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Success Story with Scott D. Clary
Peter Smith - Blockchain.com Co-Founder & CEO | What 13 Years in Crypto Taught Me About People
01:42:39
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- [00:00]
Peter Smith
Probably the half the time I've worked
- [00:01]
Brian Armstrong
in crypto, I thought that the most probable outcome was death.
- [00:04]
Peter Smith
You have to be open to living the life less lived when you're young. It doesn't get easier as you get older. There's a lot more trade offs and sacrifices.
- [00:12]
Podcast Host / Narrator
Before crypto became headlines, it was infrastructure. Peter Smith helped build that infrastructure. As CEO and co founder of Blockchain.com, peter was at the forefront of making cryptocurrency accessible to millions around the world.
- [00:25]
Peter Smith
Everybody's more worried about losing 100 grand than they are about making 100 grand. But the same is also true of life experience. Faster you get the experience of take ownership, the longer you have to deploy those skills. Over the course of your career in crypto, once every four years you're really a hero. Then the next year you're a. That gives you a huge sense of awareness about how much the external is crafting your reality.
- [00:49]
Podcast Host / Narrator
Where others saw chaos, he saw opportunity. This conversation isn't just about digital assets. It's about conviction, long term thinking and leading through uncertainty.
- [00:58]
Peter Smith
You come into crypto with a mindset that you want to get rich fast. You will be destroyed. The most predictable path to success is sustained, focused effort over a long period of time. Success and happiness don't come from mastering the universe, they come from mastering yourself. Life is going to be far stranger, far more beautiful, far more fun than you expect.
- [01:29]
Interviewer / Scott Clary
So you have been at the helm of blockchain.com since 2011. So I would consider you a true crypto pioneer. You've navigated all these different market cycles. What was the moment when you realized that blockchain would fundamentally change global finance?
- [01:43]
Peter Smith
It would be amazing if I had realized that in like 2012 or 2013. But for me, working in crypto started out a lot, a lot more casually in the sense that I didn't know that it was going to become something that would change global finance. I really thought it would probably die. Really probably the half the time I've
- [02:06]
Brian Armstrong
worked in crypto, I thought that the most probable outcome was death.
- [02:08]
Interviewer / Scott Clary
So funny.
- [02:09]
Peter Smith
And I think that not just for the company I worked on, but for the entire industry. And because it's such a sort of improbable, implausible idea, like if you're like, hey, we're going to invent a whole new financial system, we're going to do it on chain and we're going to try to do it across the whole world at once. You know, what do you think the probabilities of Success are.
- [02:33]
Interviewer / Scott Clary
First of all, you sound crazy.
- [02:34]
Peter Smith
You sound crazy. And it has to be like sub 1%, right? And so for many years when I worked in crypto, I thought it was most likely going nowhere. And so then of course the question is like, why did you work on something you thought was going nowhere? And it really broke down into three things for me. I thought there were like three sectors you could work in that would really change the world. You could work in sort of machine learning, which now everyone calls iii. You could work in autonomous, like autonomous vehicles or autonomous manufacturing, or you could work in digital finance, bitcoin and then, you know, crypto. I thought that the machine learning game would go know totally to large companies that could pay the compute and had the data sets, you know, particularly the data sets. You know, I thought that to work in autonomous stuff you needed to be like more of an electrical engineer or like a lidar engineer or something like that. So I was like, well, I'm, I'm
- [03:30]
Brian Armstrong
only left with the third one, which looks completely unlikely and implausible.
- [03:34]
Peter Smith
Sweet.
- [03:35]
Interviewer / Scott Clary
But you still jumped into it. What was your first, like, what was your first exposure to crypto?
- [03:40]
Peter Smith
My first exposure to crypto was on a email listserv. Yeah.
- [03:44]
Brian Armstrong
And so
- [03:47]
Peter Smith
it started very, very, very small time for me. And you know the thing that's also true, and it's something that I tell people today when they're thinking about exploring an idea or getting involved in an industry really early, is that there's no better time to do it than when you're really young. I was really young when I started working in bitcoin. Really young when I started working on a startup. I think the best way that you can approach your career is spend one to three years working for someone or some org that really knows what they're doing. And I skipped this part, but a couple of years working for an org that really knows what they're doing and then immediately eject and go work on all of the completely implausible crazy shit possible. Because it's never going to get easier
- [04:36]
Interviewer / Scott Clary
in your life to do that, take the risk. When you're young, you have to be
- [04:42]
Peter Smith
open to exploring, open to like living the life less lived when you're young because it doesn't get easier as you get older. And of course it's not impossible when you get older, but it's just a lot harder. There's a lot more trade offs and sacrifices. Like when you're young and you're like, okay, I'm going to go work at this Startup and like, you know, the beginning days of blockchain.com, there were like six of us living in a two bedroom apartment. I'm gonna sleep on the floor, work all day, you know, and you know, drink really cheap beers on the weekend. Like, that's not a big sacrifice when you're young because what, you know, if you go work at a bank, which I could have done, I guess it's like, okay, I would make more money, have a slightly nicer apartment, work really hard and like drink beers on the weekend. Like, it's just not that much of a different life. Right. And so whoever weird or crazy or implausible, the idea that you're working on is there's nothing that you'll learn more from and be happier that you did it than taking that leap when you're really young.
- [05:41]
Interviewer / Scott Clary
It's interesting because when you are young, you, I, I try and understand why people don't take more risk when they're young. But also at the same time, some take an exceptional amount of risk because when you're very young, it's either you don't have fear, you have like too much fear. It's like you're like on, on both ends of this, you either default to like one of, one of the two sides of this ridiculous spectrum. You have so much fear that you're going to screw it up because you have no experience, that you kind of just follow. Probably it comes from your parents and what you learned and probably your childhood and what you were exposed to.
- [06:14]
Podcast Host / Narrator
Like, for me, I had a ton
- [06:16]
Interviewer / Scott Clary
of fear about screwing up and it took a lot of like, deprogramming to jump into entrepreneurship because my parents worked for government and universities. Very safe. But on the other end, if you don't have that fear implanted in you and you can just reconcile what you just said is true, which I think it is, then you have, you have no reason to be fearful because you've never failed before.
- [06:38]
Peter Smith
Well, I think it's a lot about loss aversion. There's a lot of like, psychological research that says, you know, everybody's more worried about losing 100 grand than they are about making a hundred grand. Like, it's a lot easier to deal with the risk of not making a hundred grand than it is to deal with the risk of possibly losing 100 grand that you already have.
- [06:59]
Interviewer / Scott Clary
Yeah.
- [07:00]
Peter Smith
And when you're really young, you know, you have this perspective where it's really
- [07:06]
Interviewer / Scott Clary
easy to lose respect and that's what drives your decisions.
- [07:10]
Peter Smith
Yeah, the humans are, you know, we're tribe animals, right? And so when you think about like your parents or whatever, it's like, you know, the reality is when you're a 24 year old kid, even if you did get a job at Goldman or whatever other high prestige thing is going on right now, and now I guess it's startups, which is like a little concerning, but you know, get this high prestige job at Goldman so you have this respect, right? And in your mind this is like an incredible achievement and in some ways it is. And I don't want to, you know, denigrate that, but all you really did was like become one of the like 10,000 new people that Goldman hired this year. That's true. Like it's not that big of a deal. Like it's not like the rest of your life they'll be like, ah, there goes Joe. Like he was hired at Goldman straight
- [07:54]
Interviewer / Scott Clary
out of Stanford, he's a great analyst.
- [07:56]
Peter Smith
But when you are Joe and you have that offer to go to Goldman or you have that offer to go like sleep on the floor and eat ramen and like hack with three other weird nerds, it feels like a huge loss.
- [08:09]
Interviewer / Scott Clary
Because of the reputation.
- [08:10]
Peter Smith
Because of the reputation, right? And, and maybe even the money, right? Because the money side of those two things is very different. Even though when I said look, look, you're going to be doing the same anyway, just different price points, it feels like it's going to be a big loss because you've never had any money, right? And one of the most interesting things that people sort of lose sight of is that, yes, like because of compounding interest, money that you make and save earlier in your life is much more important than later. But the same is also true of life experience, right? So the faster you get the experience of being someone who has to take ownership, hiring, managing, leading, the longer you have to deploy those skills over the course of your career. And when you're a young person, there's no place that you're going to get that experience faster than being a founder of a startup or of a new company or working at a really small one, right? And so I would argue that even more than whatever money you might save from the age of 22 to 28 is the compounding effect of that experience that you get by doing risky off the wall things in that sort of 22 to 28 year old gap. And then of course like in your early 30s, you should be focused on achieving financial freedom and doing that by saving money and letting it compound and all that shit that you read about from Warren Buffett. But when you're really young, I think you want to be racking up this life experience and these skills in a way that lets you deploy them across the rest of your life in a really compounded fashion.
- [09:42]
Interviewer / Scott Clary
I like that idea a lot. How did you. How did you get over this loss aversion?
- [09:47]
Peter Smith
I didn't have a lot of it because I grew up without a whole lot of expectations. Like, you know, my grandmother has no idea what Goldman Sachs is. You know, she has no idea what investment banking is.
- [10:02]
Interviewer / Scott Clary
Yeah.
- [10:04]
Peter Smith
You know, she tells people, and this means a lot to me, that she's really proud of me because I'm like, her most successful angel investment ever. She doesn't even say angel investment. She just says investment because she loaned me some money to go to school. And. And she still tells people very proudly that she has a grandson who's a millionaire. Like. And so I say all that because, one, it's cute and it means a lot to me. But I say it also because I was very blessed that I didn't. I didn't have the sort of expectations of, like, if I didn't go to work at Goldman or a hedge fund, I was a failure. And so I think that gave me a lot of. A lot of freedom to explore and to do. To do weird things. But, you know, like, even my dad was, like, concerned that I would never have a real job until two or three years ago.
- [10:49]
Interviewer / Scott Clary
That's funny. So it does come back to, you know, all these ideas that are sort of implanted in our head when we're kids and you have to be careful. Like, for example, like, what do you. Knowing that lack of expectations allowed you to build something great. How does that translate into how you parent your own kids? Or how will it translate into parent parenting your own kids in the future when they're older? Have you thought, because every parent wants to have expectations, yeah, you want them to do something great. But it's ironic that the lack of that actually allowed you to pursue something that was riskier. That worked out.
- [11:24]
Peter Smith
I think I'm going to do my best not to have expectations about my kids and, you know, to try to help them think about what will make them happy. What are they going to find meaningful in life, you know, what truly brings them joy. One of the things I've learned from my own personal life is that achieving these sort of milestones that people put in their heads brings very, very little happiness. I've never had a moment where I achieved a milestone that classically People look at someone like me and are like, wow, that must have been an amazing moment. I can almost guarantee you that all of those moments that someone who doesn't know me would write down were not amazing moments for me personally. And everybody's wired differently, right? For me, a lot of my focus, after achieving a lot of those milestones and not finding happiness in them, has been figuring out how to get back to enjoying the process rather than being focused on finding enjoyment in the outcome. And this is like some really great wisdom that a mentor, a friend of mine, Justin Kahn, has really helped me, inspired me to focus on is, you know, you have so little control of the outcomes in life. There's so many things that are just frankly so far behind you that if you're not enjoying the process of what you're doing every day, you're really setting yourself up for. For failure. And this isn't me saying, like, you shouldn't have big goals, you shouldn't attempt big things. But it's about, like, does attempting big things. Does the process of attempting big things bring you joy? Or are you just doing this thing because you think that the outcome is going to bring you joy? And I can tell you from my life and from watching many other entrepreneurs and, you know, rich people and whatever, the achievement of those outcomes is very rarely bringing people a whole lot of joy. But I do know a lot of people that have done really big things, really great things, and they found joy in the process and in the journey of those things, whether they had huge monetary outcomes or not. And they found real fulfillment and joy in life. And so I spend a lot of my time thinking about how do I enjoy the process of this, rather than how do I think that I'll find enjoyment in the outcome.
