Peloton's Executive Shuffle, Peter Thiel's Meta Exit, and the Future of Fintech with Jeremy Allaire

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Speaker 14 Hi, everyone. This is Pivot from the Vox Media Podcast Network.
I'm Kara Swisher.

Speaker 15 And I'd like to talk to you about your car's extended warranty. We're doing product placement now.
Let me just say that. We're doing product placement.

Speaker 14 Two things, Scott Galloway. Please stop sending me that Adidas boobs tweet.
Stop sending it to me, or I'll report you to the Gespacho Police.

Speaker 15 Yeah, would you like some Nazi secret police with your grilled cheese sandwich?

Speaker 14 This is like tormented. You know, there's so many good memes, I have to say.
One was

Speaker 14 the Gespacho police are in cahoots with the anti-foe

Speaker 14 or the progressos.

Speaker 14 I forgot who did that one, but George Conway did the progressos. Must be really going crazy for this.
Anyway, go ahead. Sorry.

Speaker 15 Yeah,

Speaker 15 Adidas was not hacked. That was actually, they intended to do that.

Speaker 14 I guess. I don't know.
Just boobs everywhere.

Speaker 14 i don't know yeah yeah i guess they're just showing there's lots of boob types which women of course already know but thank you for the photo display i remember meeting with the ceo of lululemon a really um

Speaker 15 impressive guy who was the ceo of sephora uh calvin and he went on for 10 minutes talking about uh the relationship between fabrics and

Speaker 15 and breasts and we sat there and just kind of nodded our head for a while.

Speaker 15 I guess it's actually sports bras are actually quite complicated technology, which I did not know.

Speaker 14 Oh, yes. Well, I'm wearing one right now and I'm enjoying it quite a bit.

Speaker 14 In any case, the Marjorie,

Speaker 14 you're right. Welcome to America.
The joke we were making was about Marjorie Taylor Greene calling Gestapo. I think that's what she was going for, Gestpacho.

Speaker 14 Everyone's having a good time on Twitter with it because

Speaker 14 she's an idiot. That said, you know,

Speaker 14 she's dangerous. She's still dangerous, as dumb as she might be.

Speaker 14 And all these malaprops, you know, Trump makes makes them all the time. It didn't matter.

Speaker 15 In any case, she knows Nancy Pelosi asking people to things like stop stock trading and everything.

Speaker 15 It's very reminiscent of

Speaker 15 people.

Speaker 15 It's exactly,

Speaker 15 it's not a false analogy. There's a lot of historical parallels there.

Speaker 14 It's really truly not a lot of times that you can make a Nazi joke, I'll tell you that. But she manages to allow us to.
In any case, that is an interesting story, the Congress doing that.

Speaker 14 We talked about that yesterday, which is interesting.

Speaker 15 Who predicted that?

Speaker 15 I think someone listened to us.

Speaker 14 Well, you thought Pelosi wouldn't do it because she was again it, but then she said, I'm going to go with my

Speaker 14 going with the constituency. And you know what? She's leaving.
So she can make money afterwards. She'll make a lot of money.
She's already.

Speaker 15 They've already made her. I would love to, quite frankly.

Speaker 15 I like the speaker. I love her fashion more than anything.

Speaker 15 I think that's very important. Yeah.

Speaker 15 Especially for the kind of one of the third most the third in line to the president needs to look good and she looks better than we haven't had some great dressed uh speakers which is i think really upsetting but she does

Speaker 15 um

Speaker 15 uh but she's um i would like to see her husband's trades i i think it's just insane that these people richard senator burr what's gone on here um i i just can't i just literally can't get over i know him pretty well i i i he doesn't strike me as a cheater but uh but uh but it well that's the thing they don't they're not cheating that's the problem right yeah well they're not cheating any more than elon is moving to texas Texas.

Speaker 14 That seems like, I know, but it seems as if he did that, that would put him in the target zone. I don't know.
I don't know.

Speaker 14 Who knows? But nonetheless, I think you were correct in that they doesn't, you can't even help yourself in some ways. You know stuff and you know stuff, right? And you talk at home.

Speaker 15 You think you're just being smart. Yeah.
You find out a pandemic is about to break out the next day and you think, well, maybe I'll just take a sell a few seconds.

Speaker 15 Or you find out, oh, we're about to commit a billion dollars to Moderna.

Speaker 15 Maybe I'll buy a few shares for my grandkids, my great, great, great, great grandkids, because I'm 100 and fucking 40 years old and refuse to leave.

Speaker 14 Yeah, it's a different kind of insider trading. It's a weird, you know, sort of plain sight one.
But in any case, it's probably the right thing to do.

Speaker 14 But then again, who's going to run for office, right? Only rich people, or maybe not rich people. You know, it's really,

Speaker 14 I don't know. I'm just saying.

Speaker 15 This is the reality, and that is, unless you have insider information, there's probably no good reason, according to most of the finance academics, to stock pick.

Speaker 15 You're supposed to to put your money in low-cost ETFs. There's a lot of studies showing that stock picking doesn't work for most people.

Speaker 15 For them to say they want to engage in capitalism is just saying, no, they want to engage in insider trading because if they were to put their money in blind trust or put it in low-cost ETFs with trading windows, that research shows they're not going to do any worse than the rest of us.

Speaker 15 So unless you're onto something,

Speaker 15 if they can't pass this, they literally can't pass anything. They can't pass anything.
They can't pass anything.

Speaker 14 And

Speaker 15 what I'm dying to see is if that one bullshit piece of legislation goes through, that your penalty is confiscation of your salary. I'm telling you, I'm running for senator, dog 2022.

Speaker 15 I'm going to give all six years up and I'm going to go to Washington with the sole purpose of starting a hedge fund and I'm going to be transparent about it.

Speaker 14 All right. Based on insider.

Speaker 14 We'll enjoy you here in Washington. We'll hang out all the time.

Speaker 15 I'm going to set up meetings with Lena Kahn to find out about FTC actions coming up, Jerome Powell to get his view on interest rates.

Speaker 15 Head of the Department of Defense.

Speaker 14 I told you, go watch that Eddie Murphy movie. Go watch the Eddie Murphy movie.

Speaker 15 I'd be awful, but

Speaker 15 I wouldn't be any more awful than anyone else.

Speaker 14 Serve the people. You need to have more civic feeling, integrity.
Anyway.

Speaker 14 Yes, you are. Okay, today we'll talk about Peter Thiel stepping down from Facebook's board, Peloton shuffling at C-suite.

Speaker 14 We'll speak with Jeremy Alair, CEO of the fintech company Circle, about what 2022 will bring for the world of cryptocurrency. Circle.
Circle. Circle.
Circle. That's it.

Speaker 14 He used to have a video company, if you remember. I'm totally blanking on his video company, but I yelled at him once for a full hour about his shitty video company.

Speaker 14 This was back in the day when we were trying to get video up online.

Speaker 14 It wasn't shitty. It just was early.
Anyway, Amazon wants five-star talent and it's ready to pay top dollar. Everybody is sort of upping the ante.

Speaker 14 The company will raise its max base pay for corporate and tech workers from $160,000 to $350,000.

Speaker 14 Amazon says more increases will follow for quote most globally,

Speaker 14 jobs globally, most jobs globally. The Internal Post noted this past year has seen a particularly competitive labor market, you think.

Speaker 14 Late last year, Apple paid out a surprise bonuses up to $180,000 in an attempt to stop software engineers from leaving the big tech competitors. Huge jump, huge amount of money on the bottom line.

Speaker 14 I guess they weren't paying people enough.

Speaker 14 And being at Amazon isn't enough, correct?

Speaker 15 This is really interesting. If you think about wages are under incredible upward pressure right now, especially in the information economy.
And

Speaker 15 the other thing, and I actually, you know, in a weird way, it's sort of related to Teal leaving Facebook's board, and that is these companies are ⁇

Speaker 15 so you have Facebook whose stock has declined. So anyone who's joined ⁇ actually anyone who still has a lot of shares who they haven't or unvested or vested options,

Speaker 15 your equity compensation. at Facebook or Amazon at

Speaker 15 kind of a mid-level to executive level, the majority of it, at least psychologically, is from the expected value of the increase in your equity award, right?

