E77: Tech work culture, crypto regulation, stablecoins, $NFLX & more w/ Coinbase CEO Brian Armstrong
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Bright, I M strong. What's up? right? What's up? How are you good to see? You good to see as well. Yeah, Jason, just think me yesterday is like, what just come on as guest and I was like, okay, great.

Let's do IT. It's so good. I'm really excited to hear what jack els intro is for you.

Yeah, you guys, you keep getting water.

We may give.

We open sources to the fans .

and they got.

Hey, everybody, welcome to episode seventy seven of the all in podcast less than thirty days for the sold out all in summit and there's a weight list. But sadly, I don't think going to get to anybody on the weight list. We've got a great, great episode for you.

I thought I bring a best guys stine but not tell my best day. So we'll see if they can figure out who's coming on the pot today. Um but let's get the intro over with he's investing in sas at different stage.

Is coming off a miami pender for the ages, doing shots with your boy and venia eyes. The rain man is back twice as nice. David sacks, everybody. How are you start? How is your adventures .

with vania ice and .

you still here? And so, van, that cost sixteen hundred dollars to get him to show up. What is no eyes caused to show up for a party? That's about ten key. I think it's about ten to twenty.

No.

a little bit more, really a little more. And did you go on stage and do ice ice baby with him?

I didn't, but there are some like teenage winton and the turtles typed dancing around with him whatever was interesting IT in triple like that .

find very nice, very nice. And you're still in miami for whatever tech week. Okay, so he wouldn't need your meat, but i'll take your m dma.

He's very interested in your DNA when he's in the lab. He's in heaven. He has been bitten the since that rave in one thousand nine hundred and ninety seven. The lord of the laboratory, the sault of science.

David freeburg, how are you.

sir? I was my favor. I like you picked in ninety seven, yeah, about two A M. You were picking about two A M.

Did you say he doesn't want your meat, but he wants your M, D, M, A?

Yes, he won't need your meat, but he shout to producer nick, really crushed this .

week his bank of just what is. It's hard to give you together for these.

Sometimes bank a cow would make a crown prince jealous. His network collection is over jellous. When he is not C, M, B, C, he makes a scene. Last time he did, leg day was twenty nine. Supreme leader, respect the dictor himself to month follow up.

I've actually spending a lot of time working out on my legs.

really. I have been working on orders and chest, and my legs have always been diego. I will be doing a shirt off self this summer.

Jill IT, looks like you have not bought new shirts. Last all the weight because that shot looks about five sides.

I bought this one half way through the weight loss, and now it's still too big. So I got another slimmer. I got the slum fit. Now I got the Normal fit, and then I got the slim .

fit from peak to you've lost like like fifty pounds.

two hundred thirty pounds, my peak, like four years ago. And I was one sixty seven, one sixty eight other, yeah. So whatever that is.

forty five.

something I feel incredible of. I ve started running again and know I did forty days to skin. This year i'm going to take up kite surfing. I think this summer I want another sport to do. You know.

on the summers, are the people around you annoyed at your increase energy levels?

Yes, people who work for me are annoyed. I am sleeping Better and everything is going Better. I highly recommend everybody, you know, just try to lose some weight.

Lot of options out there for you, including unique. Alright, we have a very special best gusty today. He's a lean, mean, cyp to machine who sort of looks like mr. clean.

If you need some tokens, you know who to call so? So he has his picture hanging on his wall. His N.

F. T. Game is never lacking. If you talk about politics at work, you might send you packing. The king of kind is the tycoon of tokens.

Who is he? Bright ARM struck. ARM struck.

Guys got a bright m struck with us. Hey, brian.

how are you? You could have gone the.

uh, at the first part, but we became brian by the office part. Anyway, welcome to the show.

brian. Uh we've obviously talked about you a whole bunch and you've been on this week and I think you know all the file is here ah but thanks for for joining the pod.

Thanks for this is sten to sure every week .

and thanks for that. So I guess you know the the topic we all have talked about a whole bunch is um work and keeping people focus that work. You took a very big step h which told me a chop of anything followed.

I just said, listen, if you're coming to work, our mission is clipped out. Can we stop talking about every other thing in the world and and just stay focused on that? Anything that was maybe he was that a year and a half ago you did that.