- [13:48]
Interviewer / Scott Clary
That's very wise. I think that a lot of people optimize for outcomes until they realize that, well, they train themselves to almost hate every day on the journey to the outcome. It's almost like the days are just something to be lived and to be survived on the pursuit of some big outcome. But then when it comes, it's not as meaningful as you think it is.
- [14:07]
Peter Smith
And I think that there's, in the startup world in particular, which is the world I'm from, there's a particular, like, almost fetishment around struggle and pain.
- [14:16]
Interviewer / Scott Clary
I agree.
- [14:17]
Peter Smith
It's like if, you know, if the founder is not killing themself and on the edge of mental failure, will you ever build anything? The best founders I know, the ones that make it a really long time and I'm trying to become one of those founders, although arguably I've made it a while, but if I want to make it another 10, 15 years, I know that, like, I have to build with joy and build out of a sense of purpose rather than sort of like build out of a sense of obligation or build out of a sense of trying to achieve a certain outcome. And I would remind people is that the best athletes in the world, they weren't suffering, right? Like, when you think about the highest performance people in the world, they weren't doing it, you know, they weren't suffering through every moment of it. Sure, there's parts of training that suck. There's parts of my job that are very difficult. There are bad days at the office, and I don't want to glass over that. But for the most part, I really find joy in what I do. And like, you know, we were talking before the mics went on about vacations and stuff. Like, most of the time at the end of vacation, I'm bored and I want to go back to work.
- [15:30]
Interviewer / Scott Clary
Did it take you a while to learn how to enjoy every single day, enjoy the process? And I asked this because also, you are probably in one of the. In terms of startup land, you're probably in one of the more volatile types of markets you can build in.
- [15:44]
Brian Armstrong
There is nothing more volatile than crypto.
- [15:46]
Interviewer / Scott Clary
Yeah, I know. So it's like take all the stress and then tack on these macro factors that are going to stress you. Like, everything will be going great and then all of a sudden the mark. I mean, markets impact everything. But I don't think with the same volatility as crypto, if I'm selling, if I'm selling socks on Shopify, I don't think the macroeconomic conditions in 24 hours are going to impact my sales. Maybe long term, but not to the same degree. So you deal with a whole other level of macro for us.
- [16:16]
Peter Smith
So, first of all, I would say that I haven't learned to be in that mindset every day. Like, learning to be in that mindset is something that is a big focus of mine the last few years, and it's something that I think about probably daily and I don't achieve it every day, which I think is also part of the journey. I'll say that working in crypto, I think is really an interesting opportunity for your evolution and growth as a human being. Because for most entrepreneurs, I think the journey is like toiling in obscurity. People start to hear about your company in a success scenario. People start to see, you know, hear about your company. And then it's like really takes off and then you're sort of up into the right. And then at some point there's some character correction where people find out that you're a real human being. And then it just sort of like stabilizes. Right. In Crypto, we have an interesting thing where about once every four years you're really a hero. You're like a genius. You're right, you know, and people are like, oh, my God. Like, and then, you know, then the next year you're a moron. Because the market blew off, right? That there's a euphoric year and then there's a terrible year that follows. And this is all rough outline, but then you're like a moron. Like, why are you still doing this? And then there's like a year where no one cares about you again. And then there's a year where people are like, oh, this might be coming back. Like, maybe he's not a moron. And maybe, you know, maybe I should check in.
- [17:45]
Brian Armstrong
And you can also look, you can almost look at my email traffic for this, you know, like, there's people that I hear from two out of four years, 100%.
- [17:53]
Interviewer / Scott Clary
Yeah.
- [17:54]
Brian Armstrong
Particularly in the beloved banking sector.
- [17:57]
Peter Smith
But that gives you a huge sense of awareness about how much your external reality, or the external is crafting your reality of how you feel about it. Right. Like, at the end of the day, like, I know that this is going to go up and down, I know it's super volatile, but how do I handle that year where everyone's like, wow, why are you even still doing this?
- [18:20]
Interviewer / Scott Clary
Do you know how you handle it? Like, are you, are you self aware enough to know, like, what allows you to navigate these cycles? I mean, I guess the obvious question is why do you want to keep doing this so many years later? That's like such an obvious question. Because you're a smart entrepreneur, there's a lot of other things that you could build where you would not have to deal with this.
- [18:42]
Peter Smith
Well, one, like I said, I think it's a great teacher. So it teaches you a lot. Until I feel like I've learned all the lessons.
- [18:50]
Brian Armstrong
I haven't gotten there yet, but still learning.
- [18:53]
Peter Smith
I mean, I do, I think, I do think that, like, I would love to navigate one, you know, staying in that mindset, a full cycle, staying in that mindset, you know, navigating with grace. That hasn't happened yet.
- [19:06]
Brian Armstrong
So, you know, I still got, still got more to do.
- [19:08]
Peter Smith
I think it's also a great teacher in the rest of your life. Like, you know who your friends are when you're a crypto CEO. Like, you know, because the market washes people out every couple years, you know who the people on your team are that you can really count. Like there is a powerful cleansing effect to the market volatility that is both very difficult to endure and, you know, a huge blessing.
- [19:37]
Podcast Host / Narrator
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- [20:44]
Interviewer / Scott Clary
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- [20:45]
Podcast Host / Narrator
Spending real money on ads that reach completely the wrong people. Wrong industry, wrong seniority, wrong everything. And I've been there. You run a campaign, you spend the budget, and the results don't match because the audience was never right to begin with. LinkedIn ads fixes that their network has grown to over a billion professionals, including over 130 million decision makers.
- [21:06]
Interviewer / Scott Clary
And.
- [21:06]
Podcast Host / Narrator
And the targeting is on a different level than anything else out there. We're talking job title, industry, company size, seniority, skills, company revenue. You can get super surgical with it. And that's exactly why LinkedIn generates the highest B2B return on ad spend of any major ad network. Not one of the highest.
- [21:26]
Peter Smith
The highest.
- [21:26]
Podcast Host / Narrator
So if you're serious about reaching the right people who can actually say yes, this is where your budget belongs right now. Drop $250 on your first campaign and LinkedIn will give you $250 in credit for your next one. Go to LinkedIn.com ScottClary that's LinkedIn.com ScottClary Terms and conditions do apply. Framer is a success story partner. Now you could be a solopreneur, you could be an entrepreneur. You could be somebody just sitting at home who's trying to start a business out of their house. But you know the drill. You need good design to create a website to get your business off the ground. But good design is expensive and you can't afford to hire a designer for every single landing page. So social posts, but you also can't afford to look amateur. And I've been there. You need to move fast, you need to look professional. But you also need to not blow your budget on five different tools. Framer already built the fastest way to publish beautiful production ready websites. And it's now redefining how we design for the web with the recent launch of design pages, a free canvas based design tool. Framer is more than a site builder. It's a true all in one design platform. From social assets to to campaign visuals, to vectors and icons, all the way to a live site. Framer is where ideas go live, start to finish. And the best part is it's actually free, not a trial free. I'm talking unlimited projects, real vector tools, 3D transformations, everything you need without the nickel and diming. So if you're ready to design, iterate and publish all in one tool, start creating for free@framer.com design and make sure you use Code Success Story for a free month of framer pro. That's framer.com design and use promo code success story framer.com design promo code success Story Rules and restrictions may apply if
- [23:11]
Peter Smith
you can view it that way.
- [23:12]
Interviewer / Scott Clary
If I look at people and again, I am not as into crypto and blockchain as you obviously, but a lot of people have crashed out, burned out, are no longer building the companies that they started. Especially when you got into the game, you sort of touched on this, but sort of last, sort of last question around this. What do you think allowed you to persevere through all that up and down and market cycles and stress and anxiety?
- [23:42]
Peter Smith
I think about that a lot and I am as far as I'm aware, the second longest serving crypto CEO.
- [23:48]
Interviewer / Scott Clary
So I'm not wrong. So there's not many people.
- [23:51]
Peter Smith
Brian, Brian Armstrong has a little bit of time on me but you know, like of the original cohort we're it. And I want to say, and, and Brian is an incredible entrepreneur and arguably a better entrepreneur than I am, for sure, a better entrepreneur than I am, for what it's worth. But I have retained all my hair. So
- [24:10]
Brian Armstrong
in almost every category, he is number one. But in that one vain category, I've still got my hair.
- [24:16]
Interviewer / Scott Clary
You have amazing hair. So no trips to Turkey yet?
- [24:19]
Brian Armstrong
No trips to Turkey yet for me.
- [24:21]
Peter Smith
But what I'll say about learning to, to go through that up and down is that we have survived because we've stayed very focused on our customers. We're not like a grand vision. We're sort of closer to an Amazon where we try to understand what people are going to need, what companies are going to need, what institutions are going to need, what crypto projects are going to need to be part of the crypto financial system. And we build those products and we refine those products and we are very knowledgeable about the fact that we serve our customers. And if anything, you know, most of my time these days is, is talking to customers. I probably talk to at least one or two institutional customers a day, and I talk to retail customers every single day as well. I think that grounding has really helped us. I think we've also been very fortunate at times. Like, for any startup to survive a long time, you need fortune. Fortune favors the bold. But you do need the fortune. You do need some luck. And then I think I've been surrounded by a great team. I'm very blessed that our team has been very stable. We have a lot of people that have incredibly long tenure and we've always been able to attract great people. The third factor that I think has mattered a lot has been that we have never been based in California. I think California is very difficult for people, and by California, I mean San Francisco, to retain focus long term. It's kind of like the, the memes you see online about everybody pivoting from like crypto to AI, AI to something, you know, robotics, robotics to, I think defense is the thing now, right?
- [26:00]
Interviewer / Scott Clary
Is it? I don't know. I can't keep track.
- [26:01]
Peter Smith
I can't keep track either. But you know, we were in London
- [26:06]
Interviewer / Scott Clary
saying like the team and like the, the people that you work with, they're trying to jump to the next latest, the greatest thing.
- [26:12]
Peter Smith
No, I think that entrepreneurs, and I think it's very difficult temptation for entrepreneurs in Silicon Valley too, and in the US in particular. Whereas being in London, you know, we weren't as sort of enmeshed in that whole, like Echo chamber. And a big example I'll give you is that a lot of the early crypto companies were wiped out by the whole distributed ledgers, not tokens movement. And this is long enough ago now that it's super easy to talk about. Like that happened after the first big crypto up and then bear market. Everybody was like bitcoin retarded. We are going to instead focus on distributed ledgers for banks and our name was blockchain. So the amount of investor pressure that we had to like go to POCs with Credit Suisse or with UBS or with, you know, whoever and become like a enterprise reseller of distributed ledger technology was immense. Immense.
- [27:12]
Interviewer / Scott Clary
I'm curious, like it's interesting. You were sort of insulated in London, but also I'm assuming that the investors that you brought in, they were also not, they were not just bombarded with all these new like technological movements, however you want to call them. So they probably weren't pushing you to move quicker than you wanted to.
- [27:33]
Peter Smith
Well, we really don't have any London investors.
- [27:36]
Interviewer / Scott Clary
Well, where are your investors from? Because I'm trying. Because investors also put, the point is investors put so much pressure on the CEO that if you are an SF and you get the wrong investor, they're going to push you to make decisions that you don't want to make, including exit sell, work on the next thing. I want my money out, whatever it is. So where were the investors from? Because maybe, maybe that didn't happen to you at all. But I'm just curious about how you were able to sort of incubate your idea and not sort of speed run entrepreneurship because of investor pressure.
