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In Search Of Excellence
Brock Pierce: What Is Bitcoin, How Does It Work, And The Importance Of Contribution | E139
01:19:55
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- [00:00]
Brock Pierce
The reason why we don't use Bitcoin as a medium of exchange is because of its volatility. I mean, people use Bitcoin for any transaction. You can buy a Tesla, you can use this, you can use that. Bitcoin can be used as a medium.
- [00:13]
Host
Of exchange, but like you said, nobody does it.
- [00:15]
Brock Pierce
People do. But that's not the primary use case. The primary use case of Bitcoin is as a store of value, as a speculative investment, as a hedge against other assets. Right. It changes the fundamental world in which we live that we can now transact over the Internet with anyone in the world without a trusted person in the middle.
- [00:42]
Host
You're listening to part two of my awesome interview with Brock Pierce, a crypto billionaire who has pledged to give away billions of dollars during his lifetime. If you haven't yet listened to part one, be sure to check that one out first. Now, without further ado, here's part two of my awesome show with Brock. And let's switch it to something that I think people know most about you. It's exciting. It's what everyone in the world talks about, and that's blockchain. And let's start with the premise that everybody has heard of it, but not a lot of people know actually what it is. We can get very complicated, but I want to keep it very simple. What I call the grandma standards. The grandma standard is your grandmother. My grandmother. My grandmother passed away two years ago at 104 years old. But the grandma standard, oh, she was the best.
- [01:25]
Brock Pierce
Good.
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Host
Genius. My hero. My hero. What a life.
- [01:28]
Brock Pierce
104.
- [01:29]
Host
What a. What a life. I mean, she was amazing.
- [01:32]
Brock Pierce
By the way, my great grandmother passed away at 104.
- [01:35]
Host
It's. And what, she functioning at 104?
- [01:38]
Brock Pierce
Yeah, yeah, it's great. I mean, not as well as at 90, but it's great.
- [01:43]
Host
So the standard is. Let's explain it to people in a way that people will now learn exactly what it is. So let's take a step back. What is the blockchain that everyone's heard of?
- [01:58]
Brock Pierce
I think we have to start with bitcoin, because I think that's going to help people at least understand the first piece of it.
- [02:05]
Host
Okay.
- [02:07]
Brock Pierce
Most people have heard of bitcoin, or at this point at least heard of it. And so think of bitcoin as the first application utilizing what we call a blockchain. Think of the blockchain as like the operating system that powers your iPhone or powers your Android device. Right. That is the underlying operating system, the sort of software system or the architecture. Bitcoin was the first app, like the first app, and now that same database or blockchain, that architecture is being utilized to do lots and lots and lots of other interesting things. But bitcoin was the first use of this concept. And what we've learned is the same architecture that makes Bitcoin possible can be used to do a lot of other things. And so to describe it, a blockchain is just a new type of database, what you'd call a distributed database, kind of like cloud computing or aws.
- [03:16]
Host
Or Akamai.
- [03:17]
Brock Pierce
Or Akamai, Right. To use the more appropriate one that less people know today, but yes, than those as far as grandma is concerned. But exactly. Perfect example. Akamai, except for its decentralized, meaning it's not run by a company. Right. Akamai is a corporation. You know, AWS is, you know, a division of Amazon. Right? All these sort of cloud computing systems. A blockchain is a distributed database similar to cloud, except for it's decentralized, meaning there's no corporation usually that runs it. It's an open system that anyone can use. So imagine if we talked about a credit card, for example, talk about a MasterCard, a Visa, an Amex, a Discover. Imagine of American Express said to all the cardholders in the world to kind of keep it in the financial services area, as an AMEX holder, you are allowed to use your computer or your cell phone to run the Amex software. So instead of American Express having its own back end, instead they said, we're no longer going to run the American Express backend. We're going to allow all American Express holders, cardholders, to run the American Express platform. And imagine 10% of all the AMEX holders in the world said, I'm going to run the software. And in exchange for running the American Express software, so they no longer pay server fees, they no longer pay for infrastructure. They said, we're going to give it to our users to do that. And they said, in exchange for that, we're giving all Amex users that run the Amex software a piece of the transaction fee. That is probably the easiest way to think kind of how Bitcoin works. There's no Bitcoin company, there's no blockchain company that runs Bitcoin. You can run a node, you can effectively run those servers, and in exchange for doing that, you can earn Bitcoin. Blockchains effectively work that way. Whatever product and service, a blockchain is essentially a decentralized distributed architecture where the people that run the infrastructure get a piece of the action in the form of coins. Similar to like how cloud works, distributed database, except for it's decentralized, which means it's the user base that runs the software normally, professional users more than amateur users. But it's a new framework where no company runs the thing. And one of the benefits of that is it creates what we call censorship resistance. Meaning there's not a company that you can go to to say, oh, you can't do that. It's run by people or groups of people all over the world, which means you can't really stop censorship, which presents a whole nother potential discussion. But you also can't shut the network off, which is why Bitcoin is very popular. It's called it very resilient. You know, it's a very resilient, highly secure system where if someone didn't like bitcoin, a government historically, for example, no one can shut it off. So these are some of the benefits of using a database like this. Highly resilient. It's also the most secure system the world has ever seen. Highly secure, highly resilient, can't be shut off. And it's censorship resistant. And these are the reasons why one might want to use a blockchain. But to speak in a different way, it's also a slow dumb database, right? And so these are the reasons why you'd want to use a slow, dumb, expensive database. Is one of these things is must be a need for it. Most people just put a blockchain on things because it's a buzzword like AI or cloud or this or that. Though most businesses and most products and services don't really it. So in short, a blockchain is a new architecture of database, a decentralized distributed database that has a few attributes that justify using that slow dumb database for certain types of applications.
- [07:41]
Host
Okay, so let's go back.
- [07:43]
Brock Pierce
Long winded, but hopefully simple and covers everything.
- [07:46]
Host
Okay, let's go back the creation of Bitcoin. And to do that we have to go back to 2009. Someone who went by the name Satoshi Yakimoto wrote a white paper about Bitcoin. Tell everybody what a white paper actually is and just explain the fact there's no coin you're putting in your wallet here and how people actually get a bitcoin. You can buy it on exchange, but anybody listening who has a computer could also make their own Bitcoin. So explain that to everyone because no one really understands. If you're not in the crypto game, you don't understand that. And even my guess is over 50% of people, hundreds of millions, billions of people who own bitcoin don't really know where it started.
- [08:38]
Brock Pierce
Yeah, you have to go back further than 2009 or 8. So crypto is short for cryptography, right. It means it's security. Like, it's a form of encryption to encrypt data for purposes of condensing file size and securing it. It goes back to 1982 and a guy by the name of David Chaum, who really was the first person to publish, like, scientific research, to publish this concept of using encryption or cryptography to build a new monetary or currency way of transmitting value. And then there were a number of ideas and things that happened in the 1990s. Kind of the next big idea was the national security agency. The NSA wrote a paper in 1996 on how to create the similar concept. And then you have a number of entrepreneurs in the 90s and 2000s that were also publishing ideas. E. Gold, hash, cash, and similar concepts. My background goes back to the late 1990s and 2000s. I ran all the digital currency markets. Not all, but I was the main person running the markets for virtual currencies in video games. So if you played World of Warcraft and Second Life, I was the main market maker for all the game currencies from 2001 into 2000. Call it 8 when this begins. I had 400,000 people in China primarily living in the Metaverse or the virtual worlds mining digital currencies. I was PayPal's largest merchant for years. I was instrumental in launching Alipay. And so there were a number of what you'd call precursors. Then you had your Internet poker sites, Internet gambling sites. And so a lot of these ideas were kind of the precursors, the stuff that predated Bitcoin, which was when the eventual solution of how to really make this work happens. So Satoshi Nakamoto is the pseudonym of the creator or creators of Bitcoin. And the white paper, which is. Think of that as like a thesis or a scientific, you know, sort of research report. It was the publishing of an idea for those that want to study. It was published on October 31, 2008. Bitcoin's idea was then published to the scientific sort of community, the encryption community, and then it launched on January 3, 2009. And that was the first time anyone could download and run the bitcoin node.