Everybody wants to know, uh, how that worked out for the company. So maybe you can tell us what I was like to go through that cause, I mean, you are target for for for a period of time we all thought seems reasonable. And then how is that actually impacted day to day life for the people who decided to opt into working at a single focused coin bus?

So I would a term that was like a painful transition, I think IT create a lot of, there was some focus in the media, decided to go call bunch people who left the company, you know, right? Hit pieces and all that kind of thing. And Frankly, you know about five percent of the company opted into the exit packs of packaged.

So there was some teams that were short handed. A lot of people had to work extra time to fill in the gas. But long term, I think IT turned out to be an incredibly positive decision for the company.

I do think there's a lot of companies and silk value right now and probably elsewhere is that you, the ceos and the managment team almost feel like they are being held hostage by the employees. And I feel for some of these organizations, you soon probably has an incredibly difficult job right now. We saw that, that video for microsoft, I think last year was was SATA of was with people talking about their hair color and stuff.

And they don't feel like that they can really lean and and move the company the direction they want. And they they're fearful of kind of all these internal dynamics. So I think there's probably a Better way to do IT than what I did, which is if you're starting a company today, just make that clear up front.

I didn't make a clear up front. And so the company culture started to diverge and drift. And I had to kind of real IT, which was which was a painful process I was doing IT over again. I'd probably just said that as the expected up front, then they wouldn't be this no public awkward realignment. But yes, I think i'm really glad that I did IT.

I think queen bed has been very productive since then, and we're been able to attract a lot of the best and brightest st people from some of these other companies that are like, I don't want to be in those companies anymore. I want to work the company where we just focus on the work in the mission because that's actually important. So I say it's been positive .

brand and i've always talked about this is being like the difference between a hard culture and a soft culture or hard cultures are companies that really define what they do and what they don't do and what they spend time on and what they don't spend time on. And sometimes what you don't spend time on can relate to product. Sometimes you can relate to things outside or external alist to the business.

Do you think that, that become kind of a trend where you know soft culture in silicon valley is more about like a peeing a very special employee base? And as a result, you have aren't as clear about what you're not onna talk about and are you going to talk about and suddenly the troops all the day and things get kind of side track and productivity or down. I mean, can you talk a little bit about what you've seen you know with other cultures around the valley and how that kind of affecting work and what employees are choosing .

to go to and not go to? Yeah so I think bho was always talked about like war time CEO, peace time CEO. And Frankly, you i'm kind of a conflict avoiding person, right? I never thought of myself is like more time.

C, we're just like go on in this direction. Let's go, go, go. You know, I never really thought of myself like that, but I think what i'm trying to do now is find the happy medium between these two.

So you, the company, should have a really ambitious mission. And then I think you as A C E O, you do have to say noto things which are off track from that. You do have to part ways with people who are not helping raise the the talent far in the company.

And so in some ways, you have to be, I guess, hard in that sense. But I don't think it's it's not like, you know, we're all only here to make money and it's like it's bonus time or you're out or whatever. It's like we actually have a much software culture, not I think, and silk value, which is most of the mission.

These companies are trying to do great humAnitarian efforts and they're trying to improve the biggest problems in the world. And so people sign up for those. They want to have a real impact.

And you know we take time to let go for exact off sites and we walk in nature and you know we have like coaching, we do all this touching feeling stuff. So I think it's kind of a mix of both is the right baLance. I don't think of myself as like you know a wall street hedge fund or like touch feel culture.

you can imagine. Why do you think companies now have sort of weird into this place where they have to kind of appeal these fringes on either side? How did did did did you spend time trying to figure out like how did we evolve there from just being mission focused to having to deal with all the other time?

yeah. I mean, one theory have on this is that in south valley, especially pre pandemic, we were all was so competitive to get talent right. You know google and facebook, they were just kind of one up in each other on like higher, higher salaries.

And so I I know as A C E O of a company that was rising at that time, I felt incredible, scarcely like I had people leave to get out who got Better offers. And I was like a real issue, and so I was doing anything thing I could to retain people and keep them. And so if if an employee said, hey, I want, you know, another flavor of water in the kitchen or whatever else, like, okay, maybe we should do that right.