- [28:07]
Peter Smith
Until we started raising our growth rounds in 20, like mid-2021, the vast majority of our cap table was based in Silicon Valley.
- [28:16]
Interviewer / Scott Clary
Did you have some of this pressure then?
- [28:17]
Peter Smith
Oh, for sure. Okay. We definitely did. We had a lot of the pressure
- [28:25]
Brian Armstrong
and you know, we did one very
- [28:27]
Peter Smith
tiny proof of concept with an investment bank.
- [28:29]
Interviewer / Scott Clary
Yeah.
- [28:30]
Brian Armstrong
Open an office in New York to
- [28:31]
Peter Smith
support was very clear that it was, you know, a very silly idea to me. And it came back to, to me. I remember going for a very long walk in Washington Square park and just asking myself like, I mean Peter, like this was the days of like R3, if you remember that the R3 consortia, Blake Masters thing, Digital Asset holding company, whatever it was called. I remember asking myself like, is this the way you want to spend your time? Is this like how you want to spend your life? Like if you're successful and you get, you know, Bonds clearing on a blockchain for four investment banks and you make $100 million selling the company to IBM, will you be happy? And the answer to that was no. I got into this for human economic freedom, to create a free financial market that anybody anywhere in the world could interact with each other, that you could interact peer to peer, that we could make money as easy as WhatsApp. I didn't get into crypto to, like, help banks clear, you know, bonds between each other. Now I think eventually banks will clear bonds between each other on the blockchain, but they won't do it on a private ledger. They'll do it on a public ledger. And so I was completely uninterested in the private ledger. You know, blockchains for banks, vertical. And yeah, we shut it down and continued course. Now, what's interesting about that wind the whole story out is that every company that pivoted into that space that I'm aware of is no longer here today.
- [30:11]
Interviewer / Scott Clary
Why do you think that is? Focus. So this is brings me back to the point of, of balancing investor expectations with entrepreneurial vision. So I think that investor expectations, they kill the entrepreneurial vision because they tell them to focus on all these other things because now they have stake in the company. So for entrepreneurs that do raise, what's the advice on how to manage investors? When they're pushing you in one direction, you have their money, you get stressed out because you have their money, because you're a human and you know you're going in the wrong direction, but they're not hearing it.
- [30:46]
Peter Smith
It's a hard thing to generalize about because it's always so specific. But the things that I generally tell people are, number one, you know, raising money is really not to be celebrated because, you know, you basically just signed an iou. And of course, their institutions are sophisticated. They know what they're doing, yada yada. But expectation wise, you just signed an iou, right, for something in the future that, you know, frankly, like when you're 26. When I raised my first venture round, I was like, 26? Yeah, 26. 27. 26, 27. Ish. Like, I didn't even totally understand.
- [31:24]
Interviewer / Scott Clary
But nobody does.
- [31:25]
Peter Smith
But nobody does.
- [31:25]
Interviewer / Scott Clary
Nobody does, right?
- [31:27]
Peter Smith
So first thing I tell people is like, whatever age you are, you're signing an IOU on a future expectation. Second thing is, you know, really, like, why do you raise money? Well, because it's, you know, your best source of financing. The best source of financing in the world is making money. My biggest regret at the company is that I didn't push harder on monetization earlier. You know, I think that it's all well and fine to grow your product, and we've always had great growth and been blessed with that. Till you're growing your revenue, you don't really know how useful your product is, Right? And even revenue can be confusing because, for example, if I sell you something that cost me a dollar and I sell it to you for 90 cents, my revenue is going to grow very fast. An example of this right now is ChatGPT. You know, they're losing money on every query, right? So, like, they don't really know if their product is that valuable. And I think it is really valuable.
- [32:28]
Interviewer / Scott Clary
I know, but they're, they're playing this game where they're onboarding as many users as possible at a loss, and that's how they keep increasing their valuation, where they keep raising.
- [32:36]
Peter Smith
And I understand that strategy really well. But the danger in that strategy is that you never truly know how valuable your product is or if you're building the right thing, because you don't know if it's generating enough economic value that customers are willing to pay you more than it costs you to build it. Right? Which that is the definition of building great product is like, will you pay me a dollar fifty for something that cost me a dollar or a dollar forty? Or whatever your margin is, right? So I would monetize a lot earlier. I tell every entrepreneur, like, it's never too early to monetize. The second thing is, I do think it really helps to have investors where you are physically. Physically. So when we first started raising, you know, there weren't as many great VC firms outside of Silicon Valley. Today, that's not really the case. There's great VC firms in London, you know, there's great VC firms in New York, you know, some of the best in New York now, actually, Silicon Valley. I think it's a lot easier to manage your cap table when you can meet with these people in person and when you don't have to travel to each other. So I would usually, if you have all the choices in the world, which you never do, I would give preference to people that you can, you can spend time with on a regular basis. The third thing I'd say about managing investors is that it really helps to raise capital. And if I raised, you know, another early stage round, I would try to raise capital from the founders of firms or from people who work at VC firms that used to be founders. I don't think it matters if someone's never been the founder of a tech company. But like, if you were the one that started an investment firm, your lived experience and your mindset is different from someone who, you know, was an amazing product manager at Meta and then joined, you know, a 16.
- [34:33]
Interviewer / Scott Clary
Yeah.
- [34:34]
Peter Smith
Or whatever. A 16 is a great firm. But like, I know what you're saying, different mindset. Right. If you were an entrepreneur and you joined Founders Fund, you are a different mindset than if you are, you know, an ex, whatever analyst that joined a
- [34:49]
Interviewer / Scott Clary
firm, they get the journey that you're on because they've been on it themselves.
- [34:52]
Peter Smith
It's not just that. They also have the experience of betting on something when no one else believed in it and succeeding. Right. Like, even at the end of the day, if you raise capital from, you know, let's pick someone that founded a firm. If you raise capital from, you know, Mark Andries.
- [35:14]
Interviewer / Scott Clary
I was gonna say marketed. Ben Horowitz. Pick one like.
- [35:16]
Peter Smith
Right. Like they know what it meant to bet on something big and succeed multiple times.
- [35:22]
Interviewer / Scott Clary
Yeah. When they were entrepreneurs before.
- [35:25]
Peter Smith
Yeah, entrepreneurs before they build a 16. Like, that is a different story and it's a different kind of person than someone who's never had that experience.
- [35:36]
Interviewer / Scott Clary
I've never heard it makes so much sense. And I know a lot of people that have raised money, but I've never heard somebody bring that idea up. I think it's a really smart idea.
- [35:45]
Peter Smith
Yeah. And look, there's also the reality of life that, like, you won't always have a choice about who you raise from whatever.
- [35:49]
Interviewer / Scott Clary
But I do think well, so the main thought that I keep, I always hear and I agree with, is that you find somebody who at least understands what you're building. Like, like at the bare minimum, smart money, not dumb money.
- [36:01]
Peter Smith
I actually, I, I don't agree with
- [36:03]
Interviewer / Scott Clary
that one as much you would take, you would take. If somebody made a ton of money in real estate, you would want them on your cap table. For a blockchain company, that one's a hard one.
- [36:12]
Peter Smith
It kind of depends on the stage of the company. At the later stage, maybe. But I don't think that, like, look, every investor at a C or a series A stage or a B, because the further you go, the bigger you get, the more like, the less relevant this advice becomes. Is going to say that they understand your idea and because they're a successful, probably type A person, they're going to be pretty convincing that they understand your idea and that they get your vision. Right. It's more to me about the style of person you are of the like lived experiences that you've had in the sense that when everything looks, you know, silly about what you're doing and you need to like, the only way is to double down, to go to the other side. You need someone in your corner that has been exactly there, you know, that was like, oh, you know what, this is hard and this is expected, you know. And so that's what I mean by the like taking money from people who have been founders and CEOs themselves is that no one else really understands what it is to be that until they've done it.
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Podcast Host / Narrator
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Interviewer / Scott Clary
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Interviewer / Scott Clary
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Interviewer / Scott Clary
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Interviewer / Scott Clary
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Interviewer / Scott Clary
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Interviewer / Scott Clary
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- [39:55]
Interviewer / Scott Clary
you built blockchain to over a trillion dollars in transactions.
- [39:58]
Peter Smith
Yeah.
- [39:59]
Interviewer / Scott Clary
And these are old, I'm sure old numbers. So probably much more than that. Regardless, like a phenomenal company, I want to understand what your vision was when you started it, but also we can tie it back into the raising money component. What was the vision when you started it? And then what was the sort of the idea or the thought that made you think, okay, the vision is great to this point, but I want to go pour fuel on the fire, go raise money and really blow this, like, blow this thing up with some growth capital. So a little bit, I don't want to spend too much time on the whole origin story because I know people know it to a degree. But a little bit on the origin story about what you wanted to build
- [40:37]
Peter Smith
kind of comes back to what I said at the beginning. It's like, what do people need to actually use Bitcoin? Like, what products and services do they need? And of course later that became also a thousand other cryptocurrencies. And then later it became other crypto companies. One of our biggest segments is other crypto tokens, projects, protocols, companies. Probably it's our probably fastest growing.
- [41:03]
Interviewer / Scott Clary
That was your idea going into it?
- [41:04]
Peter Smith
No, no, that was much later.
- [41:05]
Interviewer / Scott Clary
Yeah, yeah.
- [41:06]
Peter Smith
And then. And so it's like, that's what's always guided us, is like, what do people need to be in the crypto space more than anything else in terms of why we raise capital? You know, in the very beginning of crypto, there wasn't a lot of revenue. And so you could either be a very tiny crypto company, like, you know, three of you, or you could raise capital to be able to like, you know, invest in Capex and what have you. And so it's a pretty simple choice I think. Also I was probably less, I was probably less thoughtful about why we would raise capital. It's like that was just the thing you did, right? Like you went, you go out and you raise and you raise the most capital you can at the highest valuation possible. Because that was the game. And I don't mean game in a bad way.
- [41:54]
Interviewer / Scott Clary
I just mean like that is, that's
- [41:55]
Peter Smith
the game, this is what we do. Right. I think it was in later years that I became more thoughtful about why I was doing it. And I think that's kind of usually a natural evolution.
- [42:08]
Interviewer / Scott Clary
You've mentioned before, the crypto was initially a mission, not a business. So how do you maintain that sort of ethos as you build a massive company that is a business?
- [42:20]
Peter Smith
Yeah. And I'm reminded every day it's a business. You know, now I think of it as a business that supports a mission. Right. Which is the best missions. They need resources. Right. And at the end of the day, like if I was trying to run a 501c charity to like bring human economic empowerment to the world, I don't think we would have gotten anywhere near where we've gotten. Like one of the coolest things we've done is put a US dollar checking account in tens of millions of people's pockets all over the world, no matter where they live. Like, we've helped preside over the biggest expansion to like tier one financial services for everybody in the world in human history. Like, that is wild. When I think about it, I get huge joy out of. And look, other companies have been a huge part of that. We didn't do it alone, but we were a big part of an industry that said, okay, look, people in Nigeria, and we haven't gotten them quite to the same axis as Americans, but we've gotten them huge leap forward in terms of access to high quality financial services. Right. Hey people in Buenos Aires, Argentina, you can choose now, right. You don't have to just be in that system that's massive for people, for human economic freedom, for economic growth. And so today I think of the company as a business that supports a mission.