- [11:20]
Host
In a way, you're getting too complicated now. So what's a. What's a What could they download? And what's a node?
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Brock Pierce
You could download the bitcoin software to run it from your computer.
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Host
You had a PC.
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Brock Pierce
Yeah.
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Host
You click something, it downloads on your hard drive.
- [11:34]
Brock Pierce
Yeah. And then you install, you know, the. Basically to run one of those bitcoin nodes which powers the network.
- [11:40]
Host
What's a node for people who don't know?
- [11:41]
Brock Pierce
So the node is your computer, then becomes one of the servers for Bitcoin that is tracking all the bitcoin transactions in the world, which also allows you to become what's called a bitcoin miner. And so all the nodes that are also bitcoin miners are competing in a lottery where every 10 minutes someone wins the lottery running that software around the world. And whoever wins the lottery gets a block of bitcoins. You get a bunch of Bitcoin, you make a ton of money today if you win. Back then, Bitcoin had no value because it was just an idea of people experimenting in 2000, early 2009, because no one had ever used Bitcoin for a transaction yet. So at that point, if you were curious, you read research reports, you read a white paper, you're like, oh, this is an interesting idea. This may be a big breakthrough. Which, by the way, if you ever saw Good Will Hunting, that Matt Damon movie, one of the greatest challenges in cryptography at the time, you know, one of the holy grail, sort of like a big ideas is could anyone ever build a system that would allow peer to peer financial transactions without a bank, without a PayPal, without a trusted intermediary? And prior to Bitcoin, it was believed to be impossible because for decades people had tried. It was like that problem on the blackboard, the great scene, by the way, the great scene. And no one could solve it until Matt Damon, the janitor, the genius, comes in and looks at it. Satoshi Nakamoto would be the equivalent of Matt Damon in that movie. Solving the imp problem of technology which has changed the world. It was, it was a breakthrough. So the people that read the scientific research, the white paper, you know, were not there for monetary reasons. They were there to see did someone actually solve this holy grail of problems that literally fundamentally changes the way that our world can operate. We talked about earlier the Internet of information. The Internet by design couldn't become a system other than moving information. It couldn't do financial transactions other than in the same. We'd always done finance with a trusted intermediary. We had to trust a third party to facilitate all financial transactions. We could never do them Other than in person. If I hand you a bill or a coin prior to that, we've always needed, from the time of the Knights Templar to today, you know, a financial intermediary that was trusted. It changes the fundamental world in which we live that we can now transact over the Internet with anyone in the world without a trusted person in the middle changes everything.
- [14:28]
Host
Right? So, but let's talk about it's not a coin and how we get them. You mentioned the word mining, and people don't really know what it is. I think that some people who do know what it is, you plug in your computer, you get lucky, it takes a lot of power. And your own computer over time can generate Bitcoin.
- [14:47]
Brock Pierce
Yes. Back then it didn't require a lot of power because it's just your regular computer. But as more and more people took an interest in Bitcoin, more and more computers came on the network. And then people started using, instead of their just laptop or their desktop, they started customizing computers to run better and better systems to try and solve this mathematical problem, to win the Bitcoin reward, the mining reward, which then eventually, as Bitcoin had value and started to go up in value, people started investing in really competing for this stuff, which has now become a huge industry. There's big public companies, you know, in the US public markets that all they do is bitcoin mining. So it's not really something you can do with your laptop anymore. It's become an entire industry like ISPs, like data centers, which is a massive, massive industry now in terms of its tens of billions of dollars. The industry of bitcoin mining, it's not really a hobby of an individual. You still can. The main variable is, do you have the hardware? Because it requires specialized hardware today, it's not your standard computer. You can go learn with your computer, but you're not going to make money per se. And then it does. The primary variable is now energy. Bitcoin, you could argue in some ways, is digital gold. Right? It's a digital gold versus a physical gold. In some ways, it has a lot of the same attributes that makes gold valuable. It's also, you could argue, a form of stored energy. So if you have a bunch of excess power in a place where that power can't be used, meaning it's stranded, and it would be wasted, the power would be lost. You can now take stranded or excess energy, convert it into a digital commodity called Bitcoin, and use it anywhere in the world. It's a way of taking Wasted or low cost energy, turning it into a digital asset or commodity that looks a lot like digital gold. That's a way to think about why is this asset class so valuable as well as at a time where people are concerned about inflation, they're concerned about financial instability in the world, they're concerned about black swan events, they're concerned about wars and pandemics. And so in the same way that people used to buy gold historically or you know, assets to hedge against uncertainty, Bitcoin has become another alternative. A digital version of people putting something in their, in their investment portfolio for call it a rainy day fund. It's a rainy day asset for most people that buy it, you know.
- [17:25]
Host
Right. And so to the layperson listening today, there's no bank who's minting bitcoins. They're all individual people. Now companies mining these huge data centers. There's 19.7 million Bitcoin in circulation today.
- [17:42]
Brock Pierce
Yeah, 21 million in total.
- [17:43]
Host
Right. So max 21 million. What are we talking about when we talk about those numbers?
- [17:50]
Brock Pierce
So that's the total amount of bitcoin that will ever be produced.
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Host
Why?
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Brock Pierce
Through the mining process. It's how it was originally encoded, to create scarcity. So inflation is central. Banks keep printing more and more and more money. And so the amount of dollars ten years ago is substantially less than the number of dollars in circulation today. Every time we print more dollars, your dollars theoretically become less valuable because you have a smaller and smaller and smaller percentage of them. Bitcoin's economic theory, right, to create interest is around rather than abundance and continual dilution of your bitcoin or dollars, is scarcity, meaning there's a limited supply of bitcoin, which in theory as demand, and so far is beyond theory, as demand in bitcoin rises, so does with it the price like gold. The only difference is as the price of gold goes up in value, we can dig more of it out of the earth. So every time the price of gold goes up, we mine more of it from the earth because we can afford to extract more of it. Bitcoin doesn't have that. Bitcoin there is a fixed limited amount. And when you hear 21 million, you might go, well, that's not enough. But it's a digital asset that's call it nearly infinitely divisible enough to the purpose that you can call it infinite, meaning owning one bitcoin is a lot. Now in today's market, that's a substantial amount of money for most people, you know, and 60, $70,000 per Bitcoin. You don't need a whole bitcoin. You can own 0.1 bitcoin. You can own 0.01 bitcoin, right? You can own 0.001. And eventually, you know, so it just happens to have been called 21 million. It could be 21 billion, it could be 21 trillion. That would just determine as a percentage. When we, when we switch to digital, it's hard for our brains to conceptualize it. It's instantly divisible, kind of like digital money. Today we just press and print. With bitcoin, you can't press and print more, but you can send a fraction of it. Imagine if I had a piece of gold and I could just say, I'm sending you a sliver of my gold coin. You press the button, it does that.