Speaker 15 So there's a lot of people, there's probably several thousand people in Amazon or Facebook that have several million dollars in equity value that has invested.

Speaker 15 So they think, okay, I'd like to go to this cool little startup, but every month I continue to stay here, I make another 40, 60, 100, 200K in additional equity value.

Speaker 15 Then all of a sudden, Facebook throws up on their earnings and it goes from being worth $3 million to $400,000 or it goes from being worth $400,000 to zero.

Speaker 15 So all of a sudden, people start returning the calls of headhunters.

Speaker 15 And so typically what happens in a mature company is the compensation shifts from equity compensation to current compensation because a company, even like Amazon and Google, that are doing really well,

Speaker 15 their stocks don't double.

Speaker 14 Yeah.

Speaker 15 Well, their stocks don't double for here.

Speaker 15 So if they go to a smaller startup that's doing really well, it's very conceivable that the equity value of their options could quintuple in the next three to four years.

Speaker 15 And so it just becomes a different dynamic.

Speaker 15 The other thing I find fascinating about Amazon, and I do think Amazon is the most visionary company and forward-thinking company of the last century, arguably. And

Speaker 15 look at what they did in the beginning, Kara.

Speaker 15 They kind of, no one has zigged when everyone else has zagged in terms of investments like Amazon. Amazon said, all right, let's take our biggest expenses.
Let's look at fulfillment.

Speaker 15 And let's not only overinvest in in it, but we're going to so massively overinvest in it because we have access to cheap capital that we'll be able to rent it out to other people.

Speaker 15 I was in e-commerce in the 90s, and every e-commerce player did the same thing.

Speaker 15 We'd all go to the Kentucky-Ohio border and ask somebody, can you get our shit there within seven days for four bucks a box or three bucks? It was the lowest common denominator.

Speaker 15 It was terrible service. They went the exact opposite way and overinvested.
Then they overinvested in processing power. Then they overinvested in media.
And now I'm not sure.

Speaker 15 I'd be curious to get your thoughts here, but I think Amazon says as we move towards more software and services, away from manufacturing, which is more about inventory, more about warehouses, and you're moving bits instead of moving atoms.

Speaker 15 I think they've said we're going to make a staggering overinvestment in human capital.

Speaker 15 I think they've said we have the cheap capital.

Speaker 14 I think they've seen

Speaker 14 like as usual with a company. It's not Jeff Bezos here, but the people who he trained, they have an opportunity

Speaker 14 to get people, and they'll do it.

Speaker 14 They've always spent. Look, this is a company that's always spent for whatever their need is and has relied on Wall Street to let them do it.

Speaker 14 And in this case, unless it is, you know, look, Facebook is reeling, their stock is still strong. They've got the opportunity to do this.
So why not? I just feel that this is sort of in there.

Speaker 14 And they need the people. This is a company that needs lots of people.
They need everybody working for them.

Speaker 14 I think they're still going to face enormous challenges with unions, et cetera. The bigger they are,

Speaker 14 the harder they'll fall in that regard. And so they've got to at least be having people questioning whether they need to be part of a union, right? Like, well, they're kind of nice to me.

Speaker 14 What do I need this for? Like, kind of thing. Well, they lost.

Speaker 15 The unions are losing.

Speaker 14 So far, it doesn't mean they're the big one. Yeah, they're coming back.
That's not true. There's all kinds of activity, you know? So I think that they're going to have to

Speaker 14 not just the competitive labor market, but the union challenges

Speaker 14 and the ability of this, as we talked about, this reassessment of people to move anywhere they want right now.

Speaker 14 And so they want to lock this kind of thing in. I think it's just smart.
It's smart on their part. It doesn't cost them that much.
They look good. It helps in all kinds of ways.

Speaker 14 And they don't look like they're sort of living off the backs of other people quite as much, you know, which I think people think about quite a bit when they have things.

Speaker 14 Every time someone delivers, I'm like, what does that person make?

Speaker 14 And I, of course, don't do anything about it, but it still is in your mind about this company, how they treat their workers.

Speaker 15 I'm bullish on Amazon.

Speaker 14 Yeah, I am too. I am too.
I think they make the moves.

Speaker 15 Do you realize last year, in the last 12 months, they've hired more people than the population of Miami? Yeah.

Speaker 15 Amazon hires more kids out of my class. 10% of my class will go to Amazon.

Speaker 14 I teach 280 kids.

Speaker 15 30 will go to Seattle. And it's just hilarious.
They come into my office hours. They never want to talk about strategy or brand strategy.
They always want to talk about their job offers.

Speaker 15 And they'll say, I've got a job offer from... you know, McKinsey or Goldman or Sunbank, or I've got an offer from Amazon.
I'm like, stop wasting my fucking time.

Speaker 15 You got plaid pearl jam and bad coffee in your future. Everyone goes to Amazon.

Speaker 15 Young people are insecure. So they always go to the brand.

Speaker 15 And Amazon right now has the best brand in terms of an employer.

Speaker 15 And Amazon must get, I bet they get a 90% yield on their job offers. Maybe.
I bet almost everybody they make an offer to comes there.

Speaker 15 But who's going to struggle here, who's really got to think about this? It's Facebook with their stock decline.

Speaker 15 Because all of a sudden, the perceived compensation of their employees has come down a lot.

Speaker 14 Everybody. And it depends on where you want to live.

Speaker 15 But Apple's stock is not down.

Speaker 14 No, I get it, but it's where you want to live. 5% for the living.

Speaker 14 Kind of interesting place to live. Anyway, we'll see what happens with there, but it's a smart move on their part.

Speaker 14 Tesla has been subpoenaed by the SEC over something Elon Moss tweeted again.

Speaker 14 Hate to see it, Carol.

Speaker 14 Hate to see it. All right, all right.
Hate to see it. Scott,

Speaker 14 Elon polled his Twitter followers asking whether he should sell 10% of his shares.

Speaker 14 Regulators want to know if Tesla complied with the settlement agreement from 2019 that said Elon's tweets about the business would be vetted by a company lawyer.

Speaker 14 I think they're just

Speaker 14 testing the enforcement here,

Speaker 14 picking this particular one. They're not testing it, Kara.

Speaker 15 They're ignoring it. No,

Speaker 14 he's waving his fat middle finger. I'm talking about the SPA.

Speaker 15 That's the most noble organization.

Speaker 14 What does he call it? He has a name for it. That's something something.

Speaker 14 He has a funny name for the Securities and Exchange Commission. You know, this was a settlement that came after he tweeted that he was taking Tesla private funding secured.

Speaker 15 I mean, Markham manipulation?

Speaker 14 They're testing if he's it's like sort of the consent decree if he if they're doing what they said so we'll see i it was an odd tweet for sure i was like oh no the sec has got to react it's been a it takes him a while though i'll tell you that i don't know if anything will happen honestly he see he knows yeah i'm not i'm not sure either because let's be honest billionaires play by different roles or he does and they just dares him to do something you know dares them to do something is his is sort of his brand speaking of brands good luck you know dare you know he'll he'll go out there and sometimes he loses like in the pedo trial, and sometimes he

Speaker 14 didn't win. He didn't lose.
He won him. He won that one.
Right. I'm sorry.
Sometimes he wins like in the pedo trial. And he so far hasn't really lost that much, right? He hasn't really lost anything.

Speaker 15 Well, for blade market manipulation, they find him

Speaker 14 0.1% of his net worth.

Speaker 15 But part of the agreement was, I mean, this is what he tweeted at me, that I was an insufferable mumskull when I said, okay, this poll is bullshit. You've already filed to sell these shares.

Speaker 15 You're clearly planning to do it. Yeah.
And you're not allowed. I mean, this again is the most blatant violation of when you have a penalty and they say, all right,

Speaker 15 you have to do community service, so we're sending you to prison.

Speaker 15 Most people do their community service. And so

Speaker 15 he's violating the conditions of his settlement.

Speaker 14 Guess what? Welcome to Trump tearing up all documents of the U.S. government.
Do you really think they're going to get him on it? He just can do it.

Speaker 14 I don't like these rules. I'm going to blow your stop sign.
So, and

Speaker 14 there's no repercussion. So I don't know what to say.