But I think during the pandemic, we move, we move to remote first as a culture. The talent, the talent we could get opened up by one hundred x people all over the world who were really hungry and like, Frankly, thankful for these jobs. And that actually changed the scarcity mindset that a little bit to say, hey, you know, if you don't want to be here, that's fine.

We can we have other people. We can go recruit and hire who really we're going to value IT. That's probably just one piece of IT. It's it's a much more complex issue than that.

I think one of one other thing is that you know like google and facebook, I think kind of made just a common trend in the valley where companies would host these, open my Q N S. On every friday or every two weeks, so whatever. And IT was almost like a town hall. IT felt like a democracy, right? And in a democracy, like the leader who works for the people, they are elected by the people.

Um but what got very awkward was that these open my q as that became, you know this kind of like hostel thing of like how can we make the person swarm and let's ask that is difficult society issue questions that aren't actually related to the company, what we're all building and you know I think that was actually a mistake and so can value we've scotland rid of that opened my q nays because IT IT really encourages people. I say we were like a hundred, 2， two hundred people. Everyone was on the same page.

Everyone was asking good questions. Once we like five hundred, seven hundred people, IT started to feel like there was a little bit of an us per as them. And then, you know, the questions got very off track.

And I realized that a certain point, this is not a democracy. I want to everyone's input. I'm not onna rule like with an iron fist, but ultimately, you know, I need to see you and I need to help guide this company in one direction and forced the hard decisions.

Not everyone is going to like them. So we're not going to allow people to do grand standing open mike stuff a little bit of risk for that. You thousand nine hundred and nine percent of people don't do IT.

But if one person does IT and IT can't creates the snowball that so we ve got a rid of the open mikes, people can still submit questions. But there there nobody else can see them. We read them ahead of the Q A. If there's a good theme in the questions we address IT. But you can't like brand .

stand with an open minds. I saw this um thought he was in twitter. Nick, maybe you can find IT but I was like this general that had commanded all of these different and he was talking about what was like in all the different theatres in which he is Operated any basically said, you know eighty percent of the men and women that serve for me, we're just absolutely incredible.

You could always rely on them a hundred percent of the time. They were a hundred percent aligned. And then he said there was fifteen percent that was wish he wants. And what they were looking for was how you managed and dealt with the five percent.

And the five percent of folks were always trying to push the boundary and try to figure out where the escape fell was or where the exception was or you know whether they would be grand standing or whether they try to break a rule. And he said his entire energy was focused on keeping those folks extremely focused on on point or out, because that was what solved for the fifteen percent, because the eighty percent would be fine. But if you didn't deal with the five, the fifteen would go crazy and then the eighty would get dejected. And I just kind of the whole thing would rot. And IT was really interesting reminder that there is these people that comment to these companies almost with the desire to see these companies go sideways or just waste their time, which is completely counterintuitive because you think you joined for the mission, but they don't all the time.

And to be fair, you I think told people listen you you could, as a group of people off hours, create your own you know uh dinner party and talk about whatever topics you want. This is just when i'm paying you to come to work for those eight hours. You know all the company servers, if you're using slack or whatever you know communication platform you're using, let you stay focused on getting the work done.

So this could be a viable enterprise, but you were fine with people if they wanted to sell, organize and do that on their own time. correct? You weren't saying you can't have political belief. You can't care.

not care about B, L, M, or s, no, as or exactly deliberate mischaracterizes about the policy is that it's somehow silence. People are prevented them from, you know, taking positions on issues or donating to causes. Care about the policy. Never said that. He has said that while we're in the office together on coin base time, we're going to engage in coin basis mission and avoid fractious debates that divide us.

Yeah, that's right.

And there's a time for those debates, just might. I think a lot of this has to do with slack. I'll be totally honest.

Yeah, when people are in a slack room and they're frustrating and people can have valid fruit tions like there are things in the world that are horrible and yeah, you want to talk about IT and yeah, you build friendships at work, it's completely understandable that people would want to blow off steam and but just people have to look at slack is not an ale chat room. It's not ready. It's not A L L chat. And maybe you can talk a little bit about electronic communications.