- [20:11]
Host
So when we invest in a traditional currency, where most people today will invest in stocks, for example, you have immediate liquidity by the second, like you do in bitcoin. Companies are traditionally valued on a whole bunch of other things. Traditional companies, cash flow, profit, history of the company. There's some financial metric there. Even for non profitable companies. It could be multiple of cash flow or multiple of revenue, depending on a whole bunch of other things. In bitcoin's case, there is zero financial history of all the metrics in terms of how you value it go out the window. And so my question to you is, how are people valuing bitcoin? Because let's say there's no difference. I mean, I get a daily coinbase update on the price of bitcoin. So it's up 6% today, down 20% yesterday. And really the number of coins hasn't changed one bit. And we saw several years ago bitcoin. Tim Draper, who I know is a friend of yours and a friend of mine, he was on my show like you bought a bunch of bitcoin in the Mount Gox fiasco, that bitcoin went up to I think 70 or $80,000 and then not too long later was down at $3,000. Today it's at 67,700. I think before we came on the show today, what's going on here?
- [21:38]
Brock Pierce
Yeah, so you talk about how do we value assets and we've talked about venture capital. One of the things that we do when we are looking at companies to invest in is we look at the tam, the total addressable market. And so bitcoin isn't a company. So it doesn't have revenues or earnings or cash flow per se. It's an asset, a Digital asset. But one of the things you do look at is how big of a market is it in? You know, the market for bitcoin, right, is it's competing with commodities like gold as an alternative to gold, right? It's, it's potentially competing as an alternative to currency, as a store of value, one that goes up versus down. So, you know, we're saying that instead of people putting money in a bank and putting it in Treasuries, some people may take their money and put it into bitcoin and hold it, or people might put money into bitcoin and hold it as an alternative to gold. So you have to look at it as an asset, it's not a business. You don't value it in the same ways. But if you look at the size of the market that it's offering an alternative to, you're talking about the largest market in the world. And clearly a bunch of people have recognized that bitcoin is an interesting speculative investment product or asset to buy and hold as opposed to holding money or holding Treasuries or holding gold. And so you have to look at it from that perspective to see where its value is derived. It's not a business. It's not valued on cash flow, it's not valued on revenues or earnings, never will it ever be. It's valued by the size of the market that it's offering an alternative, you know, investment, respected investment to which is the biggest market in the world. And that's why it's gotten to where it is.
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Host
What explains the fluctuations?
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Brock Pierce
Fluctuation is all assets.
- [23:38]
Host
Well, we're talking about massive fluctuations here.
- [23:41]
Brock Pierce
But all assets, right? The price of something going up and the price of something going down ultimately is determined by supply and demand. So Crypto is a 24 hour, 365 day market. And so it doesn't stop trading like the stock market or currency wires and banks. And so it's also a market that is heavily traded. The types of people that hold bitcoin are digital, kind of always on and hardcore. And in the same way that stock markets have high frequency trading, a lot of the prices go up and down, not based upon revenues going up or down or earnings going up and down. It's by news, right? We look at news a lot of things so that the, the price is often based upon, not necessarily the fundamentals. Right? A lot of it is emotional. And so markets are moving. And if markets start going down, people are trading, trading, trading. And because a lot of people with bitcoin are trying to they're traders. They're actively going, how do I grow my bitcoin? I sell high, I buy low. And so you have a huge active market where they just trade bitcoin all the time. So it's an actively traded market far more than most stock people. I mean, if most of us that hold stock, unless we're a hedge fund or a day trader, we kind of buy and we sit and we hold. And crypto, we call that Hodlers, but.
- [25:04]
Host
What do you call them?
- [25:05]
Brock Pierce
Hodlers. H O D L. It means hold on for dear life, you know, which is the roller coaster ride of up and down for crypto. But the sentiment drives the price more than the fundamentals. And so there's just a lot more active trading. And yeah, bitcoin volatility is not a bad thing from an investment perspective. You know, volatility is actually a very good thing to make money from. And it's not as volatile as some assets. But yeah, it goes up and down a lot. You know, generally over time. It's been. Goes in these big market cycles and we're, you know, it's. People are very excited about, I think, kind of what the next year potentially has in store. You know, we think, many of us, that we're on the verge of the next big run.
- [25:54]
Host
Ten years, ten years ago today, Bitcoin was trading at $353 each. Today it's at 67,715. I think, as I said before we came on the show, that's a 191X. So if you invested $10,000 10 years ago, you'd have $1.97 billion today. And there's a frenzy, right? Everyone knows someone who's investing in bitcoin. Everyone knows somebody who's made a ton of money in bitcoin. People don't really talk about losing a lot of money in these speculative asset classes. Should people be investing in things like bitcoin, including bitcoin, when they really know nothing about the asset itself?
- [26:40]
Brock Pierce
So you can go watch all of my speeches, all of my interviews. I think since I've begun publicly speaking on the subject, I've never encouraged people to invest in bitcoin. I encourage people to invest in themselves, in their own education, in their own knowing. When you're dealing with an emerging technology, a speculative investment class, you know, I would not encourage people to do something because I say so or because I, I've done so, or because you've seen people do well with it. I encourage you to take the time to be informed. And so what I encourage people to do is to go buy $100 worth of Bitcoin, $20 worth of Bitcoin, $10 worth of Bitcoin, but generally not more than $100, something you could afford to lose $20, you know, if that's the right number for you. It's the sort of thing that you should expect to lose it because you're not making a speculative financial investment. You're investing in yourself to take a little bit of time to become informed, you know, so that you can start to get a sense of what this is. If I told you about email in the 90s, you know, we could spend a show like this talking about it, but the moment you sent your first email, you might have a, oh, wow, I don't have to like write a letter and put it in an envelope and stick a stamp on it and wait days, you know, and spend money. I can type something up and press send and it just gets there, you know, it's one of those sort of things. Until you've tried it, you're not really going to understand it, even if I've done a good job explaining it. And so what I encourage people to do is take a little bit of time out of your life to learn what it is, how it works. And with that, you know, if you decide it makes sense for you, once you've informed yourself, you know, then you do a little more. Then maybe you invest $1,000 in this. Once you've decided that you're ready for your next step. Remember, this is an emerging technology. You can lose your money not just because the price goes down, because you didn't learn how to protect your password. You didn't learn how to, you know, lock your computer. There's little things you need to learn first before you should be investing any meaningful money here. And the one exception that makes today different than the last 10 years is because there's now ETFs in the public market. You can go into your traditional brokerage account and you can get exposure to Bitcoin without the risks of, call it the security and without using, you know, call it a coinbase. So you could, if you wanted to, which again, I don't encourage you to do. If you wanted to get more meaningful exposure without the security risks, you can do that through these ETFs. The next best thing you can do is go to your. Call it what we call centralized exchanges that have password recovery, better protections, like Coinbase. But there's still some risks there. If you get hacked and things of that nature. So A, there's the speculation, but B, in this, call it brave new world, you're going to need some training first. You shouldn't go make a big investment in something where you don't know what you're doing, forget you don't know what it is and you don't have a strong opinion. There are risks. It's an emerging technology. So I would encourage everyone to go put 20 bucks or 100 bucks or 10 bucks depending upon what you can afford. I would hope you can afford a cup of coffee and it's probably the best investment in yourself you may ever make. You know, for a cup of coffee, not only in terms of the potential financial rewards you could achieve in learning from this, but it's preparing you for a future that's probably going to be different than the one that we currently live in. I mean at this point, most of the leading minds and industries in the world, whether it be JP Morgan on down, whether it be blackrock on down, at this point I'd say consensus has been reached. There's almost no dispute, almost no debate that this technology is real and it is here to stay and it's not going anywhere. Meaning you taking a night out of your life and you know, a cup of coffee worth of risk might, might change your life one day. It might even save your life one day.