- [43:45]
Interviewer / Scott Clary
Well, you're actually banking people that were unbanked. That was kind of the original goal to a degree. Right now the interesting, and I'm curious about how you view this because the interesting idea around Sort of like self custody in banking people is that they no longer rely on financial institutions. And then you're in an industry where there's lots of fraud and security breaches and people not understanding what it actually means to control their own money. So this is macro idea. Do you think crypto, do you think crypto and blockchain in general, we could talk about crypto because more applicable to like the average consumer, do you think we've done a good job of achieving the mission that crypto was set out to achieve, or is it causing more stress and anxiety and loss than good?
- [44:43]
Peter Smith
The answer to that question really also depends on the customer themselves. And what I mean by that is that, you know, if you come into crypto and you come in with the mindset that you want to get rich fast, you will be destroyed. I don't think that that's about crypto. I think that's about almost anything in life where people try to get rich quick. Like at the end of the day, for every story out there about someone making a bunch of money in any industry really quickly, there are a hundred other people that tried to do that and got completely wrecked. In life, as with anything, the most predictable path to success is like sustained, focused effort to do high quality things over a long period of time. And so, and this is the thing I come back to all the time I have, everybody's always asked me, what coin should I buy, what's going to be really sick, you know, like, how do I trade crypto? And I, and I almost universally disappoint people because I say, look, I have, have, you know, I've seen, I've seen people trade crypto, I've seen the best funds trade crypto. I've seen myself trade crypto. And let me tell you the number one alpha strategy I can give you. It's to take a look at your checking account, decide amount of money that's not stressful, take that money and then divide it into six or 12 equal amounts and go out and buy the top two cryptos, top three cryptos, maybe just bitcoin, you know, once a month for six to 12 months and then forget about the fact that it's there maybe for 3, 4, 5, 6, 7, 8, 9 years. If you log in and the balance is like frightening to you because of how big it is, just start selling until you're no longer stressed about it. If you find yourself waking up in the morning wondering what your crypto portfolio is worth, there's a sell button for a reason. Now people are usually disappointed with that answer because it is not. Here's how you can make, you know, 25x on your money in the next 60 days. But for people that are willing to be a long term investor in the crypto ecosystem, and even better yet, a long term participant in the crypto ecosystem, which is sort of the next level we could talk about. I've never seen anyone that didn't make amounts of money that meaningfully improve their life for the better. And I've never seen anyone participate in the crypto ecosystem that didn't meaningfully change themselves in their life for the better if they were willing to follow the slow and steady plan.
- [47:24]
Interviewer / Scott Clary
I would love to understand how people become a participant, but I was, I was actually speaking about people just taking control of their own finances to a degree. That's also something that I think people do not fully understand. So when they put money, and I think that actually the need to make money is probably what for prompts people, pushes people to make these stupid decisions and they don't realize that putting money into a meme coin, if it goes to zero, it's gone. There's, there's, there's no way to get it back. And also if you don't, if you're not a smart custodian of your money, you don't understand the technology and there's a hack like there's no insurance on that money. So I think that all these ideas of not gambling, not looking for quick returns, also understanding that when you have, when you, when you have money in a wallet or, or whatever device use to store crypto, like it, that's yours.
- [48:15]
Peter Smith
Yeah. And it's like, you know, not only should you invest for the long term, you should use platforms that have been here for the long term.
- [48:22]
Interviewer / Scott Clary
Yes.
- [48:22]
Peter Smith
Now obviously, full disclosure, I'm self interested because I have one of the longest running ones. But like, like, like we've never broken a trade or not honored a withdrawal. Coinbase has never broken a trade or not honored withdrawal. Use one of us. Yeah, you know, or not. But like if you don't use one of us, like you know, and it's some new entrant and they blow up on you like you know, well, that's
- [48:45]
Interviewer / Scott Clary
when people get stressed out because like, you know that like the largest hack I think of all time just happened
- [48:49]
Podcast Host / Narrator
what like a week ago it did.
- [48:52]
Interviewer / Scott Clary
So when somebody who is not, you know, you know, not technically savvy and they're kind of just like a, you know, an average consumer and they see a $1.5 billion hack. Well, that shakes faith in the whole ecosystem.
- [49:07]
Peter Smith
And we have an amazing part of our product that I really believe in, which is we have, you know, one side of our product, which is like a trading and brokerage account where we have custody of your, of your crypto. And we treat that as like a really, as a synchro sync duty. It makes it easy to trade, easy to onboard, you know, so on and so forth. You can link your bank account, your cards, like all that kind of just normal stuff. You'd expire and like you expect in like a fintech trading experience. And then in the same wallet, we also have an on chain defi wallet, right, where you control the key, we have no access to your funds. But of course backing up that key, as you've already alluded to, can be tricky for people. So we build a cloud backup which makes backing up your key incredibly easy. Like if you will take the time to back up your key in the cloud backup, you will not lose access to that crypto. With one button, you can move all the crypto from our custody to your custody. Right. You no longer have to trust us. And there's been moments in the crypto, you know, market that look extremely high risk and you know, like this one big hack. But you know, there was the whole post FTX blockfly, just Gemini, like all companies were falling left and right.
- [50:21]
Interviewer / Scott Clary
Huge companies, enormous companies.
- [50:22]
Peter Smith
We sent our customers an email and we said, you know, this is how long we've been in the space. This is our board, this is our governance. Yeah, we want to earn your trust every day. But if for any reason you do not want to trust us. Clicked his button. And a lot of people clicked a button.
- [50:44]
Interviewer / Scott Clary
Really?
- [50:44]
Peter Smith
Yeah. But what's interesting was it was one of the biggest days for withdrawals of all time. The next 72 hours, the week after that was one of the biggest weeks ever at the time for inflow back.
- [50:58]
Interviewer / Scott Clary
Because if you can honor all the withdrawals and people trust you.
- [51:00]
Peter Smith
And not only was that people, I think, told their friends, yeah, so we had signups, we had inflow. So we believe in user choice and we believe that, you know, we should make it easy for people to be their own bank. We should also make it easy for people to onboard, to buy, to trade, to have that classic fintech experience. But at the end of the day, this comes back to what I've been saying a lot. We believe in serving our customers.
- [51:20]
Interviewer / Scott Clary
When somebody who is again, not like fully entrenched in crypto, they see FTX was fraud. But Bytebit was not.
- [51:29]
Peter Smith
No, it's a IT security breach.
- [51:32]
Interviewer / Scott Clary
So what do you say to that person who sees these stories and it's like, well, if it's a security breach, a $1.5 billion security breach, how can I trust anyone when somebody can lose $1.5 billion?
- [51:44]
Peter Smith
What I would say is you, you don't need to. It's the beautiful thing about crypto, you know, like go use an exchange, use us, whatever, buy the crypto and then move it into your own custody.
- [51:55]
Interviewer / Scott Clary
What do you mean by being.
- [51:57]
Peter Smith
You can't even, you can't trust banks either.
- [51:58]
Interviewer / Scott Clary
Like, you know, but with what was it the startup Mercury?
- [52:03]
Peter Smith
Was it Mercury or.
- [52:04]
Interviewer / Scott Clary
No, it wasn't Mercury, it was Silicon Valley Bank.
- [52:07]
Peter Smith
Yeah, but I mean even more than that signature.
- [52:09]
Interviewer / Scott Clary
Yeah.
- [52:09]
Peter Smith
SCB, First Republic.
- [52:11]
Interviewer / Scott Clary
Yeah.
- [52:11]
Peter Smith
You know, Silvergate. Those are all top 20 U.S. banks that went bankrupt in the space of two weeks. Right. And now the federal government stepped in and made them whole. But I was a customer of two of those banks. There was a very long weekend where I didn't know if they were going to do it right. And I rested pretty easy that weekend actually because, you know, I had, I had some other monies in my own custody.
- [52:36]
Interviewer / Scott Clary
What do you mean, what do you mean by being a, like a market participant or crypto participant?
- [52:42]
Peter Smith
Yeah, there's a lot of ways to participate in crypto and that's just kind of one of the beautiful things about it is you don't need anybody's permission. So you could do the very obvious thing. You could go to our website blockchain.com careers. We have many jobs open. You could apply for a job there. You could become a participant in building in the crypto ecosystem. And I think that's a great way to be part of crypto. You can contribute to open source projects and not just developers, there's also people that contribute community. So typing how to documentation, you can join the discussion, you can be someone who talks about crypto, you can become a crypto evangelist, you can go to community meetups. It's a system in which you don't need anybody's permission to get involved and you can even go out and start your own company and put yourself through
- [53:29]
Brian Armstrong
many years of massive up and down markets and eventually end up on a podcast talking about it.
- [53:34]
Interviewer / Scott Clary
It almost feels like, like crypto feels a lot like open source. Well, because it is not all of it.
- [53:41]
Peter Smith
Well, it's not open source.
- [53:42]
Interviewer / Scott Clary
No, I mean a company that involves community, it's great. But I mean, the companies, a lot of them are centralized. They are not. They're still private companies.
- [53:51]
Peter Smith
Sure, but even in open source you have private companies building on top of the open source, correct?
- [53:55]
Interviewer / Scott Clary
Yes, but I feel. Yeah, so you're, you're right. I just feel like, like the culture is very much like akin to open source. People want to contribute.
- [54:04]
Peter Smith
That's one of the most fun things I know.
- [54:06]
Interviewer / Scott Clary
And you don't see that in, in
- [54:07]
Peter Smith
regular tech and it's the biggest open source sector in the world. Yeah, like if you look at all the other open source projects on GitHub and then you look at the crypto ones, you know, it's massive.
- [54:18]
Interviewer / Scott Clary
For people that don't understand the difference between traditional crypto and say, defi. What. How do they, how do they understand if they want to invest and they want to put money somewhere and they want to not look at it for the next 10 years? Okay, check. You've done all the right things. You have the right mindset going into it. Where does defi fit into this? From an asset class, obviously there's like utility as a technology, but from an asset class, is it something people should consider at all?
- [54:43]
Peter Smith
For sure. I mean, the number one application of DEFI or decentralized finance is what I have already talked about, which is being your own bank right now. Of course, decentralized finance today goes further than that. You can be a lender on a, on a decentralized lending market, you can be a borrower on a decentralized lending market. You know, you can be a yield generation, a staker, a miner, and then, you know, frankly, 20 other things that are maybe even more complicated than I can get into. But the biggest use case of decentralized finance today and has always been custodying your own funds, being your own bank.
- [55:22]
Interviewer / Scott Clary
When you think about sort of like the evolving regulatory landscape, if you're building in this space, I mean, I think regulatory frameworks have been super unclear. That's sort of been the biggest pain point that I see people speaking about online. Obviously you build in spite of that. But do you think that we're finally getting some clarity from the government? Do you think this is going to be something that we see in this administration? Do you truly feel that? Because this has been going on for how long? You started this in 2011, 2012, whatever. Has there been any regulatory clarity? So since 2012, we have MAA in
- [56:04]
Peter Smith
Europe, which is pretty clear, to be frank. It's not, it's not great in some areas, but I think it'll improve over time. But we do have clarity. Asia, like Singapore, Hong Kong, Tokyo, you got clarity from all those regular US
- [56:20]
Interviewer / Scott Clary
centric and ignorant of the rest of the world.
- [56:21]
Peter Smith
The US has been a laggard thanks to the Biden administration. But I do think that while we don't have that clarity today, what we do have is an incredibly strong commitment from the current administration to provide clarity as quickly as possible. So I expect that we achieve clarity in the United States within the next 12 to 18 months.
- [56:42]
Interviewer / Scott Clary
If you think about unclear, like unclear or either unclear or overly restrictive regulation, how does that impact where you want to take the company? Does it impact you at all? Or do you just build in spite of what's happening? In terms of regulatory.
- [56:57]
Peter Smith
You do your best to future proof. You follow all the current applicable regulations, and there are plenty. And, you know, you try to try to work collaboratively with governments to make sure that the eventual regulation, you know, leads to the creation of a healthy market that grows.