Speaker 15 But what I don't get, I think everybody, and I don't like it, every company

Speaker 15 I've run, I have a board of directors and they get in my face about stuff and they put up guardrails. And you realize that greatness is in the agency of others.
You get a good board.

Speaker 15 He clearly has absolutely no board because someone on the board would call him and say, Elon, how is this helping?

Speaker 14 What are they going to do? Honestly, this is if

Speaker 14 I think this shows that if you don't want to run the rules, you don't have to. Like, you don't.
Like, you know, there's maybe for some people there's repercussions, but not this guy.

Speaker 14 So, there you have it. He's going to, I just don't think anything's going to happen.
It's just, he doesn't like the stop signs where they are.

Speaker 14 There's a stop sign I don't like in DC. I blow it all the time.
And Amanda's always like, you just decided this. And I'm not.

Speaker 15 You run a stop sign.

Speaker 14 It's not a stop sign. It's a light that I don't like.

Speaker 15 You're a rebel.

Speaker 14 I just don't like it. It says you have to take a right.
And I'm thinking it's stupid. So I always take a left.
And I'm not going to say where it is.

Speaker 15 Just to you're going to show a signal when you go the wrong way, regardless of where you're going.

Speaker 14 No, I'm going. I don't like it.
I don't agree with the government's decision on this light. So I just don't do it.

Speaker 15 Don't stand too close to your flame.

Speaker 14 You might get burnt. People do it all the time in little ways.
And this guy does it. He doesn't like the rule and he thinks it's dumb.
And so he does what he pleases.

Speaker 14 And so they either have to come down really hard and then he makes them look stupid, which is like, it's just, he's going to win.

Speaker 14 If you break little rules like this, and there are little rules, they really are.

Speaker 14 It just shows you there's nobody there.

Speaker 14 Just like with Trump, he ripped up all the things trump did one thing after the next everyone's like he can't do that and he did and he got away with it so and i'm and more sometimes i ripped a sometimes i ripped a label off clothing that says do not remove oh well there you go that's right i'm just saying it's just like there's no there's no repercussions and they're just proving that you know they're just proving that

Speaker 14 Speaking of no, well, repercussions, no repercussions. The Canadian protesters are staying in the headlines.

Speaker 14 There's not as many of them.

Speaker 14 There's a lot of like fact check. They're not as big as people think they are, but nonetheless, it's effective.
A small group of people can be very effective.

Speaker 14 Drivers and pickup trucks and cars blockaded the Ambassador Bridge between Detroit and Windsor. I've been on this bridge.

Speaker 14 Their protests against COVID measures inspired by the Freedom Come by Soccupied Ottawa for only two weeks. The Ambassador Bridge is the busiest international crossing in North America.

Speaker 14 Lots of trade goes across it. 27% of all U.S.-Canada trade, which is incredible at one bridge.

Speaker 14 Let's fix that.

Speaker 14 It's a privately owned bridge.

Speaker 14 So, you know, it's just that they're, I think, I think their imagery is not great because I think a lot of Canada is pissed now with them. Now they're just irritating pains in the necks.

Speaker 14 But, you know, it's growing, too. There's groups of people that like to make trouble.
And, you know, this is how they do it in Canada instead of invading the capital, I guess.

Speaker 15 Well, actually, it's how they do it in France. I remember coming up from Charleston de Gaulle, which I can't stand, which maybe next to Miami is the Worst International Airport in Oregon.

Speaker 14 A mile. You're right.

Speaker 15 It's crazy. And then trying to get into town.
And someone said, oh, there was this trucker strike and they parked at the exits. And it took us literally four hours.

Speaker 14 That happened to me.

Speaker 14 I don't find this. I got out of the cab and walked a mile to the airport.

Speaker 15 I don't find this,

Speaker 15 I don't have a ton of sympathy. I'm not down with the

Speaker 15 good truckers in France or in Canada. My view is they should

Speaker 15 take pictures or just record who the trucks are stopping and go confiscate 10% of them. Problem over.
Sorry, boss, our truck now.

Speaker 14 I guess. I don't even want to see that.

Speaker 15 I think this is a form of economic hostage taking. I really think it's

Speaker 14 a thorny problem for governments, I'll tell you that. How do you do this right with the business? Well,

Speaker 15 it's striking at the economy when it

Speaker 15 just because you can strike at a place that's weakest.

Speaker 15 I mean, there's collective bargaining. I would bet Canada has stronger pro-labor laws than we do.
But I'm like, you know, take pictures, show up, confiscate 10% of their trucks. Word will get around.

Speaker 14 Once you have a little bit of attention,

Speaker 14 they're high on their own supply here, and they just they just it works and what they're doing though of course is the violence and the um the the

Speaker 14 nazi symbolism and and just crude behavior i don't know i just i don't think you have to symbolism yeah yeah yeah yeah that's the whole thing yeah they've got like there's all kinds of things

Speaker 15 who do they think they are gaspacho

Speaker 14 there's gaspacho they're drinking a lot of gespacho up there anyway there it we'll see we'll see where it goes um but i think the government has a real authority problem to deal with them they got to come down hard and and a lot.

Speaker 14 Anyway, let's go to some listener mail. You've got, you've got.
I can't believe I'm going to be a mailman.

Speaker 14 You've got mail.

Speaker 14 This week, our listener mail inbox was full of reasons why you're not watching the Olympics.

Speaker 14 Lots of you said time zones were the issue. One person even said it's because you can't gamble on figure skating.
We also heard a lot of opinions, like this one from Gabe in California.

Speaker 14 Gabe in California.

Speaker 14 Play the tape from Gabe.

Speaker 16 The problem is, how do you watch it? I tried hard during the Summer Olympics to find a good option. The peacock app is a joke.
The curated content is terrible. So it needs innovation desperately.

Speaker 16 I would love to become obsessed with the Olympics again, but I can't find it anywhere that I watch entertainment. And that's the fundamental problem.

Speaker 14 That's interesting. That's the fundamental problem.
I don't necessarily think that's the case. I think it's that our nation is all split up.
We go off to our little streaming things.

Speaker 14 We used to all be part of a little town. We'd all gather around for the Olympics.
And now we got other options. I just, there was no options before.

Speaker 14 I think it's that we're not a collective anymore as a group of people. We like, we like what we like.
We'll watch what we watch. But I haven't used the app, so I don't know.
What do you think?

Speaker 15 Well, I, you, I think you're both right in the sense that just consumer behavior is really powerful. Remember, only a few Olympics ago, it was sort of 2-4 and 7.

Speaker 15 Not only got a lot of viewership passively, you put on the evening news with Tom Broca or whatever, but you, you, channel four, NBC, was right there and so present for you.

Speaker 15 Whereas one, you now have 400 channels and not even 400 channels, but technically your options are 4,000 extra days because everything's streaming and on demand.

Speaker 15 And then you have so many other things pulling your attention. And also,

Speaker 15 to have to get to a channel

Speaker 15 and run through hoops, the individual is absolutely right. It's not easy.
It used to be super easy to watch the Olympics.

Speaker 15 Now you have to actually think about it and maybe download an app or something like that.

Speaker 14 And then you run past something on Netflix or whatever. You just, I think it's, I don't think we're a collective anymore.
It's incredible that NBC paid more than $7 billion for the rights. And

Speaker 14 I wonder who will buy them next. 2032.

Speaker 14 You know, time zones, people have, times have been easy to do.

Speaker 15 It's going to be that Matt Damon back crypto thing.

Speaker 14 Be bold.

Speaker 14 Time zones are always the issue.

Speaker 14 I don't think that's this big a deal. I don't know.
may be they are, but but they haven't seemed to be.

Speaker 14 I don't recall being like you watch it the next day, but and also that is actually true in terms of you know what happened, right?

Speaker 14 You can read what happened, and before you didn't quite know what happened if the newspaper wasn't there.

Speaker 14 Things have changed, things have changed, and people don't want to watch them in a big group. And it's a very, it's a smaller group of people.

Speaker 14 And there's nothing, there was nothing on, but now there is. So, Gabe from California's message came in on our new phone line.