- [30:52]
Host
So let's say you're an accredited investor. SEC defines that by you have to make some amount of money, two or three hundred thousand dollars a year. You have to or have a net worth of over $1 million now to clean your home, something like that, which is designed to prevent against people who can't afford to lose money. And speculative investments. These may be private placements, they be all kinds of things. So let's take someone who has a million dollars and has maybe 50% in stocks, 40% in bonds, what percent of the asset allocation would you recommend investing in? Bitcoin. And is Bitcoin a good investment today for people that can afford to invest in it as an asset class?
- [31:38]
Brock Pierce
So my advice still stands of take the time to learn with your 100 bucks.
- [31:42]
Host
Let's say they learn about it, let's say they know everything about it. Let's even say they've read the paper, the white paper, which nobody does.
- [31:48]
Brock Pierce
So you're past that point, which is excellent.
- [31:50]
Host
Yep.
- [31:51]
Brock Pierce
Unless you are actively working in the industry on a day to day basis, you should never have too much exposure because markets, you know, you don't want to Be the last to learn. If a market goes through a negative event, you know, it's musical chairs. Unless you're day to day in the industry, you do not want to have too much exposure to a sector. If you're in the venture capital business, we can afford to have a meaningful amount of our asset allocation exposed to call it early stage private equity. Because it's our business, we know what we're doing. And if it were public markets, you've got liquidity. This is a liquid asset. You don't want to be the last to log in and be like, oh, I didn't pay attention for a year, what happened. But we're talking about Bitcoin specifically. People ask me this and have asked many times and in the private forum I've always said, you know, a good starting point, if you are an expert and you really believe in this is I might consider starting with 1%, a 1% sort of asset allocation, meaning if you lost it all, it's not going to change your life. And in the event of a black swan event, a catastrophic event, you know, call it in the financial system, it might materially impact your life and that number depending upon like how you want to allocate it, be it just Bitcoin, all Bitcoin, maybe other things that one can participate, Ethereum or otherwise, or private equity venture, public companies, mining. You know, you might want to go as high, you know, if you had some meaningful conviction as 5%. But in that range of 1 to 5%, you're not going to, you're not doing anything so substantial. It's going to wreck you. You can't get wrecked, which is I'd say as far as you should probably go until you've gotten so much conviction and you're such an expert that you don't need my advice anymore. Because I would never want to encourage anyone to put themselves into a position where they're jeopardizing their future. And you can see I'm cautious. That's a decision for you, you know, to make, not, not one to follow. Because I suggested there's been some people in the industry who I respect greatly and I won't name who I think have, you know, they encourage people to sell everything they have, you know, mortgage all their real estate, dump everything and go all in on Bitcoin. I think that is, even if I believe that to be the right thing to do, I think it's imprudent and dangerous to advise.
- [34:27]
Host
So you're one of the leading Bitcoin crypto we're going to talk about crypto in a second and what the difference is. But one of the leading crypto bitcoin blockchain experts in the world, is it a good investment today at $67,700?
- [34:44]
Brock Pierce
I believe yes. But it's a speculative asset class. They could, you know, I like to use a binary example. Bitcoin is, and this is, it's not exactly this, but this is a good way to think about it. It's either going to zero or $1 million plus. It's one of those two things. It's either going to fail at some point either because something better comes along that replaces it, or the encryption and the technology that it's built upon fails or, you know, the whole world fails on some. Right. I think where it's not even a good hedge because the world has gone into such a dangerous place that bitcoin's not going to be accepted either. But generally I think it's more likely to go to a million dollars than zero. I think substantially greater odds of that over call it the next 10 years. But there are reasons that may not happen. And so I continue to be bullish on bitcoin. Long term, short term. It's hard to say though. I think there's some short term reasons to be bullish. The fact that our presidential candidates are all talking about it here in the United States, some of them like really talking about it. Showing up at bitcoin conferences, talking about how the United States is going to start to take Bitcoin on its balance sheets, governments all over the world embracing it. You know, it's pretty exciting the fact that BlackRock and Larry Fink has created ETFs and talking about, I mean it's, it's, it's, it's looking pretty compelling right now. And depending upon the elections and what happens around the world, I mean, we could see, I think, a material, a meaningful move in the price of bitcoin, not just in the years ahead, I think in the months ahead. I think the next, you know, months, including the next, you know, whatever happens at this election and between, you know, whatever administration ends up in power. I mean, we could see events happen that really, for multiple reasons on either side, things that could really cause the price of Bitcoin to move quickly so and positively. Right.
- [36:54]
Host
So bitcoin is a speculative asset. It is, but it's also a medium of exchange. You can use it to actually pay.
- [37:01]
Brock Pierce
For things you can, but people don't really use it for.
- [37:04]
Host
Right. So I, to be fair. Right. So There's a famous story about supposedly the first transaction, someone used 10,000 Bitcoin to pay for a $12 pizza. And I think it was a two for one pizza. And I forget the guy's name, but that's a $670 million pizza today. And we would say, oops on this. Are there any practical uses for bitcoin today except for criminals, money launderers, and people who are trying to do bad things?
- [37:37]
Brock Pierce
Yes. I mean, people use bitcoin for any transaction. You can buy a Tesla, you can use this, you can use that. Bitcoin can be used as a medium of exchange.
- [37:48]
Host
But like you said, nobody does it, people do.
- [37:50]
Brock Pierce
But that's not the primary use case. The primary use case of bitcoin is as a. A store of value, as a speculative investment, as a hedge against other assets. Right. That's the primary use of it. Another company I co founded is Tether, which is the US digital dollar, of which there's now 120 billion digital dollars in existence. And for those that are old enough, it's best to think about. Tether basically was the next evolution of the American Express cashier's check. All we did is use the bitcoin blockchain to take a dollar built on top of bitcoin technology and created a digital equivalent of like an American Express cashier's check. So you could go anywhere in the world and pay with it, but in a digital fashion, meaning you can do it from anywhere in the world. Tether, because it's a digital dollar, is used for transactions around the world. And the main one is it's used in trade finance now all over the world. More and more of the biggest trading engines, trade fi. They're not using banks anymore. They're shifting away from banks rapidly because banks are only open Monday to Friday. They don't have instant settlement. And time is money we want when the ship comes in and the thing gets dropped or the this or that. You're watching tens of billions a day now in basically trade finance, moving to tether. So this technology is being used as a medium of exchange. It's being used for settlement, as an alternative to banks. The reason why we don't use Bitcoin as a medium of exchange is because of its volatility. Most people that hold bitcoin, they're like, I want to hold my bitcoin. I don't want to give up my bitcoin. I want to give up my dollars. Most bitcoin holders are like, I spend all the money I have. In the bank until I have none left. But I keep my bitcoin. I don't think that's a good strategy. I think that's a little, I think it's imprudent. But I understand why. A lot of bitcoin holders believe that money is always, it's a race to zero, which is actually true. If you look at what happens to money in your bank account, the value, the purchasing power of money, especially at the rate that we've been printing it, is not a good. You don't want to hold money. Rich people don't keep dollars anymore. Right, right. Rich people hold stocks. You know, they hold high yielding fixed income instruments. They, you know, you don't actually want to store a bunch of money in the bank because the value of your money is going down, the purchasing power of your money is going down. And it's a terrible idea to bury, you know, money under your mattress in your backyard because by the time you go get it, you won't be able to get much with it. That's just, that's a fact. And so the bitcoin community, you know, is often people that understand this reality. And so they're big believers in the long term value of bitcoin. So they spend all their dollars first and they hold all their bitcoin. Just like people that hold stocks, that they're big believers and hold their stocks, they spend their dollars. They don't go use their Tesla stock to go pay their mortgages, they use their salaries to do that because they look at what they own and they hold their favorite investments, they don't spend those. And so that's the reason why it's not that you can't use bitcoin, it's that bitcoin hodlers continue to usually be believers in bitcoin. So they don't want to spend it. They spend their tether or they spend their dollars in the bank account. Or often what they do is they use their credit cards because those are still pretty interesting in that they extend credit, it's convenient, it's accepted everywhere. And then at the end of the month, they pay their bills, you know, with whatever it is available. So it's not because bitcoin can't be used for it, it's that people tend to be believers in their bitcoin and they don't want to spend it.
