

1:17:34 they read our quarterly letters and go that was the dumbest idea.

1:17:36 I'm like you're right like I'm embarrassed.

1:17:38 Um but our job is to find a Robin Hood

1:17:41 and we found many of them you know lifelock Robin Hood Beehive.

1:17:45 We've got one called Alpaca again a trend no

1:17:49 Alpaca powers thousand Robin Hoods around the world.

1:17:52 They're like the a modern apex.

1:17:54 So, I'm saying like our job is to know what we know, take crazy bets,

1:17:59 um, and and sell that to our LPs is like you're investing for 10 years.

1:18:03 This is like, you know, it's not as good as it was in 2013 when rates were zero.

1:18:11 Mhm.

1:18:10 And and and now it's a different game again.

1:18:13 And I'm thinking like with you got clawed and you can

1:18:16 do an anal you can analyze a stock in like 3 seconds.

1:18:19 I'm like the the the the everyone's a CFA

1:18:23 all of a sudden if they want to be right.

1:18:24 What a great time to be a public market

1:18:26 investor and yet everybody wants to be a private investor.

1:18:29 So again so funny coming from you.

1:18:32 Yeah.

1:18:32 In 2020 I've been writing about this since co

1:18:34 it's like public markets are amazing because there's so

1:18:37 many stupid people making dumb bets on Robin Hood

1:18:40 and dislocation is everywhere and it's only getting worse

1:18:44 and the degenerate economy is going to continue driving this theme.

1:18:47 Yes.

1:18:47 And I think most people should index,

1:18:50 but everybody should learn how to pick stocks, too, in this era.

1:18:53 I got you.

1:18:54 All right.

1:18:54 So, it's almost midnight.

1:18:56 I only have you for a few minutes more,

1:18:58 and you have to end up uh at at your event tonight.

1:19:01 Cash Wars.

1:19:02 Breaking news.

1:19:02 October Fest, October 6, coming back to New York.

1:19:06 That's our big event.

1:19:06 We're That's exciting.

1:19:07 Yeah.

1:19:08 Thousand people on the west side.

1:19:09 I am looking forward.

1:19:10 October 6.

1:19:11 If you want to come, hit me up.

1:19:12 Let's do our speed round.

1:19:14 Five questions.

1:19:15 Uh two hours.

1:19:17 10 seconds each.

1:19:18 I'm going to jump right into it.

1:19:19 Starting with boxers.

1:19:22 Who were your early mentors who helped shape your career?

1:19:26 I think part of I hate saying this.

1:19:28 I didn't have good early mentorship.

1:19:30 So I I really take pride in mentoring other people because I

1:19:34 Who were your later mentors?

1:19:35 I hear Fred Wilson.

1:19:36 Yeah.

1:19:36 You like people that I discovered like the mentorship came from the community.

1:19:40 Being the mentor led me like stuck twitch

1:19:43 being a giver opened me up to get mentorship.

1:19:46 I think young kids are not getting good mentorship.

1:19:48 So, just pure karma.

1:19:51 Karma.

1:19:50 I love that.

1:19:51 Uh, what are some of your favorite books?

1:19:52 What are you reading right now?

1:19:53 I know what you're reading next.

1:19:55 What are you reading now?

1:19:56 Yeah, I got your I don't read.

1:19:58 You're on flights all the time.

1:20:00 What do you do?

1:20:00 Just movies.

1:20:02 I'm so addicted to like HBO, Amazon.

1:20:06 So, you're watching series?

1:20:07 Yeah.

1:20:07 I built I'm just very That's my next question.

1:20:10 But hang on.

1:20:10 So, you're asking books.

1:20:11 I still love the classic Shoe Dog for business.

1:20:14 You know, Phil Knight's book.

1:20:15 I love Legacy's biography.

1:20:17 I I like stuff.

1:20:19 I just I just my brain doesn't work with books.

1:20:22 Huh.

1:20:22 That's really interesting.

1:20:24 Tell us what you're watching on Netflix, HBO, Amazon.