Speaker 14 You can leave us a voicemail at 855-51-PIVOT, or as always, drop us a line at nymag.com slash pivot but leave us a voice message we like our new thing and leave us nice messages we like say hi to scott or you know he needs the love um so

Speaker 14 you think you think uh anyway it's an interesting topic i was watching the olympics for two seconds yesterday and then i went to netflix or hbo i don't remember i watched the gilded age that's hbo it's not very good so

Speaker 15 uh i'm watching oh really i'm watching uh euphoria and freaking out about having kids oh yeah don't watch that.

Speaker 14 I don't watch that. My kids watch it, but I don't watch it.

Speaker 15 By the way, I was just looking up on TV, Kara.

Speaker 15 You know, in order to get viewership up, the Olympic Committee is, and it's happening tonight, has introduced a new sport, a new game. They have pinball.

Speaker 15 And by the way, I'm betting on that deaf, dumb, and blind kid.

Speaker 14 Oh, that's good.

Speaker 14 That's good Olympic humor. Oh, my goodness.
In any case, let's get on to our first big story.

Speaker 14 Peter Thiel is leaving the meta-board. He reportedly wants to focus on electing Trump-aligned Republicans in the midterms.
Two of his proteges are currently running for the Senate, J.D.

Speaker 14 Vance in Ohio and Blake Masters in Arizona. I think Blake worked for him.

Speaker 14 Thiel has donated $10 million to political action committees backing each candidate.

Speaker 14 He's donated to a candidate challenging Liz Cheney in Wyoming.

Speaker 14 He was very active in the Trump administration, obviously, and I think a lot of people blame him for Facebook's bear hug or blame or compliment him, depending on who you are.

Speaker 14 And so,

Speaker 14 you know, he's always been sort of a controversial board member when he sued Gawker. That was a moment where they had to say something about it, saying he's a private citizen doing that.

Speaker 14 So, I don't, what do you think about this? I don't know a lot of why he left. Honestly, I haven't really called around or anything like that.
Maybe he just was tired of it or whatever. I'm not sure.

Speaker 14 Very close to Mark Zuckerberg, very big influence on Mark Zuckerberg, for sure. Made a fortune, both of them together at Facebook.

Speaker 14 Was one of the first people who believed in Mark Zuckerberg, for sure. He also had investments in lots of things, Clearview AI.

Speaker 14 He was an investor in Palantir that had some beefs with Facebook back and forth. He's a really interesting

Speaker 14 person. He obviously put a lot of his meta stock in a Roth IRA, which means that he, he if he cashes out in 2027, he gets the money tax-free, et cetera.
So what do you think, Scott? There's all kinds.

Speaker 14 Peter Thiel is quite a character.

Speaker 15 Yeah, I think this is what it is.

Speaker 15 I don't know if there's a backstory here, but he's been on the Facebook board over a decade. I think he invested a half a million dollars in evaluation.

Speaker 14 Yeah, he was the first big

Speaker 15 million.

Speaker 15 He's made tens of billions from Facebook. And

Speaker 15 I think that he's decided if he wants to be really politically active, which he wants to be, he probably shouldn't be on the board of a company that

Speaker 15 has been very correctly sort of politicized. So, this makes sense.
And Peter Thiel,

Speaker 15 I don't agree with his politics, but he strikes me as someone who's very self-actualized. He kind of knows what he wants, and he doesn't really care what other people think.

Speaker 15 He's like, I'm going to, this is what I think is right. This is what I'm going to do.
And,

Speaker 15 you know, have at it. I'm not.
He doesn't strike me as someone who, he's dancing to his own drum.

Speaker 15 I've always admired that he strikes me as someone who knows what he wants and doesn't really, you know, is like, okay, I'm here to please me. Full stop.

Speaker 14 That is.

Speaker 15 But he's going to get very politically active.

Speaker 15 And he doesn't, he's probably just, what has he not accomplished? But what he does is he joins the list of the most impressive people in America.

Speaker 15 And that is the most impressive people in America have left the Facebook board.

Speaker 15 But unlike Peter Thiel, they usually leave after a year when they realize that Mark Zuckerberg is insincere about cleaning up Facebook. I mean, Erskine Bowles,

Speaker 15 Susan Desmond-Hellman, Ken Chenal all went on this board. Don Graham looked around.
Don Graham.

Speaker 15 Don Graham all went on this board, looked around, and said, okay, I can help. I can figure this out.
These people always have big egos. I can coach this young man.

Speaker 15 He probably seemed sincere about wanting to do the right thing. And then they go, okay, this guy's full of shit and doesn't care.
I'm out of here.

Speaker 15 I mean, it is, these folks have all left so much money on this.

Speaker 14 Thiel wasn't this person. Thiel is a great admirer of

Speaker 14 the Kuckerberg. He's been there for a while.
And a very big influence on the stuff that many people think are problematic. He's been a big influence, especially the lean towards Trump.

Speaker 15 Yeah, but it strikes me that this is what it is. He wants to be very involved.
He doesn't need the headache. He's got the money.
He's literally Koch Light, isn't Koch brothers light.

Speaker 15 He's going to be probably the most dominant political

Speaker 15 force of 2022 with his money, very strategic, very smart.

Speaker 15 I mean, he's probably the biggest threat to Representative Cheney right now because he's clearly not. I mean, there were so many, think about it.

Speaker 15 Think about the societal norms and pushback and you become a pariah he's basically a billionaire that got pissed off at a media company and put them out of business that has a lot of very unusual you know uncomfortable notes to it he doesn't care he doesn't care yeah he's like i can i can put i can put a media company out of business that wrote

Speaker 14 opinions he has some he has some opinions he's definitely you're right koch brothers behind the scenes but sort of in front of the scene people know he's there he's not super quiet about where he goes um i think he wants to be the you the powerful, most powerful person on the Republican side, for sure.

Speaker 14 He also continues to invest. He's in Rumble, which just offered Joe Rogan $100 million to leave Spotify and join its service, which that's exactly what I would do if I was Rumble.

Speaker 14 He's got a lot of detractors. Josh Marshall at Talking Points memo tweeted Peter Thiel is leaving the Facebook board, says he wants to spend more time with fascism, which was not very nice.

Speaker 14 But, you know, J.D. Vance is a fucking clown, as far as I can tell.

Speaker 15 I heard he loves Gespacho.

Speaker 14 Gespacho. You know, he's a shitsterer is what I would call him.

Speaker 14 I used to talk to him a little bit more, but I haven't talked to him in a long, long, long time.

Speaker 14 He's a shitsterer.

Speaker 14 That's his whole thing is he wants, he doesn't like the way society is. He doesn't, he doesn't, he rails against elites, even though he's gone to a lot of elite institutions and has, you know, sort of

Speaker 14 moves in that, those circles. He's, um, he sort of backs like the common man kind of thing, even though he's not a common man.

Speaker 14 So you're right. It's sort of coke.

Speaker 14 He has ideas about this government and what it should be or not be, you know, and it's not quite burn it all down, but it's not, you know, he's not pleased with the way our government is and what it's doing.

Speaker 14 And he's got ideas about society and liberals and all kinds of things. And it's all over the map, interestingly enough.

Speaker 14 has invested all over the place. Sometimes it's worked, sometimes it hasn't.
But certainly that one bet he made on Facebook was a good one.

Speaker 15 That's all I need. It's paid off.
I think I'm like most people. I'd like to do edibles with him and Angela Lansberry and just see what happens, see how it plays out.

Speaker 14 Just see what works out. Anyway,

Speaker 14 I think it's probably he may have thought this is enough with the Facebook. I don't need this anymore.
Done. I've done my work.

Speaker 14 I've done my work. I've moved along.
And so when Peter Thiel got in, it was like nothing. You know, back in the day

Speaker 14 in Max, he's made a fortune. Like, he's made a complete fortune.

Speaker 15 No, he's made, he's made the GDP of Columbia. I mean, this is his, that's one of the greatest venture investments of

Speaker 15 all time. But he's done a lot of strange stuff.
He's not afraid to fail either. He was, uh, he ran, he did a hedge fund for a while.

Speaker 15 I did, I really, the idea I really wasn't a big fan of was he was giving people 100 grand to drop out of college. And this is from a guy who had undergraduate and graduate degrees from Stanford.

Speaker 15 And it's like, well, it worked pretty well for you, boss.