- [41:37]
Host
All right, let's talk about something different than bitcoin, known as altcoins.
- [41:42]
Brock Pierce
So I remember, excuse my vulgar language here are also many people refer to.
- [41:48]
Host
As shitcoins well, I'm going to get into shitcoins now. Okay, so we'll call them shitcoins. But I remember I was invited by your DNA friends in 2017. 18. I forget what the conference was called in downtown Los Angeles. It was the biggest crypto conference in Los Angeles for sure. One of them in the country. There were 2,000 people there, 3,000 at the convention center. And I was invited for the lunchtime panel as one of five people. I think two or three people paid to be on the panel and two of us did not pay to be on the panel. And as you know, it was craziness around everyone going into crypto. Everyone was an expert. People who had no education at all, who hadn't graduated fifth grade, were suddenly the crypto kings of the world. It didn't matter. I remember sitting there on stage telling everybody this was going to end very badly, that 99% of these companies were going to fail, that there are going to be class action lawsuits everywhere. Because I had seen the Playbook and the dot com world, but this was 10 times worse, right? There were inexperienced CEOs who had never managed a Starbucks or made payroll, who had raised $100 million from eager investors on a white paper with a promise of technology that no one could understand or use. That market has gone by the wayside. I think 99% of these companies have gone bankrupt. Right. There were hundreds of billions of dollars of wealth wiped out. So are there any altcoins that are not shitcoins?
- [43:27]
Brock Pierce
Yeah. So I think that I echoed a lot of what you said. I told people that 90 to 99% of these projects are going to fail. It's just like the Internet bubble all over again. And one of the problems is like the Internet of the late 90s or Internet 1.0 in this space, as we see with any emerging market, is the asymmetry of information. When there's a new industry that people don't understand, and a lot of money being made by some qualified but mostly unqualified individuals. It attracts all types, including some of the worst possible types, including crooks, scammers, snake oil salesmen, some who are doing it knowingly, some who may actually have great intentions and are actually buying their own bullshit, right? And it's a mixed bag, but we've seen this anytime a new market emerges. And so I warned people pretty consistently of the same facts, though I do think this industry has performed better than the Internet of 1999, 2000, the 2017. Not that much better. Not that much better. Not that much better. But a lot of those projects actually are still here. Many of the best ones too. But similar to like 1999, 2000, the best Internet projects survived. They took a big hit, they came back because the best projects are still the best projects, actually quite similar. And somehow some of the mediocre crypto projects, even though arguably they're dead, they still exist and still have value. Even though I would call them zombies in the stock market, they kind of really did die. And I think part of that is in the stock market you have to file quarterly reports, you've got reporting, you've got audits. I think that we'd probably have the same outcome as the stock market of 99, 2000 in crypto if those obligations were there. But in the crypto market, some of these almost orphaned projects for some reason just continue to exist because there's nothing there to like kill them. They just kind of hang on and some people just kind of hold on forever. Even though these projects are effectively dead and out of compliance. I call them zombies. And so you have zombies. And so it's the one strange thing, lack of liquidity in most of them. But strangely, many of them still exist, though they're effectively the walking dead. But the best projects are still there. And so, same thing, I would say that there are real altcoins or call it alternative projects, whether it be, you know, the Ethereums and some others that are competing to be real technologies that have real things. Nobody jumps in behind white papers with kids anymore. But over, yeah, that's over. No, but projects are still getting done. But you have to have a real project now, your project, you have to have an actual working prototype or a working project that has use and excitement. You have to have real teams with real people that are capable. I mean, that was the problem. And why I warn you, if you don't know what you're doing, don't go chasing. You know, make the time to be informed. That's why I always give these warnings. I don't ever want to be one of the people that goes to bed at night going, I gave you terrible advice and made you lose your money. You know, it's like I'm always warning people about the risks and encouraging people not to get greedy, not to chase easy money, because it just doesn't work that way. The reality is it requires being informed, taking the time. Learn and take your time. Don't allow the market cycles and market conditions and what you're hearing and what you're seeing to cause you to Become, don't, don't be the fool that is soon parted with whatever money. And, and there's, there's, you know, it's brave, it's wild stuff that happens in this space. And there are a lot of scams, there are a lot of rug pulls, there is a lot of hacking. There's a bunch of stuff that. Buyer beware, be careful. If you're going to start, start in the top and kind of like stocks, start with bitcoin, which is the gold standard. Start with your top 10, like the top 10 tokens, like your top 10 companies, the top 10 projects. The likelihood of losing all your money is pretty low. And what I would actually say, if you want to go through my exercise of advice to learn, put $100 in Bitcoin, then take $1,000, put another 400 in Bitcoin, and put $100 into five of the next top 10. And just your process of studying the top 10 and eliminating half and putting 100 into five other ones, by the time you followed that basic set of advice, you'll actually have a reasonably good understanding and be really. And then if you want to keep learning, put something into the top, you know, put another $100 into 10 of the top 50. And by the time you study the top 50 projects in the space and you've chosen one, then five and then 10, you'll have 16 projects out of 50. You're probably ready then to like consider doing something more. And that's a pretty small investment to have a thorough, you know, sort of comprehensive, you know, understanding of the overall market. Or you can just stop at bitcoin. You don't even have to go beyond that. But if you want to go down that process, this is the sort of basic advice and training I would encourage you to take before you know, you know, and if you want to go play around in meme coins Again, play with $100. Play with something you know you can afford to lose either by losing it accidentally or financially getting wrecked.
- [49:09]
Host
One of the many things that you've done is you have a venture capital blockchain fund, so you're also a venture capitalist. And non blockchain assets. As a venture capitalist, what are the five most important things you look at when funding a company or a founder?