- [57:14]
Interviewer / Scott Clary
Have they called on you to, like, sit down with them?
- [57:17]
Peter Smith
Yeah, yeah, I've had hundreds of meetings with regulators in the last couple of years. Yeah.
- [57:21]
Interviewer / Scott Clary
Is it moving in the right direction?
- [57:22]
Brian Armstrong
It is.
- [57:23]
Interviewer / Scott Clary
Okay, good.
- [57:24]
Brian Armstrong
It wasn't. It was pretty tough there for about four years.
- [57:27]
Interviewer / Scott Clary
But even, like, even since Trump, like, do you. Have you sat down with anybody since.
- [57:31]
Peter Smith
Yeah, I sat down with Trump.
- [57:33]
Interviewer / Scott Clary
Yeah. And is it moving?
- [57:34]
Peter Smith
It's moving, yeah, it's moving right away. You know, I had really wonderful conversations with President Trump, with his team, and I do think we're going in a really positive direction.
- [57:45]
Interviewer / Scott Clary
No, that's, that's, that's really good to hear. Because, again, like, I'm just speaking to the layman who is.
- [57:50]
Peter Smith
And I do think there's an expectation gap. There was kind of. Expectation gap means that I think people thought Trump would be elected.
- [57:57]
Interviewer / Scott Clary
Yes.
- [57:57]
Peter Smith
Like day two, we'd have the framework.
- [57:59]
Interviewer / Scott Clary
Oh, yeah, because I was watching. I was. I think in his first. One of his first addresses, people were losing their shit because he didn't mention bitcoin. That was like one of the first speeches he gave or, like, or when he was just elected. I'm pretty sure, like the night he was elected, he didn't mention bitcoin.
- [58:13]
Peter Smith
Crypto people are, are impatient and insufferable at times. I often say that you have to forgive us for our excitement and our passion.
- [58:22]
Interviewer / Scott Clary
That's fine, though. That's no problem with excitement and passion. But that excitement and passion move market.
- [58:27]
Peter Smith
I think the fastest we were ever going to see it is 12 months. So you Know, when we, when Trump was elected and was like, you know, I'm going to bring you as an industry clarity, we were like, sick. Next 12 months.
- [58:36]
Interviewer / Scott Clary
What does, what does industry clarity mean for you? Like, best possible outcome? What would you want them to say? Perfect world.
- [58:44]
Peter Smith
I mean, a perfect world, we get a national crypto charter, so we would, you know, I think it's really hard to fit crypto into any of the existing frameworks or regimes. I think that, you know, right now a lot of the regulatory is done at the state level. So I think federal preemption makes a lot of sense. You know, I think that the best thing for consumers, for companies, for innovation is a national crypto charter and a national crypto framework.
- [59:09]
Interviewer / Scott Clary
And I mean you've, you compared crypto to like the Internet in 1997 before and sort of the adoption curve of crypto, if we get a national crypto charter, do you think that that drastically accelerates adoption in the US at least?
- [59:25]
Peter Smith
And globally.
- [59:26]
Interviewer / Scott Clary
And globally. So countries will follow the US when you look at different crypto market cycles, what are some patterns that you observe for people that are just trying to understand, and this is never investment advice when you're trying to understand crypto markets. You mentioned like, sort of like a four year cycle that you regularly impacts how people, you know, engage with the business reach out to you, which strangely
- [59:51]
Peter Smith
aligns to the presidential election cycle.
- [59:54]
Interviewer / Scott Clary
That's ironic.
- [59:54]
Peter Smith
And as well to the, you know,
- [59:56]
Brian Armstrong
overall business liquidity cycle.
- [59:58]
Interviewer / Scott Clary
Yeah,
- [60:01]
Peter Smith
yeah. I have a completely reliable magic indicator that tells me exactly when the top is here.
- [60:09]
Brian Armstrong
For the record, I do not.
- [60:10]
Interviewer / Scott Clary
I know you don't. I know you don't. But what, what are some patterns?
- [60:13]
Peter Smith
It's like any market, right? Like when things don't, when things stop making sense, when everyone agrees that crypto is like in a super cycle to the stratosphere and it feels euphoric and, and things are happening that don't make sense, then I think that's probably the top. Like, I think we've seen the top in AI.
- [60:30]
Interviewer / Scott Clary
You feel that?
- [60:30]
Peter Smith
Yeah. Like, I think when you had people talking about spending half a trillion dollars building AI infrastructure on stage together, when no one on that stage has half a trillion dollars, that is probably the top.
- [60:45]
Interviewer / Scott Clary
You see what happened with, with Deep Seek and the fact that they built it at a fraction of the price.
- [60:51]
Peter Smith
Supposedly.
- [60:52]
Brian Armstrong
They say they built it.
- [60:52]
Interviewer / Scott Clary
Supposedly.
- [60:54]
Brian Armstrong
I think the truth is probably somewhere in between.
- [60:56]
Interviewer / Scott Clary
I agree.
- [60:56]
Brian Armstrong
It's like you look at the chart of like exports of, of compute to Singapore and it's like boom, you know, straight to the right. You're like, I don't know if there's that much in Singapore.
- [61:06]
Interviewer / Scott Clary
No. That's funny. No, but I mean I don't think you're, I don't think you're wrong. So I mean you do have to sort of understand when you're at my, my advice and my advice is very uneducated advice is just probably similar to what your advice would be. If everyone's, if everyone's talking about it, it's probably not the time to buy.
- [61:23]
Peter Smith
And I don't, you know, when I
- [61:24]
Interviewer / Scott Clary
say about any asset, when I say
- [61:26]
Peter Smith
it's not for AI, I don't really, I should be more specific. I think we've seen the top for
- [61:31]
Interviewer / Scott Clary
foundational models, top for foundational models, you
- [61:36]
Peter Smith
know, like, and they'll come back and they'll be very sexy again. But I think we're going to see a blow off in foundational models. So like the foundational models, like you know when ChatGPT builds a new model.
- [61:50]
Interviewer / Scott Clary
Well, the Chat GPT, the way that I see like CHAT GPT and Anthropic, they're almost like building like the foundational model OS that everyone else can build upon. And Deep SEQ was kind of like the, the new competitor and foundational models. Right.
- [62:05]
Peter Smith
But you have to, everybody has to remember that everything is faster now. So there was like a period of time where operating systems were really valuable. Like Microsoft, like they're very, the most valuable tech company and probably 80, 90% of that market cap was to do with Windows. Now I think, you know, Windows is Probably like sub 10% of their market cap now. They've been very well, they're a great business so they've managed to build other things. Their market cap, you know, they're only bigger than ever. Bigger Microsoft. Right. But like to some extent, you know, no one really cares about os.
- [62:37]
Interviewer / Scott Clary
Well this is, so to draw a parallel, this is what you see with Ethereum being an OS that people build on. But now you have all these other sort of os and I actually think
- [62:49]
Peter Smith
that's one of the biggest ways that crypto is going to change over the next few years is that there's always been a shortage of capacity on our protocols. So every time crypto has a huge cycle, whatever chains being used the most, the fees go over 50 bucks and sometime in the next few months the cycle ends.
- [63:05]
Interviewer / Scott Clary
Why?
- [63:06]
Peter Smith
Because frankly like consumers get pretty tired of like using a product where they can't get their transaction through. They have to pay a lot for it and it fails half the time. Now we have enough high bandwidth protocols that I don't know if that's going to happen again. Which means two things. One, like, we could keep growing consumer use cases, which is amazing. But two, it means that every protocol is probably worth less now than it was in the past because it's not a scarce resource.
- [63:34]
Interviewer / Scott Clary
What was the protocol that Trump launched his meme coin on? Was it Solana that was failing?
- [63:43]
Peter Smith
No, Solana didn't fail. Actually, Phantom, the app that people were using, got overloaded and failed.
- [63:49]
Interviewer / Scott Clary
So it wasn't the actual. Okay, because I was going to say I thought, I don't know.
- [63:53]
Peter Smith
All you just had to, you know, everybody was reporting that Solana was failing. It was just, it was just Phantom. You could go on and use another wallet and you would have been totally fine. Which is interesting. Right now the choke point is at the application layer, not at the protocol layer.
- [64:06]
Interviewer / Scott Clary
That is interesting. So, I mean, Ethereum has been around for a long time. Obviously Solana is a new protocol. What are some other protocols that like, don't have scalability issues?
- [64:17]
Peter Smith
Almost any new protocol has far higher scalability than anything we did in the past. And Bitcoin was actually, you know, very pretty smart about this. It was a pretty controversial idea at the time. There was a whole industry civil war over it. Bitcoin hasn't tried to upgrade. They haven't tried to be faster, more bandwidth, more consistent speed. They've said, nah, like we're going to be digital gold. Yeah, we're going to make our value that we don't change. It's kind of left field. Yeah, right. And so they're not competing in that segment at all. But you know, Ethereum, Solana, Phantom, near, like we can keep going. There's a hundred of them are competing in that high capacity, high throughput, you know, very quick time to settlement space.
- [65:02]
Interviewer / Scott Clary
But Ethereum is not keeping up compared to the other ones, is it?
- [65:07]
Peter Smith
Depends who you ask. If you ask the Ethereum people, it's going great.
- [65:10]
Interviewer / Scott Clary
Interesting. I don't know, I'm genuinely, I'm genuinely curious.
- [65:13]
Peter Smith
Yeah, I, I'm, I'm a, and I've
- [65:15]
Interviewer / Scott Clary
said this because I see like a Microsoft as like kind of like the OG OS platform. And then I see all these other platforms sort of vying for market share, ultimately superior products, but the most used
- [65:28]
Peter Smith
one today is Solana. Yeah, I think that the trouble for Ethereum is that they decided to go down this scaling pathway of having a bunch of layer twos kind of side chains. The trouble for them with that is that it means that when I log into my Ethereum wallet Today, I have USDT a stablecoin on nine different networks. So I might have $1,000 of USDT in my wallet, but it's spread across nine networks. So if I need to pay for a $200 thing, I might not have it. I'd have to like move it around and it's just a really tough consumer experience.
- [66:04]
Podcast Host / Narrator
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- [67:53]
Interviewer / Scott Clary
Is there any path where Ethereum can potentially optimized to the point where they can now be more efficient or a better user experience in Solana? Or is that something that because of the technology or the idea that sort of first birthed Ethereum is going to be very hard for them to modernize to the point where they can come
- [68:14]
Peter Smith
up with something that was a technology problem? It's a, it's a community problem. One of the biggest challenges for Ethereum is that because they decided to do these layers, originally the plan was sharding, which would enable huge scale on the ETH main chain and layer twos and they haven't really gotten people to work on sharding. Why not incentives? So if I'm a really clever Ethereum builder, I can go start a layer two, maybe make a few hundred mil or so.
- [68:43]
Interviewer / Scott Clary
It's self serve to a degree too.
- [68:45]
Peter Smith
200 grand to 300 grand a year working on sharding at the Ethereum foundation, what do you think happens? And then I think I don't have. And then those people are big ecosystem participants and you know, they're pushing. It's all just, you know, incentives. That totally makes sense.
- [69:01]
Interviewer / Scott Clary
You mentioned something before. I don't know if this is what you were talking about when you said you have a relatively controversial opinion about something. Is it that incentives?
- [69:09]
Peter Smith
Yeah, I think the incentives in Ethereum are misaligned now and it's very hard. Solving technology problems is not that bad. Solving incentive misalignment.
- [69:23]
Interviewer / Scott Clary
It's a human problem though, particularly when
- [69:25]
Peter Smith
no one's the boss.