Speaker 14 And then there was some reports about that didn't work out that well for those those kids but he's definitely you know you gotta give it to him he's he's kind of his own dude uh so he is i'd love to sit and talk with him again okay scott let's go on a quick break when we come back peloton is spinning and we'll speak with circle ceo jeremy alaire about usd coin

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Speaker 14 Scott, we're back. Peloton's CEO is out.
So are 2,800 employees. John Foley announced he'll move into the role of executive chairman.
I suspect he's not out. He's still around.

Speaker 14 Barry McCarthy, a former CFO at Spotify, will take over as Peloton's CEO, a very well-regarded executive. I know him a little bit because he worked at Spotify, worked at Netflix, I believe.

Speaker 14 Meanwhile, the company is laying off 28% of its workforce, or as I said, 2,800 people.

Speaker 14 Not to worry, they will not, laid-off employees will get one free year of Peloton. Oh, wow.
In an earnings report, Peloton says it lost almost $440 million last quarter. So, what prompted this?

Speaker 14 This guy didn't have to. He controls a majority of shares.
Maybe he said, I'm getting out of the way here. I'm putting in a professional to shake things up.

Speaker 14 It surged 25% after news of this shake-up, for example. And Amazon and Nike are supposedly looking at it.

Speaker 15 This surprised me. And

Speaker 15 I think it probably indicates that things are even worse than we think because

Speaker 15 for the CEO and insiders control the company here, and I would have thought optically, and I think he would have said, look, just give me, let me get out of this, and then I'll declare victory and leave.

Speaker 15 Let me get out of this really ugly part of the company's history. And the fact that they and he decided, no, you're out,

Speaker 15 means it may even be worse than we think in terms of supply chain and operations and overexpansion. So, when I saw this, I was shocked because a small group of people control the company.

Speaker 14 Lots of people.

Speaker 15 And what this says is

Speaker 15 it is really bad. Either the numbers that they're seeing and the supply chain problems or customer acquisition or churn, whatever it might be, it is really ugly because usually

Speaker 15 if the company is

Speaker 15 what I would have thought on the board, they would say, okay, we need,

Speaker 15 I would have thought with someone who's the founder, they would want to stabilize things and say, okay, just write the ship, get it stable, and then move, and then you'll announce that you're going to chairman.

Speaker 15 So to make this change right now under the auspices of an activist and all the shit's going on, it really says, and all I have to do.

Speaker 14 The investors and still executive chairman, he controls a majority of Peloton's years. He's out of the limelight.
I don't know. We'll see.

Speaker 14 The activists want him out of that, too.

Speaker 15 Yeah, the activists have no power here. I don't declare victory.

Speaker 14 I'm just saying they want him out as executive chairman too. It must be really

Speaker 15 things must be really bad. The numbers.

Speaker 14 I don't know. This particular executive, let me read you a comment from someone.
I asked him, I met him. You always meet the CEO and not the CFO.
CFOs are critically important.

Speaker 14 He's smart. He focuses on the fundamentals.
He understands LCV well and knows how to generate it.

Speaker 14 He's no nonsense, has high standards, is demanding in a rational and reasonable way, but never ducks individual responsibility.

Speaker 14 He is self-deprecating in a way that I think indicates a pretty healthy relationship with himself. So kind of,

Speaker 14 this was, I called 10 people. They all love this guy.

Speaker 15 He sounds like us if we were nothing like us.

Speaker 14 In any case,

Speaker 14 he's got a lot to do.

Speaker 15 He looks like a whiskey commercial. He's very handsome.

Speaker 14 He looks like

Speaker 15 I drink Valentine.

Speaker 14 He does look like a whiskey. I think he's a no-nonsense kind of guy, and he wants to be be a CEO, and here he is.
So he's got a lot to deal with.

Speaker 14 Laid-off employees reportedly crashed an online all-hands meeting where the new CEO was introduced and left angry comments, of course. Who knew the death of Mr.
Big could cause all this?

Speaker 15 I can't believe they offered this as part of Severance a year of Peloton.

Speaker 14 Question is,

Speaker 14 is it a pandemic stock destined to die or not? And that's, I have to say, I think the users love this product. So it's a great product.
I love it. We'll see.
We'll see.

Speaker 14 Let's bring in our friend of Pivot.

Speaker 14 Jeremy Alaire is the co-founder, chairman, and CEO of Circle, the digital payments company behind the USD coin. That's a digital stable coin pegged to the U.S.
dollar.

Speaker 14 Last year, Circle announced plans to go public via SPAC and perhaps more ambitiously its intention to become a quote full reserve national commercial bank. I've known Jeremy for a long time.

Speaker 14 I was just joking with him. He had a company called Bright Cove that we used.
It's a video, early, early video company that we used on All Things D.

Speaker 14 And I would call and yell at him all the time because it didn't work. But I apologize now because I realize how difficult it was.

Speaker 13 Apology, apologies accepted. Okay.
I remember how

Speaker 13 stressful that was when you were like going live with video at the event. Yeah.
It was like a major new thing.

Speaker 14 Yeah, it was. Yes.

Speaker 13 I totally.

Speaker 14 And actually, Walt and I wanted you to build us something where we would talk to each other and yell at each other. And we couldn't do it.
And now, of course, I have Scott here.

Speaker 14 In any case, one of the other things is Jeremy was one of the first people to buy. You have built built that.
You have built that. FYI, you have built that.
I know that. I get it.

Speaker 14 In any case, he was also one of the first people to talk to me about blockchain.

Speaker 14 Him and Wences Casareas were the very first people, as I recall.

Speaker 14 And he was very, he moved to that very quickly. And we had a conversation in 2017 of what is blockchain and other things.

Speaker 14 And you just put out a, you put in newspapers or a thing called print and things like that. So can you talk a little bit about

Speaker 14 why you did that? Explain what you just did.

Speaker 13 yeah absolutely i mean so i mean there's like this big question that is kind of running around mostly in in washington but certainly in on wall street and and in other financial capitals which is you know there's sort of this perception that there's now a kind of digital currency space race china is building a you know the ec and why it's coming out at the olympics and everyone's you know

Speaker 13 to some degree is kind of freaking out saying you know where's the us on this

Speaker 13 And, you know, you've had a kind of a Federal Reserve that's been doing some research, publishing some white papers.

Speaker 13 And, you know, I think

Speaker 13 the question is sort of how can the United States lead in this space? And

Speaker 13 our view,

Speaker 13 and we have a lot of conviction around this, is that

Speaker 13 the U.S. is actually already winning this so-called digital currency space race because dollar digital currencies that are built on the public internet, that are built on

Speaker 13 an open model that is reflective of

Speaker 13 the kind of nature of the internet itself, kind of open, permissionless, interoperable, built on standards, free market competition that builds on that, that has given birth to this

Speaker 13 extraordinary, very high growth, very dynamic industry. And it's not without risk.
There's lots of issues. So no one's saying like there shouldn't be regulation or anything like that.

Speaker 13 And as you noted, right, we're

Speaker 13 sort of, as we say, all roads lead to the Fed. We believe we ought to come under federal government supervision.

Speaker 13 But I think the argument that we wanted to make, and in some ways, we took over like home pages and yes, we put stuff in print in a number of publications and throughout DC, is

Speaker 13 the answer here is not let's start a big government R D project that's going to take three to five years and itself introduces some pretty dramatic and potentially high high-risk privacy concerns, market competitive concerns, technology obsolescence concerns, et cetera.

Speaker 13 But get behind what's actually winning and embrace a model that is, in fact, what has made the West largely successful in being the leader in technology innovation on the Internet.

Speaker 13 So that's sort of the argument we want to make.

Speaker 14 But isn't it right?

Speaker 14 I mean, you're sort of saying, like, sort of like Facebook is doing, please regulate us, but you don't regulate us too much. I mean, you revealed last year under investigation by the SEC.

Speaker 14 We had Gary Gensler on last year talking about this.

Speaker 14 Isn't it appropriate, especially in financial areas, for the government to do this?

Speaker 14 You're essentially saying they're going too slow in that they could muck up the works, which was sort of early internet. People talked about this, as you know, you were around.

Speaker 13 Yeah, yeah. Well, there's a few things.
I mean, like we have.