1:20:27 I just rewatched The Nick.

1:20:29 Have you watched The Nick on HBO?

1:20:30 Solderberg.

1:20:31 That sounds Oh, it's about the 1900s.

1:20:33 The Nickerbacher Hospital.

1:20:35 No, I did not watch that.

1:20:36 Best show really season.

1:20:38 It's It's like

1:20:40 surgery wasn't done until like barbers used to do surgery in 1900, right?

1:20:45 all the rich oil guys started backing hospitals

1:20:49 and that was the original tech surgery was tech

1:20:52 and it's just an incredible period piece about the 1900s in Soho in New York.

1:20:57 Huh.

1:20:57 I'll check on HBO.

1:20:59 Give us one more.

1:21:00 Uh there's very little good stuff on TV.

1:21:02 I think Rooster is pretty good.

1:21:03 Can I tell you something on HBO that backwards?

1:21:06 There's too much.

1:21:07 I think I've seen it all.

1:21:08 Have you seen Lman?

1:21:10 Great.

1:21:10 But that's that's more like Harley Quinn romance kind of series

1:21:14 are fun to watch and the kids like them too.

1:21:17 Okay.

1:21:17 The Nick you'll love because it's superior.

1:21:19 Three body problem if you want something a little more.

1:21:21 No, but that's sci-fi.

1:21:22 I think I don't like sci-fi.

1:21:24 You don't like sci-fi?

1:21:25 So you didn't watch The Expanse?

1:21:27 No, I didn't like that either.

1:21:28 I tried it and I never get into it.

1:21:31 Huh.

1:21:31 That's interesting.

1:21:32 I like degenerates.

1:21:33 Uh how do you feel about uh Spy?

1:21:36 Uh that sort of stuff.

1:21:38 I love them.

1:21:38 Killing Eve.

1:21:39 Kelly was good.

1:21:40 I like I can really follow it well because I I start closing off.

1:21:45 Yeah, it was good.

1:21:47 Wow.

1:21:48 Yeah.

1:21:47 How about any of the British period pieces?

1:21:49 I I love Britbox.

1:21:50 I watch Brit.

1:21:51 So, The Crown, Bridgetgerton, not Bridgetgerton, but Britbox's a great channel.

1:21:57 Um there's that criterion for old movies.

1:22:01 If you have Britbox, go back and watch uh what was the name of that show?

1:22:07 There was a show that came out around the same

1:22:09 time as Friends only coupling and it had it has teeth.

1:22:15 It's I mean everything from the '9s is a little dated,

1:22:18 but whereas Friends was kind of milktoast and mushy,

1:22:22 this has a sharp edge and it's British,

1:22:25 so it's nasty and funny in a way that only the Brits can do.

1:22:29 Okay.

1:22:29 Yeah.

1:22:29 So, I'm a media fanatic,

1:22:31 but not like I'm weird and I'm so bullish on YouTube, Apple TV.

1:22:36 YouTube is just great.

1:22:37 I just love YouTube.

1:22:39 All right, so final two questions.

1:22:41 Um, what sort of advice would you give to a college

1:22:45 grad interested in either becoming a seed investor or a startup entrepreneur?

1:22:54 Well, I think there's no shame in being a number two,

1:22:56 number three, or number four.

1:22:57 So chief of staff is the new CEO.

1:23:01 So go be someone's chief of staff.

1:23:03 Like don't worry about pay or title.

1:23:06 Worry about finding something that's working this way.

1:23:10 It's it's much easier to go work for a company that's just working.

1:23:14 So go like ignore the title, ignore,

1:23:18 ignore the salary, find a rocket ship and attach yourself.

1:23:20 Whether it's Manscaped, you're going to learn more.

1:23:23 There are going to be smarter people around.

1:23:25 there's going to be, you know, less aggravation, more work.

1:23:30 But hey, like if you're really serious, I tell my daughter,

1:23:33 it's like, if you're really serious about this,

1:23:36 it's going to take a lot of work, but go do it.