- [49:23]
Brock Pierce
Well, these are two different markets, so I'll say in general, and there's some differences because in crypto projects, the founders can come and go very differently than in traditional business. But, you know, the main thing I'm looking for is the people, right I mean, number one, you can have the best idea ever. But if you're the wrong person, I'm not interested. Right. It's the people, whether it be the founder and whoever the co founders or beginning team is, that's like first and foremost because the right people pursuing a bad idea can make it work. Pivoting whatever comes. You know, the wrong people pursuing the best idea ever doesn't really matter, as we've learned, you know, with, as you talked about, even crypto projects, a lot of those white papers like 1999 are not wrong. The problem is people chased an idea and didn't really look at the people closely enough. Because the right idea with the wrong people is going to be a normally a failed outcome. In part because we mistakenly thought that crypto projects, the teams can be changed. You know, in these dao don't want to take us too down. The team we thought for a moment didn't matter as much because the team just fluids. It's a community and the community can change them out. And it turned out not so much because those creators kind of held onto the money, which was really not for them to hold on to. It was meant to be held by the project and things were not there yet. But people, people, people, people. You know, I'd say that I look at kind of what the idea is, but the idea is really what's the market size? I don't want to invest in small ideas. I want to invest in big ideas because the amount of time it takes me to invest or for you to build, you know, big ideas and small ideas are equally as difficult. So let's focus on the big ones and not spend our time pursuing the small ones. Unless it's something I want to learn. Right. So it's the people, it's the market sort of size, the big idea. Like I'm looking for big ideas. I care about the timing, right. I don't want to be too early. I also don't want to be late. Like what's the competitive landscape look like? Right. I, if, if there's already winners being emerging, you know, and the market's maturing and you're just showing up, it's like you're a little late. It's kind of like the beginning of the race. You got to be in there early enough where you know you have a chance once a market matures. So timing market conditions as well, right. In crypto, I'm actually mostly interested in and actually all things I actually like to invest in startups in bad market conditions. As I like to say, 100%. Bull markets produce bullshit. Bear markets, bear fruit. You harvest, you know, in the, in the bull market, right. You build, you know, in the down markets, right? Because bull markets become irrational. You have to pay crazy valuations, people are quitting, everybody's feeling rich. I actually like to build in the difficult market conditions so that you actually have something, you know, when the market cycles, because markets go through cycles. So I care about market timing. There's a handful of insights I could get into from a timing perspective. And with that, also the market condition of how do other people feel about it? You know, in traditional businesses, I also care about location. You know, I, I can't be everywhere. I care about sector, right? Which is, you know, location of it's, you know, one thing sector. You know, what's going on with the broader industry. You know, there's a number of sort of factors and things that I care about and other investors. I can't do it alone. You know, back to how does the rest of the world feel about it, right. I mean, I don't want to be on an island by myself. You know, I can't carry the weight, you know, as a single investor. So it's kind of like there's a bunch of, you know, things I care about. Regulation. Where are we at from a regulatory perspective? Because that gets, you know, as we look at certain things, you know, I have to have an opinion on sort of politics. The list kind of keeps going, but it depends on what we're investing. And we talked about early stage, everything, whether it be called it old or traditional sort of assets are, you know, current. And, and some of that is like, I've, I've invested in great businesses, but the industry is not growing because I invested in a incredible idea that is revolutionary. But the sector is not growing at all. Business isn't worth anything. It trades at a multiple. That doesn't make innovation worth pursuing. You know, people only buy, people only pay up for growth.
- [54:06]
Host
What are the three biggest mistakes that an entrepreneur can make when coming to pitch you?
- [54:12]
Brock Pierce
Ones I have often, which is not being clear on what it is that you're doing.
- [54:18]
Host
Isn't that amazing, by the way? You get all these business plans, some are horrible. And I always ask people, in one sentence, can you explain what you're doing? If you can't communicate to me, how are you going to sell your product?
- [54:31]
Brock Pierce
Yeah, it's like. And it's shocking. I mean, I was on a call yesterday with someone, a group, talking about, literally talking with a Straight face about how well. Yeah, well, so you're this. Well, and we're this. We're this and well, actually we're everything Go. Interesting. You're building everything. Okay, focus. Like it's hard to do one thing well, you know, and that's the. That's. I think probably the most important thing is figure out what is that one thing you're gonna do and do it well. You know, you could eventually land and expand once you've, you know, captured some part of a market, you've got a big enough user base you can look at what are the other things I can sell? You know, what are the upsells, what are the cross sells, what are the up, you know, what are the product expansion. But until you have a beachhead, why would you be talking about anything other than your. I'm going to sell books online. Yeah. That might lead to being Amazon Web Services one day in Amazon Studios. But you know, in the beginning you need to have a simple value proposition to sell it. And so I find that is like, you know, the one that, where I just get lost immediately. You know, you start talking about your five revenue streams, there might be other revenue streams down the road. Tell me how you're going to get users first and foremost and yeah, how you make money if you do and keep it as simple as possible. The minute you complicate your story, I tune out. Because I know that's 99 times out of 100, you have almost no chance of success. And that's, I'd say the most common mistake that first time or unproven entrepreneurs make. And you know, they, they overthink their idea and oh, I can do this and I can do that. It's like, no, you know, shave it down to one, you know, one thing really, because it's all, I think interesting businesses I've seen are built on a simple insight. You saw something in a market, you saw one thing that's missing, one reason why you can actually establish a beachhead. Something the market doesn't see. You see something missing and something that everybody else isn't doing. And that's why I've got an angle in. There's a hole in the market, there's a void in the market. And I see it and I'm gonna get in there through that one angle. I found my wedge. And so that's the biggest mistake I think, you know, I mean, in this day and age, I think the other important thing is if you can't, I mean, for most businesses, if you can't how to figure out how to build it on a shoestring. I mean, this day, it doesn't take much. Fail fast. I mean, right now, with AI and everything, I mean, it's called, you should be able to figure out and validate your market and whatever it is, if you're early stage, like on very little money and quick, you know, it's like. And for you too, don't waste years of your life. Right now, you could. You. You should be able to figure out whether you can do something in under a year, maybe three months. Like, right now, I think it's about minimally viable products more than ever before. And at this point too, it's like, if you don't, if you're not using AI, like, I mean, you can build just about anything with a team of six people now. It's like seal teams. I mean, I. It's not about bodies anymore. I mean, you know, and engineers. I mean, one person can do the work of thousand. I mean, it's like if you're not caught up on what's going on in the market right now, if, certainly if it's a tech business, like, get out of here. Like all the other one. This week, which is common. I had multiple meetings with projects where they pitched me on their big idea. I said, well, I've invested in multiple companies doing that over the years, and I've seen dozens talk to me about how you're different than any of those that have failed before you. And they're like, they go back into pitching. I'm like, no, no, no, that's not what I asked you. I asked you to talk to me about at least one of those that came before you doing the same thing or something very similar that failed and what you learned from them. I go, do you not know any? And they're like, no, I need to research that. I go, you're talking to me about something where I believe there is a future market. I don't disagree with that. But there are dozens of failed businesses that have raised lots of money pursuing this idea over the years. And you've never bothered to, like, do your, you know, history. You've never studied the past. You've never looked this up. You think you're the first person to come up with this idea? I go, get out of here. Like, I'm not going to have a conversation with someone so wet behind the ears that they don't have any understanding of all the feral businesses. You should learn from them. The pioneers, you know, the entrepreneurs. The pioneers. We take the arrows in the back we blaze the trails, we burn the path for you so that when we fall, you can pick up where we left off. If you haven't bothered to take the time to actually learn about, like, so that you don't have to repeat, you know, if you haven't studied the mistakes of those that came before you, you're doomed to repeat them. Why would I want to fund someone that is so, you know, hasn't bothered to do any research? You know, like, who are you? You think as you have an idea that it's, you know, you're automatically entitled to win? No, it's very hard. So this is like, I'd say another area that I just, you know, multiple examples in the last week of, you know, people that haven't, like, you know, done the work. It's like if you're, if you're, you know, and if you bump into me and you meet me randomly, and I've told this many times, if you meet me at a conference, you meet me on the street, don't ask for me for money is the first thing to say, right? Because if you just. If you start out with back to people, if your first thing is give me money, give me money through whatever mechanism possible, you've already lost me. I mean, sure, if you have a meeting to come in and pitch, yeah, I want this professional. We can have a little bit of socializing, but let's get to the point and let's figure out whether or not I can be helpful to you. But in general, if you meet me out in the world, the first thing to do is figure out how to engage me in an actual conversation that's human. If the first thing you do is just ask me for money, you've already lost me because you don't have the social etiquette to demonstrate that you have the personality skills. You just cut right to the point. Give me money, give me money. It's like you just bumped into me or you walked up to me here. The first thing is try to find, establish some human connection. And then generally for me, and that's not everyone, you know, I'm interested in why are you doing what you're doing? A lot of the times it's why I don't want to know what you're building first. I'm mostly interested in what are you doing and why not? Like, what specifically, but why are you doing this? Why you? Is there some life experience, some hardship, something that happened that led you to this idea? If your first view is, I think I can make a bunch of money. It's like, so we'll get to that. Let's. First, I'm generally interested in the story of what, who, why, and get into some of those things and develop some sort of basic rapport. I usually tell people, when I used to do these at conferences, I'd be like, if you don't know what to say, if you haven't found some way to establish a relationship, even at the most basic level, just tell me what your superpower is, meaning tell me what your gifts are. Tell me what you're good at before you tell me what you're doing. You know, I'm highly skilled at marketing. I'm an incredible engineer. You know, I'm great at like, you know, predicting things, like. Cause I care more about what you're good at than I don't want to go right into, like in a casual environment. You know what it is. First, let's get to know each other a little bit. Before you ask me for money, one.