- [69:27]
Interviewer / Scott Clary
I want to talk a little bit more about just sort of some ideas that you've learned over your journey. People that are a little bit less technical and less focused on crypto, but more just interested in like the size and the scale of the business that you built. But before we go back to that, what are some other things that I don't know enough to ask you about about Crypto that you think is useful for the audience to know? Somebody who's been in this space for so long, spoke about custody, about different platforms, regulatory.
- [69:57]
Peter Smith
I've talked a lot about quality, like being dedicated to high quality things for long periods of time in life. But in crypto it's Even more important because of how it keeps you out, it keeps you out of trouble. So for example, I don't really trust any crypto company until they've been through at least one down and one up. And that doesn't mean that just because you've done a down and up, you're scot free. There's no more stress, it's easy. But it tells me a lot about how the company is going to manage it, their culture, the way they think about risk, the way they think about greed, the way they think about taking care of their customers. So I don't really ever have an opinion about a company until it's gone through one up, one down or about a protocol till it's gone through one up, onedown. I'll give you two examples from the last cycle. I got asked a lot what my opinion of FTX was and I had said for a long time I had no opinion because I haven't seen them go through a down, right? And then towards the end I got very worried about them and said that, you know, I didn't trust them. But even very early on I was like, I don't won't know until I see them go through the other side. You know, like you can be the greatest offense in the world, but if your defense is terrible, you're gonna have problems. So a flip side of that that's a little bit more of a positive story is Solana, huge gainer last cycle, a lot of heat, a lot of action, never got involved because they were doing, you know, there's like a lot of things going on there where we're like inside games, short term games.
- [71:39]
Interviewer / Scott Clary
You saw them playing short term games?
- [71:41]
Peter Smith
I did, yeah.
- [71:42]
Interviewer / Scott Clary
But that's, that's a signal of a problem.
- [71:46]
Peter Smith
Yeah, it is. Post FTX blowout because they were very closely affiliated with ftx. I loved the way the founders stood up, owned it, said never again, doubled down on their core value proposition, doubled down on quality. And even though it was the most depressed crypto in the industry at that time, it went down the furthest. I was like, this is coming back, these guys are going to do something great.
- [72:15]
Interviewer / Scott Clary
They could have gone in two directions. They saw what happened to ftx. They're closely affiliated, they're at an all time low and they chose to sort of take the high road. They chose stop playing these short term,
- [72:25]
Peter Smith
not just to take a high road, but to take a much higher road than they'd been taking. Right.
- [72:30]
Interviewer / Scott Clary
Like, well, they're probably scared shitless too.
- [72:32]
Peter Smith
I don't know, things got hard and they decided, you know what, the way out of this is to do things better. Not to look for a short term exit or a short term way of rebounding. No, we're going to go back to finish. We're going to be slowly, we're going to build up.
- [72:47]
Interviewer / Scott Clary
That's a life lesson, though.
- [72:48]
Peter Smith
Huge amount of respect for that. And like, I've, you know, tracked closely and used and been involved in the Solana ecosystem ever since.
- [72:55]
Interviewer / Scott Clary
And I'm assuming this is sort of the litmus test that you put new projects through before you associate with them at all.
- [73:00]
Peter Smith
Yeah.
- [73:01]
Interviewer / Scott Clary
What is the, what is the, the signal that you do want outside of going through a down cycle or a, you know, when the market's the bed and, and you see their behaviors through those worst times. Is there any sort of other due diligence? I know a significant amount of due diligence, but any other sort of signals you look for that you're like, this is a project I'd actually like to work with without naming projects because then I get in trouble.
- [73:27]
Peter Smith
And this applies to everything. This applies to, you know, I invested in a food and beverage thing recently, so this applies to food and beverage
- [73:38]
Brian Armstrong
and it applies to crypto protocols.
- [73:40]
Peter Smith
And I love it when an entrepreneur and a team knows who their customers are.
- [73:45]
Interviewer / Scott Clary
You've imagined this.
- [73:46]
Peter Smith
Yeah, because many times they have more than one set of customers. Right. And I love it when they talk to me about what they're going to do for their customers rather than like, how much money we're all going to make.
- [73:58]
Brian Armstrong
Yeah.
- [73:59]
Peter Smith
Because I've learned that, like, the most reliable way to do well in an investment is to drive value for those people. Right. So when, when someone comes down to me and like, if a car wash operator came to me was like, dude, like, I've figured out a way to make getting your car washed painless in Miami. I'd be like, dope, tell me more. You know, and if I sat down with someone who was like, I figured out a way to make a million bucks a week on a car wash idea, I'd be like, man, I don't talk about that.
- [74:29]
Interviewer / Scott Clary
No. But the thing is, the million is a lagging indicator. The figuring out your customer, that avatar, like, so specifically, and how they live and breathe and everything they do in a day and how you're going to solve it, that's the leading indicator for success.
- [74:43]
Peter Smith
Correct.
- [74:43]
Interviewer / Scott Clary
That is, that is universal. That is across any kind of business.
- [74:47]
Peter Smith
So I'm, I'm always thinking about that. And Trying to anchor myself to that. I always succeed, you know, but like, yeah, I'll tell you one funny story about crypto. And then, and then we should talk about other stuff, but I had somebody call me the other day, and they were really mad because they bought into like, one of these fake Kanye coins.
- [75:08]
Interviewer / Scott Clary
The fake Kanye coins, the real Trump coins, all of it.
- [75:11]
Brian Armstrong
They're like, bro, I'm like, I'm beep,
- [75:14]
Peter Smith
beep, done with crypto, like V minus coin. And it like goes up and then like, I can't sell it. And then it like goes down. I lost my money. I'm like, okay, hold on. Like you knowingly, willingly were trying to buy a coin before the creator of the coin, who is also maybe having a lot of mental health issues. And maybe you don't want to be supporting some of the things that individual is saying. Brilliant artist, but like, you know, he's
- [75:44]
Interviewer / Scott Clary
definitely lost his way.
- [75:45]
Peter Smith
You know, lost his way. Do you really want to make money with that guy? You want to be business partners with him right now?
- [75:50]
Interviewer / Scott Clary
Yeah.
- [75:50]
Peter Smith
Maybe not you. And then you went in and like,
- [75:53]
Brian Armstrong
you buy something before it's even verified. And then like, what?
- [75:57]
Podcast Host / Narrator
What?
- [75:57]
Brian Armstrong
This is crypto's fault.
- [75:59]
Interviewer / Scott Clary
This is you problem.
- [76:01]
Brian Armstrong
Yeah.
- [76:02]
Interviewer / Scott Clary
Did you see that tweet that he put out about somebody offering him like, tons of money to. To show, like a fraud project?
- [76:09]
Peter Smith
No, I don't, I don't follow a lot of that stuff, to be honest.
- [76:13]
Interviewer / Scott Clary
He was saying that celebrities are like paid money. Oh, I know that saying that.
- [76:19]
Peter Smith
Yeah, yeah. Celebrities that will be paid just to like, tweet it. They have nothing to do with it other than making the for paid tweet.
- [76:25]
Interviewer / Scott Clary
Yeah, that's scary. Because those celebrities have trust. I mean, I think that now celebrities are wising up to maybe not exploit their audience and their fan base for a quick buck. Hopefully. You've said that most founders should go to therapy. Why is that?
- [76:41]
Peter Smith
I think that there's a lot of focus around founders getting executive coaches. I think very similar to investors. The best executive coaches would actually be former founders and formerly successful founders. Therefore, they have no desire in being your executive coach. They might want to be your mentor. Like I've talked about Justin, who's had a big impact on my life, but, like, you know, someone who hasn't done it, it's hard. It's very hard for them to give you great advice. You know, it's like a lot of best code. Yeah. It's just hard.
- [77:18]
Interviewer / Scott Clary
I agree with you. Because if somebody had 100 million dollar 500 million dollar exit. Are they really selling their time to be an executive coach?
- [77:28]
Peter Smith
I mean, even if you, even if you made 20 million bucks, like, it's not worth it at that point. Right.
- [77:34]
Interviewer / Scott Clary
So I think they just want to give back and they'll.
- [77:36]
Peter Smith
Those are the best people.
- [77:37]
Interviewer / Scott Clary
Yeah.
- [77:37]
Peter Smith
Because they care. They list, they don't care if you keep calling them, they don't care how many hours they bill you. And for the most part, I would say that any founder that tries hard to find a mentor that's doing cool shit, you will find one. Yeah. Like, you know you will because you're
- [77:52]
Interviewer / Scott Clary
going to find somebody who had an exit, who's bored, who, who not.
- [77:56]
Peter Smith
Not even somebody who's bored. Like I mentor people and I still have at least one job. So, you know, like if you're a founder and you can't find and you need a mentor because you've kind of gotten somewhere, you don't need a mentor before you've gotten anywhere. When you start to get somewhere, you need a mentor and you can't get one. That's a. Not a good indicator on your ability to continue this pathway, to say the least.
- [78:19]
Interviewer / Scott Clary
I agree with that. But why therapy?
- [78:21]
Peter Smith
Oh, okay. So that person can tell you how to handle a lot of situations at work.
- [78:26]
Interviewer / Scott Clary
Yeah.
- [78:27]
Peter Smith
Because they've been there, they've done that, they've made a lot of mistakes and you can maybe make fewer of them. Yeah. You don't really become a founder of a tech startup or a crypto startup without probably having some underlying mental issue because it's kind of a crazy value proposition. And if you do like a black Scholes model or a Monte Carlo on like your expected value of every year you work in this from a liquid perspective, liquidity perspective, it's not even a good idea. Like financially doing a startup is even. I mean, it's just not a good idea. The Monte Carlo is terrible. So you have to do it because you love it, because you want to do it for some other reason. And you know, I've yet to meet any entrepreneur who started out in this game. Incredibly well balanced. And I've met even fewer that do it for a long time and are incredibly mentally well balanced and healthy. I think most entrepreneurs have crippling levels of insecurity or anxiety. Right. I think we all come into this with a lot to prove and that chip on our shoulder comes from somewhere. And what I'm completely confident in is in this kind of calls back to our earlier conversation, is that no amount of success in the Startup game will help you find peace with that, but
- [79:53]
Interviewer / Scott Clary
that's what everyone's looking for.
- [79:55]
Peter Smith
And you will be your best as an entrepreneur and as a CEO and as a leader, in my view. When you begin to understand where that chip on your shoulder comes from and when you begin to make peace with it, and it's not that you will ever not have it, you know, like years of therapy later, you know, I think if you go talk to my team, they'll tell you I'm one of the most driven people you've ever met. Like, I'm still in there on the field. I'm still in there building. I'm still in there in the jam room. I don't need to be anymore.
- [80:25]
Interviewer / Scott Clary
Why?
- [80:26]
Peter Smith
Because I love it. But, like, where does all that come from? You know? And so, like, making peace with that will make you a better leader, it'll make you a better manager. It will also enable you to enjoy the process and the journey.
- [80:41]
Interviewer / Scott Clary
Very good advice. Because I do believe that most entrepreneurs are some form of neurodivergent.
- [80:47]
Peter Smith
Yeah, I have not met one yet that isn't. I mean, neurodivergent, yes, Mostly, like, we all have some kind of neurodivergence for the most part, but that's separate from, like, having these, like, complexes. Right. And these, like. It's like, you know, the classic way of saying is like, oh, man, he has a big chip on her shoulder. Yeah, okay, but where's that chip come from? And I think understanding that chip allows you to understand how it's driving you, and then you can begin to learn how to use it as, like, fuel rather than use it using you.
- [81:20]
Interviewer / Scott Clary
Have you thought about where your chip comes from?