1:23:38 If you're not serious, be a socialist.

1:23:39 Like, it's okay.

1:23:41 But like, don't commit.

1:23:42 Don't fool yourself.

1:23:44 Like, go work for a rocket ship.

1:23:46 Otherwise, who are you talking to?

1:23:48 So, like there's no room anymore for these kids

1:23:51 that like if you want to start a company, do you know it's 24/7, right?

1:23:55 And if you and no one's going to like you and if you want to be a number two,

1:23:59 do you know what it takes to be a number two?

1:24:01 So, I'm like, be honest, but like go work for a company that's working.

1:24:06 And our final question,

1:24:08 what do you know about the world of venture and and seed investing today

1:24:12 that would have been helpful 65 70

1:24:14 years ago when you were first getting started?

1:24:17 No, I think I luckily got the right mentorship and entered at the right time.

1:24:22 I think you have to do it for a while.

1:24:23 You got to get a crop like if you're going

1:24:25 to go do wine or the weather matters and same with tech.

1:24:28 Like what matters with tech is you have to get if

1:24:30 you if you were of the Google Glass era, not much worked, right?

1:24:33 If you were in the Blackberry fund 2008, no go.

1:24:37 No go baby.

1:24:38 So, so unless unless you could have been an early

1:24:40 investor in Apple or when they were public, I think the public markets are

1:24:45 underappreciated because seed investing became cool

1:24:48 because of Zuckerberg and because of a few of these rocket ships.

1:24:51 See, I thought seed investing or venture investing really became cool

1:24:54 in the '9s and then in the 2000s kind of faded.

1:24:59 No, it's never been more in it's never been more loved today.

1:25:04 Oh, I go see these young kids.

1:25:06 It seems like they know nothing and they all want to be venture investors.

1:25:09 I'm like, God, have you ever bought a stock?

1:25:11 Like you get wounded like day one like stock drops 20%.

1:25:15 Like go open a Robin Hood account and learn how to invest.

1:25:18 Like if you don't know the public markets,

1:25:20 what are you doing in the private markets?

1:25:22 Got to graduate to private.

1:25:23 Yeah.

1:25:23 I think the most the guys that got who were interesting to me,

1:25:25 and I'm not saying they still are, the crossover investors,

1:25:27 the people that like knew the public markets and then started doing private.

1:25:30 And I think that was my edge.

1:25:32 I knew how pricing worked, how whether I was right or wrong,

1:25:35 I understood how markets worked and the seed investing,

1:25:38 the prices made sense to me relative to public markets.

1:25:41 Now the prices in private markets make no sense to me.

1:25:44 Howard, it is always a blast when you come in.

1:25:47 You're a bucking bronco.

1:25:48 I never know where we're going to go.

1:25:50 You are not Larry David.

1:25:52 You are the Zack Galifanakis.

1:25:54 I love Zack of of finance.

1:25:56 Conan, I should put two ferns in here [music] just for your arrival.

1:26:01 Thank you, by the way, for for being so generous with your time

1:26:03 and good luck at the cash [music] awards tonight.

1:26:07 If you enjoy this conversation, well,

1:26:09 check out any of the 600 we've done over [music] the past 12 years.

1:26:13 You can find those at iTunes, Spotify,

1:26:16 Bloomberg, YouTube, wherever you get your favorite podcasts.

1:26:21 Uh, I would be remiss if I didn't thank the crack

1:26:24 team that helps put [music] these conversations together each week.

1:26:27 Alexis Noriega is my overworked video producer.

1:26:31 Sean Russo is my researcher.

1:26:33 Anna Luke is my podcast producer.

1:26:37 Uh I would also like to uh just drop a little piece of information.

1:26:42 The paperback of How Not to Invest comes out today.

1:26:46 Um by the time you hear this, it'll be out already.

1:26:50 Um what else do I want to say other than You look good.

1:26:54 Thanks.

1:26:54 I'm Barry Rholz.

1:26:55 You've been listening to Masters in Business on Bloomberg Radio.

1:27:04 [music]