Speaker 13 We've sought out regulation since 2013 when I started this. We became the most regulated company in crypto.

Speaker 13 We begged for licenses.

Speaker 13 We went after, you trying to do that because we understood that if you're sitting between the existing financial system and this new crazy world of the open internet, you know, of money and blockchains, like there's a lot of risk, there's a lot of issues.

Speaker 13 There's fraud, there's consumer protection, there's money laundering, there's all this stuff. So we've sought that out.
And now, as this has gotten really big, I mean, USDC

Speaker 13 grew 10,000% in the last two years, 1,000% last year. We've issued about 10 billion new in circulation just the last 30 days.
It's getting quite large and

Speaker 13 it's only going to get bigger. And this is now something where we believe that this ought to sit under kind of a

Speaker 13 federal supervision model.

Speaker 13 Like all of this fintech stuff, as you know, has basically been born out of what I call the fintech laboratories of the United States, which are the states, money transmission, all the payments companies.

Speaker 13 They're all kind of more lightly regulated at a state level.

Speaker 13 Our view is that this kind of infrastructure, this is what we call kind of market infrastructure for dollars on the internet, is potentially systemically scaled.

Speaker 13 It potentially has this enormous reach. So we just think

Speaker 13 we need to be thoughtful about what those regulations are. It's a square peg roundhole question, right? If you just take the existing

Speaker 13 payment system and try and apply that to this,

Speaker 13 you're not going to get all the same benefits that come from an infrastructure like this. So you just need to be thoughtful.
And that's in some ways what Treasury has said. Let's have Congress act.

Speaker 13 Let's define new statutes that are specific to this whole area.

Speaker 14 Scott?

Speaker 15 Nice to meet you, Jeremy.

Speaker 14 Can you?

Speaker 15 I feel as if crypto is like interest rates, and that is we all pretend we sort of understand what's going on or the relationship of the economy. Can you explain what a stable coin is and then and why

Speaker 15 the primary points of differentiation, I assume you think there's value versus a typical cryptocurrency. And also, I'd love to just understand Circle's business model.

Speaker 13 Yeah, sure. So

Speaker 13 the term stablecoin, I'm not a huge fan of the term, but it is what we have. That's what people are calling these things.

Speaker 13 And

Speaker 13 when we refer to USDC, we describe it as a dollar digital currency.

Speaker 13 We don't say it's a stablecoin, but everyone calls this a stablecoin.

Speaker 13 But fundamentally, the problem that we set out to solve and or the opportunity that we saw was that if you could take what we think of as traditional money, which is actually basically the liabilities of a central bank or the liabilities of the U.S.

Speaker 13 Treasury, you know, treasury bonds and central bank money, and you could

Speaker 13 express that in a digital currency form.

Speaker 13 So, and you know, essentially give it the characteristics and capabilities of what we think of as a cryptocurrency, which is a digital cash-like instrument that can transact instantly anywhere on the internet.

Speaker 13 It's open and interoperable like other protocols on the internet. It can move

Speaker 13 with extremely low cost. So

Speaker 13 you kind of give it these internet superpowers, as I like to call it. You give it those capabilities.

Speaker 13 But

Speaker 13 you're backing it by and you're basing it on the

Speaker 13 fiat currency. And really,

Speaker 13 for us, that means essentially like cash

Speaker 13 and short-term U.S. government treasury.
So everyone understands, oh, this is like cash. And

Speaker 13 you give it the characteristics of the internet. And then once you have that, you have

Speaker 13 an extraordinary ability to use those dollars

Speaker 13 on the internet.

Speaker 14 And so, I mean, that's essentially the coins, those coins on the internet. So

Speaker 14 why is that different than a PayPal or Venmo for the regular person?

Speaker 13 Well, this is like, yeah,

Speaker 13 you'll appreciate this. This is like, what's the difference between internet email or the web and AOL?

Speaker 14 Yeah.

Speaker 13 Well, one is based on open, interoperable standards. Anyone can connect to it.
It's totally open and global, and lots of developers can build around it. And another one's a walled garden.

Speaker 13 And what's the walled garden look like? So it's a walled garden metaphor. And I think the history of like payment systems and digital payment systems is essentially a bunch of walled gardens.

Speaker 13 But, you know, this stablecoins answer the question of sort of everyone should be able to instantly interact and exchange value, no matter what digital wallet you use, no matter what financial service you use.

Speaker 13 You should have that same level of reach and interoperability that the Internet gives you. And that's what stablecoins provide.

Speaker 13 And we see that in the ad that we took out, we talked about the hundreds of different digital wallets that support USDC.

Speaker 13 $2.4 trillion in transactions on the Internet last year with it.

Speaker 13 And this is just the start, right? I think this can ultimately be orders of magnitude larger than the sort of first generation of digital payment systems on the internet.

Speaker 15 Don't stablecoins sort of bifurcate utility from speculation, and that is I want the transmissibility, I want the divisibility, I want the open standards of a cryptocurrency, but I don't want to buy and pay in Solano because it could go down 20% in the next 24 hours.

Speaker 13 Totally. Yeah, I mean, like, we use dollars because they're, relatively speaking, price stable.
I mean, the Fed's mandate is to attempt to achieve price stability, right? And right now it's 7%

Speaker 13 inflation, but like more or less, 2%, 3%, 4%. People can then use it as a unit of account.

Speaker 13 It's useful. People don't buy and sell goods and services using commodities because it's insane.
And so you can trade commodities. That's important.

Speaker 13 And you can speculate on commodities, but you can't really use them as a medium of exchange efficiently.

Speaker 15 What's the use case, though? Because the use case I keep thinking of is remittance payments across borders where you get rid of the incredibly onerous fees.

Speaker 15 so it's an incredible tax cut on people sending money home i think if it's someone who wants out of the argentinian peso and there's currency control

Speaker 15 circumvent them by

Speaker 15 but what is the what is the primary breakdown the three or four biggest use cases of a stablecoin

Speaker 13 yeah sure well so i i jokingly like to say you know

Speaker 13 when people ask what's the use case of of usdc i i'm sort of like what's the use case for a dollar well there's a lot um and so you literally it's you know you might use it to make a micro payment for a piece of scarce digital intellectual property, aka an NFT, at one end.

Speaker 13 At the other end, you might have someone who's using it to bilaterally settle a huge trade for $500 million and everything in between. Now, I think.

Speaker 15 It's not subject to FINRA or Sir Fisius and all the other.

Speaker 15 If you send money, if you warn money overseas right now, it's like you're trying to get a mortgage. It gets held up.
It gets examined.

Speaker 13 Yeah.

Speaker 13 It is really challenging. And this is a vexing problem, of course.
And digital currency solves a big part of the problem. There's some incremental things that I think still need to be solved.

Speaker 13 But yeah, I mean,

Speaker 13 the concept of just a cross-border payment is kind of insane when you step back and think about it. It isn't.
Right.

Speaker 13 Like, when's the last time you sent a cross-border email or had a cross-border web browsing session? It just doesn't make any sense. And I think

Speaker 13 we're on the cusp. And people who use digital currency are already living in the future.
They're living in a world where, you know, what it doesn't matter. I'm on the internet.

Speaker 13 I have a piece of software on my device and I'm just exchanging value peer-to-peer with anyone else. No intermediary.
It's fast. It's cheap.
It's secure. It's private.

Speaker 13 Like people are living in the future with that.

Speaker 13 And regulators are catching up. But coming back to your question, like, what are the use cases?

Speaker 13 They're evolving really rapidly.

Speaker 13 So, you know, stablecoins were born out of the need for, this is where the name came from, the need for people to get out of an instable, price-volatile thing like Bitcoin and into a price-stable thing like a dollar.

Speaker 13 And so they were created for what I call the crypto capital markets. They were created to sort of be the

Speaker 13 liquid dollar that could move at the speed of blockchains because everyone who was trading was moving at the speed of blockchains and sit there. That's evolved.
So now,

Speaker 13 interestingly, to the other examples that you've given, we've seen this incredible growth. And it's interesting to see since the start of COVID, you can actually chart the growth of stablecoins.