- [81:23]
Brian Armstrong
Yeah, of course. I've been years to give out where that just come from,
- [81:28]
Peter Smith
you know, And I'll say something really cheesy, but I think, you know, it's one of the things that I've. I've really learned a lot from meditating on and thinking about is like, you know, success and happiness in life don't come from. And I'm paraphrasing, they don't come from mastering the universe. They come from mastering yourself. And I think that one of the things that's most dangerous about being in the startup game as a founder is that you're so busy and you have so much stimulus that it's very easy to ignore your own voice, who you are, and figuring out how to do it the way that feels most authentic.
- [82:08]
Podcast Host / Narrator
HubSpot is a success story, partner. Now, if you like the show, you need to check out the Hustle Daily Show. It's hosted by Juliet Bennett, Ryla Rob, LitTrust, Ben Berkley and Mark Dent. It's brought to you by the HubSpot Podcast network. They break down the wildest stories in business and tech. Everything from billion dollar industries hiding in plain sight to the real impact AI
- [82:27]
Interviewer / Scott Clary
is having on jobs right now.
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Podcast Host / Narrator
It's quick, it's smart, it's never boring, and it's daily. Listen to the Hustle Daily Show. Wherever you get your podcasts, Priori is a success story.
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Interviewer / Scott Clary
Partner.
- [82:38]
Podcast Host / Narrator
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- [83:27]
Peter Smith
Because the way that I lead my company is going to be very different from the way that another person leads their company.
- [83:33]
Interviewer / Scott Clary
I, I've also felt sometimes that. And I don't. It's. It's not. I don't think it's definitely not healthy, but like your lack of self love or your lack of ability to look and see how you want to operate. I know in the past and sometimes I still do, I lean on that as a superpower because I'm like, I can just ignore my emotions.
- [83:53]
Podcast Host / Narrator
Yeah.
- [83:53]
Interviewer / Scott Clary
I can just head down blinders on and get the shit done. And I can work harder than anyone else and I can still work smart and I can still work on the things that matter and move the needle. But my lack of self love and care at times has progressed my business, which is not healthy. And I think that there has to be a limit on that. I do believe that seasons exist for a reason.
- [84:14]
Peter Smith
Yeah, it's awareness. It's like, you know, it's like this
- [84:19]
Interviewer / Scott Clary
is coming back to the journey and all that.
- [84:20]
Peter Smith
You know, I'm one I really love
- [84:23]
Brian Armstrong
because it's funny, it's like, do you want to be a mule or a lion?
- [84:26]
Peter Smith
You know, like a mule is like, meant to plot all day for 20, 20 hours a day. A mule will plot. You know, a lion gets up like every three or four days and like, runs real fast and kills something.
- [84:36]
Interviewer / Scott Clary
Yeah.
- [84:36]
Peter Smith
You know, and I think mules are great too, but, you know, it's a different life. And you can't run at a full sprint forever. No one can. It's the funny thing that we all learn. So it's like, you know, if you want to be always in motion, then you've gotta slow down. Or you can do sprints and then you can rest, which, you know, nobody's capable of sprinting. And all the time.
- [84:59]
Interviewer / Scott Clary
No, something. Something will blow up. Usually it's your own health.
- [85:04]
Peter Smith
Yeah. Your own physical or mental health.
- [85:05]
Interviewer / Scott Clary
Yeah. Your body has a real good way of, of stopping you.
- [85:09]
Peter Smith
It does.
- [85:10]
Interviewer / Scott Clary
It's a real good way. You mentioned that, like, you know, success is in the journey. But just to go a level deeper, how has your own definition of success sort of changed in the past 10, 15 years?
- [85:24]
Peter Smith
I think having one is the biggest difference. I think that I personally never had a real notion of what success meant. I wasn't someone that necessarily, like, wanted to do a startup, wanted to be venture backed, wanted to, you know, blah,
- [85:44]
Interviewer / Scott Clary
blah, blah, blah, blah.
- [85:45]
Peter Smith
It kind of happened more organically for me. And even once I was already fully on the train, I never thought about what does success look like? Is success, you know, getting to profitability? Is success getting to 100 million in revenue, 500 million in revenue, a billion in revenue? Is it. Is it going public? Is it being one of the 20 most valuable companies on the stock market? Is it being the first company that issues its equity on a token. I never had a notion of what success was. Is it generating a lot of shareholder value? What is success for me? I didn't. I sort of like had a notion of what success was, but it was just sort of like whatever classic success indicators look like.
- [86:37]
Interviewer / Scott Clary
Yeah.
- [86:37]
Peter Smith
You know, is success for you owning the biggest private jet? Maybe, you know, maybe that's a perfectly
- [86:44]
Interviewer / Scott Clary
fine thing or maybe it's escaping with your family. It's not for me, but like retiring and.
- [86:50]
Peter Smith
Yeah, it's like I have a friend where like, you know, his next big goal is, like, he wants certain 737. I don't honestly even know. But like, that's fine as long as you know what that is. And that's authentic to you, right? I think so. For a long time I had no sense of what that was.
- [87:09]
Interviewer / Scott Clary
What is it now?
- [87:10]
Peter Smith
I think success for me is finding joy in the process and the journey more days than not. And really getting to experience my love of building, like, success for me on a day to day basis is like, how much of my time do I spend building and generating value for people and clients versus, like, whatever other stuff is going on?
- [87:36]
Interviewer / Scott Clary
It's a very healthy definition of success.
- [87:39]
Peter Smith
Yeah. And, you know, I have some financial goals as well. I have financial goals every year. Those have brought me like, financial security, but they never brought me like, happiness.
- [87:50]
Interviewer / Scott Clary
I think that the first version of success again is the, the leading indicator of the financial success. If you enjoy most days, I think you just naturally progress closer to mastery and then mastery equates to financial freedom.
- [88:06]
Peter Smith
And, and I do tell, and I, I probably should. I'd be remiss to not say this, like, financial security, you know, when you're, if you haven't achieved financial security by the time you're in your early 30s, that should be your number one goal. And I kind of define that as like, you know, do you have three years of cash on hand? If you have three years of cash on hand and you don't have to worry about how much a restaurant costs, like, nothing after that really changes your life that much.
- [88:36]
Interviewer / Scott Clary
True. Right.
- [88:38]
Peter Smith
And so if you're not there, like, that's a great goal to get to. Right. But after that, I think other things have always been more meaningful to me.
- [88:49]
Interviewer / Scott Clary
What was the most difficult, darkest moment in building blockchain.com that you want to talk about publicly at least, and how did you get through it?
- [89:03]
Peter Smith
Yeah, it was early. It was years ago and we have been through many hard chapters. But there was a moment in time in our early era where I had a major health issue and I needed surgery. There was a significant chance of mortality with the operation. And, you know, reconciling myself to the fact that like, that may be it, when we hadn't really gotten that far, it was really difficult for me. And then afterwards, the fact that we frankly didn't make a lot of progress because, you know, at the time we were family sized, not corporation sized. And yeah, I think without me being able to drive the vintages forward, we slowed down a lot. And also I think people were very naturally worried about me, which slowed them down a lot. And so I put a lot of, a lot of guilt on myself about that, you know, that even, like I hadn't done anything to the health problem was, you know, it was whatever it Is when you're born with it genetic. Genetic, yeah, it was genetic and came to awareness later in life. And I'm very healthy now and it's a wonderful story of modern medicine. But I, I really did struggle to move on from the fact that I felt like I had let everyone down.
- [90:43]
Interviewer / Scott Clary
Even though you were the one who is almost dying.
- [90:46]
Peter Smith
Uncontrollable health issue. Right.
- [90:50]
Interviewer / Scott Clary
That is, that is the neurodivergence or, or some complex showing.
- [90:56]
Peter Smith
Yeah.
- [90:57]
Interviewer / Scott Clary
Because that is not the way anybody should think about health issues.
- [91:01]
Peter Smith
Yeah. When I still felt that way quite some time later, that's when I decided I needed a therapist. So. And that was, you know, it took a long time to find the right therapy and the right systems and the right way of thinking about it. So it's not like it was like a, you know, a light switch that you flip on and you're. And you have a healthier way of looking at the world. But that was a very hard moment for me because, you know, it's a regret based thing.
- [91:26]
Interviewer / Scott Clary
Right.
- [91:26]
Peter Smith
Like, I don't know, like, where would the business be today if that hadn't happened? But this is what I mean by the fact that like there's so little control you have over this. Another example that I'll give of what became a very hard moment for us was the market crash, you know, which sort of started with Russia invading Ukraine. We had a huge financing that was going to close. It was going to be one of those sort of pre IPO financings where like old investors sell, new investors buy, blah, blah, blah, blah, blah.
- [91:56]
Interviewer / Scott Clary
Was this the. Because when I was reading it said there was at one point you were valued at 14 billion.
- [92:01]
Podcast Host / Narrator
Was that.
- [92:02]
Peter Smith
Yeah, it was that one.
- [92:02]
Interviewer / Scott Clary
Yeah.
- [92:03]
Peter Smith
And it, and it ended up, you know, a lot of investors dropped out of that realm, you know, because. And all the paperwork was signed, the long forms and everything. They're just like, well, like Russia invaded, like, you know, sue us. You can't control that, but you can't sue.
- [92:16]
Interviewer / Scott Clary
Right.
- [92:17]
Peter Smith
And yeah, it's like, I don't know when, you know, like you can spend your whole life building something. Be a week from the IPO and like nuclear war starts. Which I really hope we don't have a nuclear war, but if a nuclear war started, like, dude, like your ipl, like, you know, that was it.
- [92:36]
Interviewer / Scott Clary
Yeah.
- [92:37]
Peter Smith
You know, and so it's just like the theme that you're reminded of again and again in life is that, is that you don't have as much control as you think you do. And I think, you know, to come back to one of your earlier questions, that chip on my shoulder was that I wanted to have agency, right? I wanted to be empowered. I wanted to feel like I had the freedom to make the decisions.
- [93:05]
Interviewer / Scott Clary
But you have to have, you do have to have agency. You have to have extreme ownership, that internal locus of control, or you're never going to do anything.
- [93:13]
Podcast Host / Narrator
Like you do have to have that.
- [93:15]
Peter Smith
You do.
- [93:15]
Interviewer / Scott Clary
But there's a duality.
- [93:16]
Peter Smith
There's a duality to it that I took me years to understand, which is that that drive to have that is a huge part of what enabled me to have whatever success I've had. At the same time, the constant struggle for it and the demand for it was like probably the single greatest driver of my unhappiness or my inability to enjoy, you know, the blessings and joy that I can experience in life. Right. It's like being worried about what happens next because I can't totally control what happens next. You know, even in a life that I have where I have far more control of my average of my everyday life than most people or, or my career or whatever you want to call it, I have no control over many, many things that are going to impact that. And worrying about that all the time and trying to like bring order to that supposed chaos, you know, will generate incredible stress in your life.
- [94:18]
Interviewer / Scott Clary
How much of your self worth is wrapped up into your company?
- [94:21]
Peter Smith
Probably an all time low. That's good, but still extremely high.
- [94:27]
Interviewer / Scott Clary
That's good though. It's healthy.
- [94:29]
Brian Armstrong
Yeah. Context matters. It's still very high, but it's at an all time low on the trend.
- [94:34]
Interviewer / Scott Clary
What would be the biggest misconception about your story? Blockchain.comSuccess that you sort of want to correct, set the record straight, that all
- [94:44]
Peter Smith
that much of it had to do with any one person. Success has many, many, many fathers and mothers and, you know, grandparents and whatever. It's a, it takes a whole community to build something, right? And, and somebody ends up being the face and the CEO of it and what have you. And, and I think I've had a big part in it. But the right team had to come together. The customers had to choose us. You know, the universe had to smile at us, you know, with the right fortune and luck at times. And frankly, like, you know, there's probably a hundred or other, like, we're probably like, if you ran 100 simulations, there's probably like three where it all worked, right? And so when you realize that, you realize like you may have had a big part in it, but it didn't come down to exclusively you. And so for, you know, one thing is like, I've done way less, you know, press or conventional press, you know, since realizing that. And I've. And because I want to celebrate the team, I want to celebrate the company. But like in the context of this podcast, like you can't sit down and interview, you know, 400 people. And so somebody does have to.