And then I think David has follow. Yes, I agree. If you slack, I think that is an amazing tool. But IT does start to turn into social media once you get more than, I don't know, five hundred people in in a room, thousand people, a lot of CEO. I've been talking to IT. We're all trying to figure this out because we still think slack is a net positive to productivity, but IT has a huge negative in terms of most distracting people with lots of things pop in up all the time, but also these kind of social media flame wars that did emerge in mob like behavior.

So some of the things, I mean, we've been trying is, for instance, if if we get any kind of a slacking room that has say, more than five hundred or thousand people will often try to limit, so only you you have to be a VP or level nine and above can only post in there and others otherwise its so we're trying to know done bars numbers, one hundred and fifty people, right? You're trying to think who can you remember everyone's name and have some sort of group affinity with them? And I need too much above done bars number.

We tried to like carpet, so it's it's a really only chat room. But I think these tools need to keep evolving and I hope so. I know is a couple start of you all might funded some of them um that are working on this.

Ah there's an actual need feature you can do in slack now where like that level, nine person can post and everybody else can post in the thread. Like you can reply to the thread, but the opening salvos and thread have to be started by somebody in that sort of groups. But like definitely needs to double down on this.

I also think they put that random room in there and you put the random room, it's like basically wave in the flag, like it's random put stuff in there. I think you're got IT to lead that if you're running. I tell all sorts to lead the random and tell people do not post memes and jokes. David.

you had to follow up. One thing is going to say is it's a bran aggress everything you said. The one place maybe where I would not pick away that gives you little more credit is you found a point base back in two thousand twelve, right?

yeah.

So if you have created this policy on day one, I don't think you or anybody could have predicted that these issues would arrive the way they have. I remember two thousand twelve of a year, I sold my computer, microsoft. We are ready to deal with any other stuff.

And we were using we didn't have psychic then. We are using hamor very open culture pill to communicate on anything. We never had sort of hyper activist employees.

The word woke him even exist yet. And um IT just wasn't an issue. So I would have required you, I think, to see ahead so many years.

And I think what happened is of the last of the years has been this drift towards, you know, employ activism inside these companies. I don't think it's coming from both sides at the political spector, to be honest. He is coming from the survey yer worke employee in the age age and petitions and letter writing campaigns and threats of boycotts.

They sort of hector and mama these CEO to basically give into them. And we've seen apple the way that the apple was pressured to fire and tony a grocery Martinez and they gave in. And now they're a little writing campaign every month. And you just saw in florida, I think bob um was an bob chape business.

I don't think he's going to survive the year after what has happened at disney and is because he gave into the employees, took sides against, you know, governor in florida and the legislature, and they just ripped away disney special privileges in florida. You saw IT at netflix where tens renders was sort of mmd by these employees who want to cancel dave shapely, he ultimately stuck by shaped l but only have for gravy to these employees. And so I think we're seeing these issues did not exist even five years ago, I would say.

And I think the reason why the coin base story is so relevant to a broader audience and what you did with your policy is so relevant is I just think every company is have to make a decision sooner later on where they stand. Do you give into these petitions and mobs and boycotts due, allow unlimited activism inside the four walls of your company? Or you take some sort of more neutral stance where you say, listen, really going to leave our politics to the door so we can effectively work together on the company's mission.

I think every company eventually is gonna have to either be coin base or be apple. You're going have to be coin base or be disney. You're either going have to give you into the mob and suffer consequences or you take the short term agne of doing what brian did and you basically rely everyone around the mission. And a year later, you're very happy with where you are.

The good thing with netflix, ks and disney, those that they're going to be a very clear examples of the business impact of getting distracted. And I think that yellow, brian took leadership, but the business impact, at least from the outside looking in, not really measurable. Obviously, he felt that the team felt at whatever they did and that business is working, but he wasn't done as a public company.

Printing SE to the counter factual s heart to measure. In the case of disney and netflix, it's really clear to measure right me in all of this confusion. Netflix has completely botched their business model in all of this fighting. Now internally, inside of disney, not only are they gonna lose essentially a chief stem inside of florida, but it's gna have repercussions with respect taxes, with respect to debt, with respect to the quality of the service they can deploy. And that will eventually float to the business and that will be measurable by investors. And I think we d uh, I think probably what I think, which is a slider sort of more modified version of what you just said is in the next few quarters, I think C, E, S will actually be Better equipped to numerical point to while taking brands path is the value creating path for shareholders and for stakeholders. And the cost of getting distracted coron can be really expensive if you if you are, uh, a four profit company.