Speaker 13 It's been incredible. And there's global demand.
And the global demand is from people who want to hold digital dollars

Speaker 13 in a secure way. And

Speaker 13 correlating to that has been this extraordinary growth in what's called DeFi. And so, you know, USDC, for example, plays a huge role in DeFi.

Speaker 13 And DeFi provides people with a way to store their dollars securely and then earn interest on them. And so the blockchains have given birth to essentially open interest rate markets.

Speaker 13 And these are interest rate markets that any individual in the world can participate in. You literally can connect your wallet, you can effectively lend your USDC and earn a passive.

Speaker 14 So you're mimicking. You're mimicking the world as it was.
How do you relate then? You just mentioned Bitcoin. What analogy would you have them to

Speaker 14 your excellent AOL example, for example?

Speaker 13 Yeah.

Speaker 13 Well, I mean, I think

Speaker 13 if each of these kind of digital currencies are like open internet protocols,

Speaker 13 Bitcoin is a really powerful open internet protocol.

Speaker 13 And I think it has I think very compelling attributes

Speaker 13 as a secure store of value. And And I mean, people say this all the time: it's digital gold, et cetera.

Speaker 13 But I think that's quite accurate. So the concept here is simply that from a long-term perspective,

Speaker 13 governments around the world are really, including the United States, are massively in debt, are issuing a lot of money to continually refinance that debt, and are fiscally irresponsible.

Speaker 13 And that's everywhere. And in some places, it's horrible.
And, you know, that means that those fiat currencies

Speaker 13 have a structural problem. And so, from a long-term perspective,

Speaker 13 a non-government, non-sovereign, secure, tamper-resistant,

Speaker 13 scarce, well-defined monetary policy store of value is actually quite compelling. But you're not going to use it to buy cookies and milk and pay rent.

Speaker 13 And so there's this interplay between you know, an open internet of value exchange that's built on the big the biggest reserve currencies of the world, which we think will be massive and be used massively, and these store value currencies, which are frankly savings instruments more than anything else.

Speaker 13 So, gold

Speaker 14 is the thing you're using.

Speaker 13 And I think gold's the wrong analogy because I think gold is such a relic and it has no utility. I mean, jewelry is interesting, but it doesn't have actual utility in the same way that Bitcoin.

Speaker 13 Bitcoin brings the monetary effectiveness of gold, but to

Speaker 13 a digital asset that can actually move

Speaker 13 at the speed of the energy.

Speaker 14 You can't carry gold around, is your point. You can't carry gold around.

Speaker 15 I just want to jump in here because right before you got to the interesting stuff, Kara interrupted you. And I want to assure you, she never does that.

Speaker 14 She never does that.

Speaker 14 You are about to

Speaker 14 go.

Speaker 15 But you are about to get to what the yield is on your USDC. What is potentially the yield you can get? And answer a fundamental question I've always had, and I don't understand.

Speaker 15 How can that yield be so much greater than the yield a bank gives you on cash stored in a certificate of deposit?

Speaker 13 Yeah.

Speaker 13 So

Speaker 13 the best way to think about this is,

Speaker 13 you know, there are capital markets and, you know, banks participate in capital markets.

Speaker 13 They,

Speaker 13 you know,

Speaker 13 give out a bunch of loans. They package that loan up.
They sell that as a thing to a capital market. And then there's hedge funds or whoever else buying up those loans.

Speaker 13 And the banks, you know, know are you know maybe making four percent five percent six percent seven percent whatever they're making on those loans and they make a spread of like three percent it's that's sort of the the like the model now when you put money in a checking account they're not really paying you anything um uh and so that's a source of quote unquote deposits for them that then they use and then they create money they make new money and then they loan it out and then they have that that loan book on the other side um

Speaker 13 But, you know, so

Speaker 13 what's happened with digital currencies like this is,

Speaker 13 I think the sort of developers have basically built protocols that are themselves borrowing and lending markets. So

Speaker 13 the market to borrow and lend is a piece of software that's on the public internet. It's a public protocol.
It's not a company. So you're anyone that wants to borrow and lend from each other

Speaker 13 does that through the protocol itself that's you know running on a on a virtual machine and a smart contract on on one of these networks and that's what makes them decentralized so it's this protocol that's out there and and then individuals whether it's an individual or a household or a firm or whoever can take their stable coins or other digital assets and lend them to the protocol.

Speaker 13 And then there's people on the other side of it who will borrow it. And

Speaker 13 these protocols,

Speaker 13 the well-known are like Aave and Compound. These are some of the bigger ones that are out there.

Speaker 13 Essentially have created these capital markets in software on the internet. And

Speaker 13 the reality is, and all the risk management and how the collateralization and liquidation and all the stuff that goes on for these markets, it's open and transparent because it's all open open source.

Speaker 13 Everything is public and transparent. And everything that's happening in that market is real-time auditable because it's on a blockchain.
So everyone can see the risk and what's happening.

Speaker 13 So it's, first of all, it's just an extraordinary innovation and breakthrough. But secondly, the borrowers of capital are paying, are willing to pay a high interest rate, essentially.

Speaker 13 So if the borrowers of capital are willing to pay, let's just say it's 6% for dollars on these markets, and then the protocol itself generates income for the protocol, and then people who

Speaker 13 participate in it generate a piece of the fee. Then there's a piece that's then passed along to the lender.
And so that's basically it.

Speaker 13 You don't have a bank as an intermediary as one of my.

Speaker 14 Yeah, you just kill the bank.

Speaker 13 Yeah, I mean, it's like

Speaker 13 self-driving banks is the concept.

Speaker 13 It sounds scary, actually.

Speaker 14 Yeah, it is. Don't use that one.
I would not use that method. So let me, I have one last question.
So there was a lot of friction between your sector and U.S. regulators with, I guess, Yell,

Speaker 14 Federal Reserve Chairman Jeremy, Jerome Powell, Treasury Secretary Janet Yellen, SEC

Speaker 14 Chair Gary Gensler, as I said, wanted to tighten regulations of stable coins.

Speaker 14 And Gensler called it the Wild West in his testimony. And one thing you said is that it's critical.
Let me read you a quote.

Speaker 14 You said, I think it would be great if there was a clear set of rules in the banking system in the United States around crypto asset lending. It doesn't really exist.

Speaker 14 We see it as a really important product here with a lot of growth. So, can you, what would you, what is the one thing you need the government to do right now in terms of bringing this,

Speaker 14 not calling it the Wild West, which is okay, but what to make it not that, to make it not that, I guess. Yeah.

Speaker 14 To their liking, I suppose.

Speaker 13 Yeah, I mean, the thing that

Speaker 13 I'm focused on and we are focused on is,

Speaker 13 and by the way, this is like very aligned with what, say, the U.S. Treasury Department is proposing.
And there was just testimony to Congress last week from the Under Secretary Nellie Lang.

Speaker 13 She's going to the Senate next week.

Speaker 13 And

Speaker 13 there are a lot of people in Congress who are now working on legislation. So we'll see if Congress can do something, but they're working on legislation to say, if you are a

Speaker 13 dollar stablecoin issuer, here's what you got to do.

Speaker 13 You have to have the following reserve requirements liquidity requirements audit requirements anti-money laundering requirements controls etc we're going to define a charter for that you got to register with the u.s treasury department you're going to be supervised by the u.s treasury department and in some cases supervised by the fed as well depending on the the full scope of your activity and define that So that's what's needed.

Speaker 13 And that's basically what the White House has said they'd like to see, some version of that.

Speaker 13 And then it's like devil in the detail stuff there's a lot of of of things that you know could go too far or or too little um

Speaker 13 and and so but that's the essence and then i think the other thing is um you know essentially

Speaker 13 we need some definitions of these things so that accountants just you know good old-fashioned accountants know what the hell these are and they can treat them like cash and cash equivalents so that corporations and financial institutions and and households know that they're dealing in dollars, essentially, that this is

Speaker 13 something that they can account for in the right way. Because right now

Speaker 13 it's amorphous. What the heck is this? And so you need some definitions and then you need this kind of U.S.
Treasury supervision. And in order, you need to do that at a national level, basically.

Speaker 14 Yeah, which they have not done. All right, Scott, last question.

Speaker 15 Quickly, business model and how do you establish any sort of sustainable advantage as a USDC or a a stablecoin?