- [95:56]
Podcast Host / Narrator
Lex Friedman has tried.
- [95:57]
Peter Smith
Lex Friedman has tried. But 400 people from one company could get very boring. And so, you know, I try to be the best representative for the team and the collective and our customers and all the people that made us what we are today as possible, but any one person has less to do with it all than they think.
- [96:17]
Interviewer / Scott Clary
I hate the idea of self made. It doesn't in my mind exist. It just never exists. And just the shift of focus from like, this is what I built to this is what we've built. I mean, I gravitate towards the latter and those types of entrepreneurs all the time. I cannot stand the self made bullshit.
- [96:38]
Peter Smith
There used to be this podcast called How I Built It. Well, there's still exist.
- [96:42]
Interviewer / Scott Clary
Yeah. With Guy Raz.
- [96:43]
Peter Smith
And it used to be one of my biggest goals to go on that podcast.
- [96:46]
Interviewer / Scott Clary
You should do it.
- [96:47]
Peter Smith
I won't do it.
- [96:48]
Interviewer / Scott Clary
You should do it. It's a good show.
- [96:49]
Peter Smith
I don't like the title, How I Built this. I think it's the wrong attitude. How we build the wrong mindset.
- [96:56]
Interviewer / Scott Clary
Yeah, right.
- [96:57]
Peter Smith
It's like no one person builds anything. And I get that that's not the point of the podcast or whatever, but I think it's like I want to steer away from perpetuating a lot of these myths that place everything, all the pressure, all the expectations, ba ba, all the glory onto one person because it's not how the world works.
- [97:19]
Interviewer / Scott Clary
I agree. Well, technically there is a lot of pressure on you, but I would say, I would say that, I would say that a good founder understands that they can, they can sort of, they can take on all the pressure and the stress, but then all the wins are not their own. All the wins are the teams. I think that's a, it's a healthy way to look at it. Because if you're saying that all the negative is everyone else's fault, then you're just deflecting.
- [97:44]
Peter Smith
I hear some.
- [97:47]
Interviewer / Scott Clary
It's oversimplifying.
- [97:48]
Peter Smith
It's oversimplifying. I think. Yeah, I think the whole team owns the wins and the whole team owns the problems. You also don't want to be putting that kind of like, as a leader, entrepreneur, whatever you are, I don't think you want to put yourself in the position where, like, all failure is yours, all success is the team, which is like, one is a management maxim. Right. Like, we, you know, like, everything. Everything we're doing wrong is ultimately my responsibility as CEO. Everything that we do that's right is like the team's win.
- [98:16]
Interviewer / Scott Clary
Yeah.
- [98:16]
Peter Smith
Like, that's sort of a shitty deal. You as a human being.
- [98:19]
Interviewer / Scott Clary
It is a shitty deal, but it so perfect scenario. I think the team wants to share the wins and the losses, but that particular idea, I think is better than I'm responsible for all the wins and everyone else.
- [98:33]
Peter Smith
Oh, for sure. That one's, like, completely not acceptable.
- [98:36]
Interviewer / Scott Clary
100.
- [98:36]
Peter Smith
I think if you have a team that doesn't want to share the wins and the losses, you need a new team.
- [98:40]
Interviewer / Scott Clary
How do you find people like that? Because, I mean, like, even speaking about the community that you attract and sort of like the open source culture component, you probably attract people that are like crypto blockchain.
- [98:52]
Peter Smith
Honestly, it's one of the best parts about building a company that reaches scale is you can hire really good people. And people ask me a lot of times, they're like, oh, would you ever, like, retire and do it again? And I'm like, oof. I don't know. Like, zero to one is very hard. Like, you know, we can hire amazing people now.
- [99:09]
Interviewer / Scott Clary
Nice.
- [99:09]
Brian Armstrong
It's.
- [99:10]
Peter Smith
And if you come back to, like, where do I find joy? I find joy in building.
- [99:13]
Brian Armstrong
It's a lot more fun to build with these people.
- [99:15]
Interviewer / Scott Clary
Of course it is. You know, there's not fun to build on your own.
- [99:18]
Brian Armstrong
It's like, I don't know.
- [99:19]
Peter Smith
So, but how do we find them? I mean, it's like anything else in life, very carefully.
- [99:24]
Interviewer / Scott Clary
What would be the highest. I mean, you mentioned your health, which is a pretty damn high personal price. But outside of your health, what would be the highest personal price that you've paid for commitment to your vision, to your business?
- [99:36]
Peter Smith
I left. I probably left a lot of money on the table. You know, Like, I think the best way to make money in crypto probably was to run a fund. Right? And I kind of. I've known that for a long time,
- [99:49]
Brian Armstrong
and I, you know, at any point
- [99:51]
Peter Smith
in time could have, like, retired from here and started a fund, but I don't think it would have been as fun or as rewarding or as satisfying. And so maybe, maybe that. But I don't know.
- [100:03]
Interviewer / Scott Clary
Like, yeah, but I think that ties Back to your, your, your North Star.
- [100:06]
Peter Smith
And.
- [100:07]
Interviewer / Scott Clary
Yeah, and you have, you have a beautiful North Star, which I think has actually allowed you to be successful. I think that a fund, yes, it can provide. It's not just a pure extraction of value. You do provide a ton of value, but in a very different way.
- [100:21]
Peter Smith
Yeah. So that could be one answer. I think probably a harder truth is that it took me a long time to learn how to balance having a personal life with being the CEO of this company. You know, maybe the, the biggest thing or biggest regret I have is not learning how to have a healthy personal life While being the CEO of Blockchain.com and of course that has come in the form of friendships, you know, where I ignored friendships for a very long time, which is not a way to have a healthy, meaningful life. Also in romantic relationships. You know, as an entrepreneur, you are under incredible stress when you're playing at that level of the game. I have so much admiration for people that play at even higher levels of the game that balance relationships. And to do that while maintaining a healthy relationship, you know, is something that definitely did not know how to do for a very long time and, you know, arguably still don't know how to do. Right. And so I think that, that, that is always where those sacrifices will be. The biggest right, is that you live a very unique, very high pressure life and that is really hard to make your personal life work with.
- [101:43]
Interviewer / Scott Clary
Listen, I think that there's seasons for everything. I think that this is a, this is a journey. It's a learning journey too. Like you do have seasons where things won't be balanced. But I think the whole point for all entrepreneurs is to use that season to get the thing from 0 to 1 and then understand when it's time to not abandon hard work, but to move into a season that is slightly more balanced.
- [102:05]
Peter Smith
Yeah. And I think this is one reason, you know, to circle it all the way back to the beginning, that I'm really happy that I started early because I'm 10, 11 years in now and I'm still 35. So like, there's a lot of time left on the clock.
- [102:20]
Interviewer / Scott Clary
Yeah.
- [102:22]
Peter Smith
And, and I think that's a good thing.
- [102:25]
Interviewer / Scott Clary
If you look 20 years into the future, what impact do you want your work to have?
- [102:30]
Peter Smith
I think there's the, like, industry as a whole and our customers, and then there's sort of like legacy with the company on the first one. I think that I want to leave behind the impact of like, having fundamentally helped drive human economic freedom in the world and I think to some extent we've begun to do that. And I'm really excited about like talking about giving people the right to opt out of their financial system. Giving people the choice to interact with people anywhere in the world economically. That is super powerful and super meaningful to me. So that's the legacy from sort of like a hundred, you know, hundredf of you I'd want to leave. When I think about the company, the legacy that I'd want to leave is a company that is really, really well run and without me, still cares deeply about its customers and deeply about each other. Right. I don't need to leave behind
- [103:36]
Interviewer / Scott Clary
the
- [103:36]
Peter Smith
world's most valuable company. Now I think Amazon has been a very interesting example and they're not the world's most valuable company, but of a company that, you know, you've never heard Jeff talk about wanting to leave behind a trillion dollar company or wanting to be number one. You, whenever he's spoken about this or in his letters, he talks about the legacy he wants to leave behind is a company that cares deeply about its customers and a company that cares about its team. And the byproduct of that is this phenomenal company, arguably the world's greatest company to be built in the last 20 years. Because they have no natural edge, they don't pump oil out of the ground, they have no monoline revenue product. Like Amazon never discovered a magic money tree. Facebook, Google, Apple, at some point they all discovered some magical money tree and then built an amazing company around it. Amazon, Microsoft, same story. Amazon never had a magical money tree and was always doubted because of it. Right. And that whole time that guy was out there saying like, no, our secret sauce is that we're going to build a company that cares about its customers and keeps building out across the whole Internet. We're going to build everything people need to use the Internet. And like their first use case is like selling books, which is kind of funny.
- [105:09]
Interviewer / Scott Clary
It is, it's wild, right?
- [105:11]
Peter Smith
That's the kind of thing where I'm like, wow, if I could leave behind like something that even on a smaller scale looks like that, that would make me really happy.
- [105:22]
Interviewer / Scott Clary
Have you thought about how to actually achieve that and exit out, find the right. Is this something that's in your mind right now?
- [105:29]
Peter Smith
No, no, I, I think a lot about how do I encourage the culture of that. But in terms of like, have I started thinking about, you know, filing for unemployment or finding a new job and now I'm a long way out?
- [105:42]
Interviewer / Scott Clary
Not quite yet.
- [105:43]
Brian Armstrong
I still got a lot left in the gas tank.
- [105:45]
Interviewer / Scott Clary
Amazing. What would be one thing that you understand now about either crypto or leadership or entrepreneurship that you wish you knew in the beginning? And I know there's 10 million of them.
- [105:59]
Peter Smith
The most practical advice that I can give anyone is to write things down.
- [106:05]
Interviewer / Scott Clary
That's good advice.
- [106:06]
Brian Armstrong
Oh my God.
- [106:07]
Peter Smith
Like playbooks.
- [106:10]
Brian Armstrong
Yeah, you know, playbook for everything. Anything that you do more than once. Write a playbook. You know, come into work in the morning, write down three things that you want to get done today.
- [106:20]
Peter Smith
You know, so simple. Hire someone.
- [106:23]
Brian Armstrong
Write down your thesis for why you hired them.
- [106:25]
Peter Smith
You absolutely cannot keep track of all
- [106:27]
Brian Armstrong
this and no one else can either. So like write, write down. Document. Write document. And it's so easy now with the LLMs.
- [106:37]
Interviewer / Scott Clary
It is very easy now with LLMs.
- [106:39]
Peter Smith
Takes a quarter of the time.
- [106:40]
Interviewer / Scott Clary
Yeah, do it. If you could tell out of all the different lessons that you've learned, first of all, where can people connect with you? Where do you want to send people? Social website. I mean blockchain.com is.
- [106:50]
Peter Smith
Yeah, so my Twitter is one more Peter all words which I find entertaining. And then my email is just Peter blockchain.com and I read all of them.
- [107:01]
Interviewer / Scott Clary
You read everything? You inbox zero every day.
- [107:03]
Brian Armstrong
Do you get all the way through there routinely?
- [107:05]
Interviewer / Scott Clary
If you could tell your 20 year old self one thing, what would that thing be?
- [107:12]
Peter Smith
I would tell my 20 year old self that life is going to be far stranger, far more beautiful and far more fun than you expect.