- [62:25]
Host
Of the things that's made me very successful is something I called extreme preparation. I prepared prepare more than anybody for whatever meeting that I'm in. It doesn't matter what I'm doing. It could be a phone call, it could be a meeting, it could be a podcast. How important has, and I call that extreme preparation. How important has extreme preparation been in your success? And can you give an example or two where your preparation made the difference between success and failure?
- [62:48]
Brock Pierce
Yeah, preparedness is important to some extent, but then there's the other side of it, right? You can over prepare. As I like to say, perfection is the enemy of progress or good. So I often subscribe to like good enough in the beginning. Obviously, as a project develops, you know, once you, once you get greater and greater clarity, you know, around what you're doing, then it's really about being prepared. Really clear plans, really, you know, you want to get as clear as possible. You know, it depends on where I am in the process. Like I'm tinkering sometimes. It's just I'm throwing spaghetti against the wall, you know, trying to like run through ideas. But eventually, as you're trying to bring product forth, if you don't make something great and you're not well prepared, it probably won't, it won't cut it. And so I view kind of that, that step of where you are in a projects, is it amorphous, right? Is it still in that sort of fluid state? Or is it getting into that hardening? And eventually here's you Know, we're, we're putting real resources behind this and eventually you need to be very prepared. And if you're not prepared, you're, you're, you're, you're not going to make it. And so it depends on where I am in the process. But eventually it's a necessity to like, be well organized, especially when multiple get involved. Otherwise, you, you, you lack coordination and collisions happen and lack of accountability, and that will usually be your demise.
- [64:04]
Host
You're a motivated person. At a young age. You've made a lot of money. When you were younger, did you ever think, one day I'm going to be a billionaire? And now that you are a billionaire, how does it feel?
- [64:16]
Brock Pierce
Well, I was far more, I was a little arrogant at certain points in my teenage years. You know, having come off of being a movie star and having started, you know, sort of billion dollar Internet business at 16, 17, 18, I'm still very similar. But back then I, you know, I actually did think I was going to be extraordinarily wealthy and then have done it, you know, a couple of times over. And money kind of became, you know, as I achieved more and more success, money no longer became my measurement of success. You know, as I like to say, a billionaire to me is not someone with a billion dollars, but someone who's positively impacting the lives of a billion people. But I had the great luxury of having been successful enough that the way that I measure my success has changed, you know. You know, wealth is one measurement of success. Once I've won the game of life or money, then it became, what is my new unit of measurement? How do I measure my success? So that's, you know, easy for me to say, but that's coming from having been financially successful, you know, many times over. And so today I try to measure my success by the impact I have in the world, which is we're probably not going to get too much into it, but I do a lot of philanthropy, healthcare, I'm in a lot of industries, and most of what I'm looking at is trying to solve the world's problem for our collective future.
- [65:38]
Host
So speaking of trying to Change lives, in 2020, you ran for President of the United States. Did you actually think you were going to win? And why did you run for president?
- [65:48]
Brock Pierce
Yeah, no, I didn't run to win because I announced on July 4th an appropriate day for the United States, but of election year, meaning you can't even get on every ballot in that time period. As we've probably read about ballots with rfk I broke, I think, every ballot record ever at that point in terms of the timeframe in which I had done it. But for me, it was a reconnaissance mission. I ran as an independent. So I wanted to understand all the ways in which the system is rigged, you know, because I had a view, rightly or wrongly, that we need something more than two choices. I was getting tired of, you know, blue and red, left and right, and the simplicity of two choices. And I wanted to see, is there a way to build a middle ground? Because I was becoming more and more concerned about the polarization and division, you know, that we were seeing in the country. And so I wanted to do a trial run to begin laying a foundation for both myself, potentially in a political career as a public servant, but also to lay foundation for other things. A lot of that infrastructure was used by RFK in his presidential run, meaning it mattered. We founded the Independent National Convention, which is infrastructure that is helping to drive an independent movement in the US that got revitalized through this. And so I consider it to be a major success. I also received the first vote for a presidential candidate on a blockchain, which I will forever hold that record. So as we talk about building open source, auditable election infrastructure, which I do believe is needed long term globally, a lot of great things have come out of it. It was never my goal to win. It was my goal to deliver a message, prepare for the future, lay infrastructure, demonstrate how technology can be used in innovation. And so depending upon how you measure success. And there's many forms of winning, it's not necessarily winning an election. I believe it was a decisive victory for me.
- [67:52]
Host
So a lot of people have immense wealth. Like, you signed something called the Giving Pledge that Warren Buffett and Bill Gates said, at some point in your life or after you die, you're going to give away at least 50% of your wealth to charity. In your case, you said you're going to give away everything. You have as many billions of dollars during your lifetime. What's your goal in doing that and where are you going to focus your efforts?