Speaker 13 Yeah, yeah,

Speaker 13 yeah. So, um, uh, on on the on the business model, so we sort of operate a couple of key businesses here.
The first is what we call our stablecoin market infrastructure.

Speaker 13 That's a mouthful for what we do with USDC, but we have ambitions to do other currencies beyond the dollar.

Speaker 13 But that market infrastructure, so we operate that, we scale that, we support that, we support the whole ecosystem that builds on it, and then we monetize it through the reserves.

Speaker 13 So, you know, the reserves are basically growing. There's 52 billion in circulation, and there's an interest rate environment.
And so we monetize through those reserves. So that's one big piece.

Speaker 13 And that's quite significant if you look at what the interest rate environment is

Speaker 13 and where it's going and how fast this is growing.

Speaker 15 So similar to a traditional bank, you have money, you're a custodian, you loan it out at a higher interest rate. We don't loan it out.

Speaker 13 We do not loan it out. We are full reserves.

Speaker 14 They facilitate the loan.

Speaker 13 Yeah, and that's the second piece, which is basically once people are living in digital currency instead of in legacy dollars and the legacy banking system, we provide a whole suite of essentially like accounts for businesses that want to transact in this, use it in their payment systems, integrate it into their own applications.

Speaker 13 We provide ways for people to lend it and borrow it and the like. And so that's purely in the digital currency itself.
It's not in the legacy banking system.

Speaker 13 So we're sort of conducting these new commercial finance activities on top of blockchains and using the digital currency itself.

Speaker 13 And so that we have, it's what we call our transaction services and our treasury services. And it looks a little bit like a commercial bank.

Speaker 13 And so that's a second piece. And that's something that we monetize is growing fairly quickly.
In terms of your last question and like, how do we think about competitive advantage or doing this?

Speaker 13 You know, I, as you know, like I come at this from the angle of like internet platforms and technology platforms. And I look look at this as

Speaker 13 how are we building a kind of open platform for dollars and money on the internet? It's about developer adoption.

Speaker 13 It's about scaling the ecosystem that uses this, making it as widely accessible as possible. And it's a network effects business.

Speaker 13 I mean, basically, I mean, the more people who plug into the protocol, the more utility it has, the more demand there is to use it.

Speaker 13 And the more people who have the format, it's sort of like, why did MP3 win? Well, because everyone put it in devices and it worked. The more people who have the format,

Speaker 13 then and and the more people who hold that the more utility value it has and so it has really strong network effects and and so i i think that's the that is the core is it's like an internet platform developers applications integrations distribution and and that's how we maintain the competitive advantage that i think we have right now

Speaker 14 all right jeremy Sounds exciting. You're going to help me find my Bitcoin someday?

Speaker 14 You know, I did buy some back then when you told me to.

Speaker 14 He's one of the two people that told me to buy. I lost it, Jeremy.
I don't know where it is. Could be in it.

Speaker 13 You're not like that guy who's in the dumpster in England.

Speaker 14 Remember, I'm that guy.

Speaker 14 I don't have 500. I think I bought 10 when up on your advice, and the advice was Wences Caesars.
I don't have it, Jeremy.

Speaker 15 You could have a pretty good time in Vegas with that jungle dog.

Speaker 14 We could.

Speaker 14 We could. We could.
But again, Jeremy was one of the earliest person who told us. And again, I apologize for yelling at that video, but it didn't work.
In any case, Jeremy, thank you. Good luck.

Speaker 14 And this is a really important issue. This is, you know, critical instead of figuring out how these financial instruments are going to work for regular people and also throughout our economy.

Speaker 14 It's very exciting. It's still a very exciting arena.
Anyway, thank you, Jeremy. I really appreciate it.

Speaker 13 Thanks, Kara. Thanks, Scott.

Speaker 14 All right, Scott, one more quick break. We'll be back for predictions.

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Speaker 14 Okay, Scott, predictions. Go ahead, make a prediction.
Obviously, we didn't expect the Peloton guy. We'll see.
Well, first off,

Speaker 15 Go Rams. Let me just say that.
Not a prediction, but Go Rams.

Speaker 14 Is that a football team?

Speaker 15 No, it's an off-off Broadway play that we're going to together.

Speaker 14 Oh, okay. Good to know.

Speaker 15 So, anyways, my prediction is Coachella is doing something interesting. They're selling 10 tokens or NFTs or wait, what are they? I think they call it a token.

Speaker 15 It gives you lifetime access to the music festival. So far, the highest bid, 75 grand.
But this is the beginning. This is the tip of the iceberg.
You're going to see in 2022

Speaker 15 what I call Lux coins emerge. And that is organizations that try to monetize the scarcity value of access.
And it'll be interesting things.

Speaker 15 If I were Chanel or Hermes, I would issue 10,000 coins, access to all Hermes products anytime with a stylist. And it'd be such incredible signaling and the perfect gift for every guy's fourth wife.

Speaker 15 I think they could raise billions overnight. I think Stanford or a university could issue a coin that says, okay.

Speaker 14 Account for that in terms of accounting of the costs, like things you owe later. I don't know, just

Speaker 14 putting my accounting hat on.

Speaker 15 Yeah, but you'd get the cash up front.

Speaker 15 I mean, you might not be able to take an account, you might not be able to recognize the accounting revenue, but you would raise billions of dollars overnight, get rid of these stupid development departments,

Speaker 15 get rid of the admissions department. What about, I'll give you another one.

Speaker 15 A Langone, a Cedars, or a Jackson or a coin, and that is Cradle the Grave, healthcare, no insurance. Say you're a parent.
What do you leave your kids in your will?

Speaker 15 You leave them a stable coin for their family that says, cradle the grave. Anyone with your last name gets great health care at Cedars or Langun for the rest of their life.
They could raise billions.

Speaker 15 So

Speaker 15 the scarcity, monetizing, they'll use technology.

Speaker 15 They'll have a technology overhang, but there's just so many things you could do to get upfront payments around scarcity value from universities to hospitals to health care to aspirational events.

Speaker 15 Burning Man could issue a coin and say that whoever owns this coin for the rest of their life gets to be in the best ERT with the best art or whatever it is.

Speaker 14 We'll see how many they'd sell with those. Yeah, the best yurt.
Best.

Speaker 14 I have to provide the yurt.

Speaker 15 I think I'm going to go to Burning Man this year. I've never said it.

Speaker 14 You know, this feels, it could be like that island. What was the island? I can't even remember it anymore.
That everybody, fire festival, whatever.

Speaker 14 Oh, my God. I love that.
This feels fire festival to me, but okay, sure.

Speaker 15 Jesus Christ, don't even use the terms fire festival when our pivot Miami conference kicks off in 72 hours.

Speaker 14 Don't even use the test.

Speaker 14 have bologna sandwiches for you all. Speaking of which, I will see you soon, Scott.

Speaker 15 Well, we almost had Emily Radikowski. That would have felt very fire-ish.

Speaker 15 No, no, she was like one of the models promoting Fire Festival. Was she?

Speaker 14 No.

Speaker 15 No? Is that misinformation?

Speaker 14 I'm looking it up because I have to fact-checked you in real time. Okay, all right.
Here's the deal:

Speaker 14 you're correct.

Speaker 15 You seem so disappointed.

Speaker 14 There was a post about the Fire Festival. Okay.

Speaker 15 Yeah, I know probably a little too much about Emily Radikowski.

Speaker 14 I'm saying that. Anyway, we'll be back on Tuesday for more from Miami.
I will be with Scott in person in Miami, and we'll both be

Speaker 14 wearing our Miami clothes.

Speaker 14 We'll have such a good time. The weather will be warm.
Anyway, Scott, I'm looking forward to seeing you in person. Yeah, likewise.

Speaker 14 And please read us out.

Speaker 15 Today's show was produced by Larry Naiman, Evan Engel, and Taylor Griffin. Ernie Andretat engineered this episode.
Thanks also to Drew Burrows and Meal Silverio.

Speaker 15 Make sure you're subscribed to the show wherever you listen to podcasts. Thanks for listening to Pivot from New York Magazine and Vox Media.

Speaker 15 We'll be back next week for another breakdown of all things tech and business. That deaf, dumb, and blind kid sure plays a meme pinball.

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