But and you also have the option to run your company, said, you know what, we care about this issue a whole bunch. We really care about human rights here. We really care about communications and freedom of speech.

And i'm gonna run twitter as a freedom of speech company. And everybody has to align behind that. You believe in sensing this is not the right company for you. If you believe in policing speech or you're uncomfortable with uncomfortable speech or speech that makes you feel uncomfortable, you you don't have to work at twitter. So it's not like you have to you know do what brand and say, hey, we are you to decide you to make .

a decision and be absent lip. The other are not really know what you're trying to do. I agree with you, and my only point is that you'll be able to measure the impact of unintentionally slipped and sliding around. Yeah first is picking a course and sticking .

to and let me ask you guys a question, if you're an individual and you want to affect social change, where is the forum in the theater that you think you would go to first? You spend most of your time at work and um maybe you don't have as much free time to go march and protest in the streets and if you did, no one would pay attention to you there anyway. So sax, like I know that you'll probably have a point of you on this, but like if you're giving a nineteen year old who has a strong point of you or twenty five year old who has a strong point of view about something that they want to see change in society, what's the right forum for them to have their protest, to make their voice heard?

I think that companies are a great change agent. I think we all do big valley critics startups. We all believe that star bs are great way to change the world.

Those starts have missions. Brians company has a mission around crypto and um expanding democratizing access the financial system based on cypher. Elan has a company that is accelerating the world towards sustainable transport and sustainable energy.

He wants to make where I possible over with what Jason said about free speech. I think elan wants to make free speech restore its place back in twitter's mission. So it's not like a separate thing is actually like should be very core to what they do. I think that there is a mission driven company out there for any Young person who cares about that issue, right? And if there's not if there's not a four profit .

vehicle .

you .

have the whole weekend you got me.

you write a blog post. What I don't think we would work is when you have people who don't who aren't really mission of and their mission is whether the current thing is. And so there is kind of like oscitation from the one for one current thing to the next current thing and every three months, an issue to shore that, that they care about more than anything else in the world. Look, there's not can be a company that can accommodate that sort of fictional activism.

Brian can ask you a question, are there um um systems decentralize systems that are kind of give individuals you know bit but you ve viewed interesting models that give people the ability to affect social change um in a way that kind of historical may have been more of held to climb where people can kind of aggregate resources and aggregated voice in a way that can can affect outcomes. And do we think that that kind of becomes a mechanism for social change in the future?

You make me think of those and things like that, but I think a lot of that is kind unproven. Like dogs are probably good ways to get a new kind of governance systems in place for allocating IT or maybe even managing a city or or a society. But I you know, I agree with David.

I think the best way to effect change right now today is for Young people is start a company or join a company. I think Young people are sometimes a little enema red with like becoming an activist. But I think fundamental that's you're sort of giving up your power by saying, like, well, they have the power and I don't and so i'm gonna speak truth to power, but I think know some there's context that historical with that may have been more true.

But I think today, a lot of people, they have more powered than they realized. And if you go start a company, which finally companies are essentially zed too, you can have lots of little companies all over the world. Um they're not like you know monolithic usually. And so if they start a company, they can have a good impact, I think, on the biggest issues out there.

And I think over time as well, the way that you have real impact is that you prove yourself in the market of ideas to have a high reputation and to be really reliable. And that is not something that you can just over power because you're nineteen or twenty and you're really upset by something. At some point, you're going to have to really invest your time and dedicate yourself to something that you really, really care about.

And then the world tends to move to the good ideas. So I think part of like what we also need to remind folks is that this is a hard like if you wants to make real sustainable change is hard. IT does not matter in which area you pick.

IT is just really hard. But if it's really worth IT, you should give your life to IT. But what I think people push back on is the more superficial forms of just virtue signaling and saying, yeah, in this moment I really want to pretend to care about something. But when push comes to shove, i'm not really willing to take the except I don't I think that most people find that very unreliable.

Yeah, I think 有 个 question for somebody who prompts to really care is like what you care about that's not currently in the news。 You know that's not like the hot thing that everyone is basically obsessed with.