- [68:16]
Brock Pierce
First of all, I'd rather give it away while I'm alive. Giving, I think, is one of the greatest gifts there is to experience the pleasure of helping, you know, and giving. It's. It's something I wouldn't want to miss. Like, to give it away after you're dead is to miss out on, like, raising your children right. The pride and the joy that comes from, you know, the impact, right, of the work that you're doing. You want to be there to watch it, you know, because it, you know, it's the pride that comes from being a father. Right. You know, when your kids do something, well, it's the same sort of thing. It's like, why would you want to miss out on that? So I encourage giving while you're alive, you know, even if it's 10%. Right. As you're alive and, and if you become successful enough, maybe then it's 50% as you go. But I encourage people to give now, not, not later. And that doesn't necessarily mean everything. But I would be giving as you go if you can. I believe that's important. And so I focus on all sorts of things. It turns out that giving money away is much harder than I thought. But I used to think that charity would be easy. It turns out kind of like venture capital. Giving away money effectively is almost as difficult as investing in startups and seeing an impact, because I don't want to give it away and see it squandered and lost, which is what I used to do when I gave money away to charity and give it to good causes. But there's not good reporting and measuring of impact and the things as someone that does what I do, I expect to see. So I've been working on charity for seven years. We've gotten very good at delivering multiples. One of my donations recently, I think we got 191x on our donation. So in the same way that you have return on investment, we have return on impact. And what we learned is instead of giving a dollar away and seeing 10, 20, 30, 40, 50 cents go to the underlying cause, when we give away a dollar, we don't even see one dollar go away. We choose to give money away very thoughtfully, like it's an investment to see multiples. And so one of the things that we've gotten good at doing at my foundation is writing grants. So for example, we subsidized the grant writing to for the preservation of the bioluminescent Bay and Vieques through Integro. It cost us $15,000 to get a $2.9 million granted. So we found we've given to 185 nonprofits in Puerto Rico in this particular foundation. And what we effectively do is underwrite and find the most effective organizations possible that are good at what they're doing, are efficient with resources, and then help them unlock big numbers. So we have 10 baggers, 20 baggers standard. So it's basically we've cracked the code. I think a new form of giving that I've not seen others really do. And so I'm trying to. I'm an innovator in everything I do and so I'm trying to innovate around charity. And another part of it is going in and effectively investing into a lot of things. Like for example, bought a hospital last year out of bankruptcy because I was watching some of the healthcare issues that we have and that's been a very interesting one. It is a for profit hospital today. But, you know, this is, I'm. I do a lot of this sort of work as I'd call charity because I've got a massive amount of economic exposure and I can easily lose all of my money though it's, it's playing with wealth and I'm actually a little bit skeptical on traditional charity. I believe that you can give sustainably into, you know, b corporations and other things. The main thing is what am I giving it to? You know, I'm investing in things often without the desire to make money, but how am I doing it sustainably so that I'm ultimately driving the impact that I want? Another cool company I'd recommend looking up is a thing called the Dollar Donation Club where you can give away a dollar a day, a dollar a week, a dollar a month, a dollar once more if you can. We've created Humanities checklist and so all sorts of really cool impactful things. And these are businesses that charge nothing other than tips that almost no traditional investor will fund. Because impact investing kind of has a bad name. It kind of got. It needs a rebranding like a lot of things back to even tokenization. It's one of those things where we have to kind of reinvent ourselves through these market cycles.
- [72:52]
Host
We're at the end of our show and I always conclude the show with a game I call fill in the blank to excellence. Are you ready to play?
- [72:58]
Brock Pierce
Yes.
- [72:59]
Host
The biggest lesson I've learned in my.
- [73:00]
Brock Pierce
Life is never quit.
- [73:03]
Host
My number one professional goal is to.
- [73:12]
Brock Pierce
Change the world in a positive way.
- [73:14]
Host
My number one personal goal is to.
- [73:16]
Brock Pierce
Leave a lasting legacy. And for my family, my biggest regret is fear or giving up.
- [73:23]
Host
Well, that was my last question. My biggest fear is quitting and, you.
- [73:28]
Brock Pierce
Know, not living up to my fullest potential.
- [73:31]
Host
The craziest thing that's happened in my career is.
- [73:38]
Brock Pierce
There's a long list of those. But yeah, the craziest one is this one might. I mean, I'll give a very short one which is in the Puerto Rico market. I've invested a lot of money in Real estate and things that I think are important. And there's almost no lending, there's almost no debt. So most of the things I've done there I've had to do all in cash. And a lot of those things was with Bitcoin and Ethereum at very low prices relative to today. And we're talking about like nine figures. Had I not done that, there'd be a few billion probably dollars of additional cryptocurrency in my life. And I only found out like two months ago that the brother of my CPA would have likely lent to all those projects that I never bothered to ask my own finance person for advice on where, you know, sort of lending on traditional things would have been available. Meaning I basically, I started to cry, you know, just the humiliation, the self humiliation that I, I had the answer the entire time, but I never bothered to check, you know, my own pockets and ask my own team for advice. So it's, you know, it's one of those crazy, embarrassing, you know, sort of like really I've sought everywhere for this answer, but the answer was, you know, with me, from the very beginning, the.
- [75:13]
Host
Funniest thing that's happened in my career is.
- [75:16]
Brock Pierce
Yeah, the funniest one is, you know, it's, it's, it's often in the. For me, it's, it's back to what do I find funny? It's like, it's kind of like the last story. It's, it's one of those where I've made the wrong turn, you know, and failed or didn't have the tenacity and quit early, you know, and I tend to laugh at my own, you know, sort of failures, you know, because it's kind of like if only I had known this, had only I had learned that, you know, and it doesn't bother me in that, you know, I'm upset by my, you know, the loss, you know, I think the greatest value, the most valuable thing we have is what we've learned because that can never be lost, you know, And I do this over and over enough again that, you know, I'm just grateful for having learned the lesson so I can put it to work the next time.
- [76:10]
Host
The best advice I've ever received is to dare. Ten years from now I'm going to.
- [76:15]
Brock Pierce
Be doing, probably serving in public office 20 years from now, hopefully advising. Well, 20 years still might be public office, but hopefully not. Hopefully I've done my tour of duty, served to the best of my ability, so that I can just be advising you. I mean, Broadly, that is, you can.
- [76:34]
Host
Still advise me too. The one thing I've dreamt about doing for a long time but haven't is.
- [76:41]
Brock Pierce
Oh, for me, most of that is all the bucket lists, you know, all the top three. I mean, I'd love to go to space, you know, which we're on the verge of being able to do. You know, I. Right now it's probably not very popular, but I'd like to, you know, take a sub deep down into the ocean and, you know, somehow end up at the top of the highest mountains. It's mostly the, you know, it's the bucket list things.
- [77:08]
Host
If you could go back and give your 21 year old self one piece of advice, what would it be again?
- [77:12]
Brock Pierce
A lot of it is in these sort of moments, I've often thrown in the towels early. I've almost never been wrong about a market in its future. What happens is sometimes in the middle of that process it gets so difficult that I eventually start doubting myself. And I think it's probably in my instance to not doubt myself through this process, even though the circumstances really make you question what it is that's happening. And am I right?
- [77:49]
Host
If you were president today, what's the first thing you would do when you sat down at that desk in the Oval Office?
- [77:56]
Brock Pierce
Well, today I like some of the things that are out there, but the one that I talked about previously, and I'm going to stick to it because it's the first commitment I made, which is, was to, on the criminal justice side, to at least everyone federally, you know, in prison for. I don't, I don't really smoke cannabis, but you know, we've legalized this far enough that there's so many people that are there for nonviolent cannabis related crimes, you know, release all of them and expunge their records so that they can get back to work. It's something that I talked about in 2020. And so I feel I have an obligation to start with what I already committed to.
- [78:31]
Host
The one question you wish I'd asked.
- [78:33]
Brock Pierce
You but didn't is how can I, Meaning us, what can we do to make the world a better place? And certainly on the political front, what can we do? What advice would I give the American people, for example, right now?
- [78:49]
Host
If you had one piece of advice, what would it be?
- [78:51]
Brock Pierce
I mean, right now the future is going to happen to you or it's going to happen with you. Whatever you think is the right thing to do, you have to be part of the solution, which is to exercise your civic duty, your civic responsibility to participate. A lot of the problems that we've encountered is due to our lack of participation. Be part of the solution. Be the change you want to see in the world. Get involved.
- [79:17]
Host
Proc. I appreciate you being here. I mean, this came together at the last minute today. I ran into you. You said, I'm in town today. You want to do the show today? I said, yeah, let's do it today.
- [79:25]
Brock Pierce
So back to now, right?
- [79:27]
Host
Back to now.
- [79:27]
Brock Pierce
Back to, like, no time better than the present back to now.
- [79:31]
Host
But I've been a big fan for a while. I've known about your career. Very impressive. And this was awesome for me, getting to know you better. And I think a lot of people are going to be very motivated by what they hear today and learn a lot about subjects they didn't know anything about. So appreciate you very much.
- [79:45]
Brock Pierce
Well, thank you for having me. This was not part of the plan today, but I'm glad it all worked out awesome.