Well, and then how are you changing IT and your plan to change IT over the next decade or two? Like yeah.

because IT takes IT takes IT takes many years to effectively create a startup. You know five years, ten years. And so if your issue dirce is, whatever s in the news, do not know to create that kind of change.

You know, I do think there are a lot of similarities, ties between mission driven startups and political movements. I A book, your service is a movement where I say, say that you know, good marketing is about advanta ism. IT is, has everything in common with what good political leaders do, basic.

They critique the states, quote. They tell you what the world likes, looks like today, what the promote that is, and where the world needs to get to, what the solution is and then how they are going to deliver that solution. So you can I think as a leader, a company be very mission driven.

You can um bring about that change you want to see in the world. You just have to attach a business mode to IT. If you don't know a business small, you're delectation donations.

Let's build on that brain. What is the stated mission today of .

is our mission is to increase economic freedom in the world. And if the people aren't me with that term, economic freedom is of economic term like GDP. But IT looks at the measures of different countries of the world and looks at factors like, are there property rights and forced? How stable is the currency, how easier that to start a business? Is the corruption and bribery prevalent and things like that in what's really cool about economic freedom that is basically countries with higher economic freedom um you know like singapore and the united states in ireland, they tend to corporate with all and the things we want in society, not just Better economic growth but even higher self reported happiness of citizens.

Better treat of the .

environment, Better income for with low economic freedom. You know cuba, north korea, sudan, these are some of the lowest they tend to have, you know even things we don't want like higher corruption, higher war, higher infant mortality. So it's basic.

When I read the bick in White paper back in two thousand and ten, I had this thought eventually, that was like, maybe crypto currency is this unique moment in history, this unique technology that allows us to inject economic widom into the countries, all of the world, especially now that more and more people have a smart phone. And we can basically put good financial infrastructure, good property rights, you know, global trade and stable currency into two hundred countries all over the world as one small group, relatively small group of people. And hopefully IT has all these positive downstream impact. So that's the mission .

of point is when you look at the regulatory environment, uh IT has been far from clear um what's allowed here in the united states. Uh in fact you had a pretty um strong rewarded uh tweet send back in september of uh twenty twenty one some really sketchy behavior coming out of the ACC recently story time. Maybe you could talk a little bit about the S C C S approach to crypto currency versus securities.

X R P comes to mind. And knowing your customer, you've obviously taken a very conservative approach to what tokens you put on the platform. And then you have competitors who are offshore who is kind of a yellow. Anything goes um what is the current administration doing right wrong and and what needs to happen here in the us too for us to be competitive encrypt while still protecting citizens from you know being bad holders .

yeah the big question. So you know I start up. You're always trying to thread the needle here. You don't want to wait too long for clarity because sometimes these things take five, ten years and so you'll just never launch a product. But if you if you're too aggressive, you can blow the place up.

And so what we always did in really days of coin basis, we said we want to go do what we think is going to be required in the future. Go get licenses. Go do K, Y, C, go due A M, L antibody laundry.

And so we tried to basically do the right thing, go and talk to these regulators practically. Now the us. Has actually been pretty forward thinking on this.

I'd say every year, we get more, more clarity. So coin basis, now a very regulated financial service business. I can go through the whole list. We have a license from the C, F, T, C, A federal regulator.

We acquired some broker deal licenses, which the c regulators we have money transmissions license were a bit license in new york is not just in the united states. We were in many, many countries around the world. So how do we get more clarity? Well, one thing i'll just say is it's actually Better for there to be lack of clarity than to be clarity that is a punitive or bad.

So it's good that there's a little bit of lack of clarity as long it's not curtAiling industry, but would be even Better as to have clarity that does provide that right baLance of good consumer protection. You make sure that there's a fair level playing field for all the players and then IT allows invasion to flourish. And so what's good now is that in the U.

S. Um a debian administration put out an executive order recently kind of asking all the different agencies in the. Ments to come back with a clear plan and they did recognize the potential innovation in crypto in that in the executive water, which I was really pleasantly surprised to see.

Um so what's happening now is that there was a little bit of shocking. I think there were the sec said he, these all look like security to us, and I don't think that's quite true. The cftc is regulates commodities es, while some critters are going to be commodities, I think here's here's what i'm realizing is that crypto o is going to be many different things.

It's not just gonna one regulator um doing IT. So you know think about critical currency like bitcoin. That's pretty clearly a commodity or or a theory um right like many of these are commodities that probably should be regular by the commodities regular or see the C F.

Now if people want to praise money for their company a security token that should be regulated as a security by the S E, C, that would be great to have more clearly on that. Let's have we we would love to keep working with the sec to make that a well trodden path that any company can go with. And that's how we get listed on and exchange like cars and we could regard as a broker deal or whatever license is needed.

Um separately, there are also some current currencies that are going to be currencies like stable coins. And you know maybe the treasury should regulate those. And finally, there going to equipped to currencies that are none of the above they're tor or something is probably shouldn't be.

And so the U S with various financial international bodies like g twenty and fat f and all these I M F, are probably going to puts some policy papers together. We're going to eventually end up with some kind of a test that says, is the script of currency a commodity, a security, a currency or something? Art else like artwork, and then maybe and buy maybe five more things we haven't thought of that will .

end up being in the future. What would you make the test for this? The utility token versus .

speculative .

security? Because that seems to be the one that's really hard for people to figure out. Ninety nine percent of people are buying a token on coin base because they want to see IT appreciate and they want to see a game value.

And only one percent are using IT for the actual utility of IT. Is that then a security is IT by the percentage of people who use IT. How would you as the the you know the leader in this industry, you know, uh actually to find IT, which your definition yeah so I think.

look, I don't want be pressured here. I don't I think that we we put some policy papers together, but I don't want to it's the policymakers jobs to come up with the policy. So I don't want to be anyone's toast.

But that being said, I think there is some existing case out there like you know the how we test is something from a long time ago, we could probably build upon that. So how we test kind of says, is this an investment in a common enterprise with expectation of profit and that would make IT, that would make IT a security. So there's a lot of pieces to that.

Is that an investment? Well, if you're just giving the tokens away, I guess people aren't investing, right? Is IT a common enterprise? Well, maybe if it's decentralized and you don't actually control this entity like um you own you know less than a majority share or something, maybe then that's not a security right? Or if there's not an expected of profit, people are using IT for something.

So every start up right now in the space has basically had to hire bunch of expensive lawyers to go to apart these old, old rules that something were created like the one thousand and thirties before the internet, every everything, and try to understand where they're falling. And so I think building upon that, how we test, but IT could be something that, that includes a commodity definition, something a currency definition. And I think we should basics on us and then the other gypt companies out there to go hire a really smart layer who has drafted legislation before and a bill and actually get a draft of IT out there.

And then we can start to circulate IT with various policymakers and get their feedback. And maybe they take IT run with IT. Maybe they say, thanks.

we've got IT from here, but that's our next step three b go with the how we test um or do you have thoughts on how to how the government here in the U. S. Should say this is a security.

this is a utility token? I think what the E O did was basically kind of give people enough regulatory safety in the sense that something reasonable will probably happen in the reasonable futures that people could keep building. A my big take away in the last sort of like nine months is that this thing is now too big to fail, and the government basically has to just find a reasonable framer to enable something.

Because the old the real big issue, Jason, would be if they did something crazy and now, you know, retail would just get completely smoked because I think they are the only, I think congress has to basically pass a sensible set of legislation that clearly demand actly. What bryant said, this remo stuff goes to the C. F, T.

C. This remo stuff goes to the S. C, C.

Now you guys go and implement, and if left their own devices, those two will use these are cane laws and try to and negotiate amount each other who should be covering what, but they can't arbitrated decision and so as a result, nothing nothing reasonable will happen. Um so I think that's what has happen. Congress has to get together and write something reasonable.

Here you are building companies at the production board every year. You build a couple of companies. Uh, you have to go through security law. You have to, you know, raise money from a credit investors. You do IT in the traditional way um but you must be looking at crypt o saying, well, I could launch cana unique whatever project and have a token associated with that and raise money and raise a globally or started dw, what do you think is a reasonable way for people like yourself who are playing by the existing rules to be able to embrace this new technology and these new platforms and paradigms? I think should the government .

handle IT well as some perspectives important, which is, you know, go back to kind of the nineteen and twenty in the united states, and there were two thousand and twenty years, folks would go around and tell tall tales about interesting business ideas or business concepts or things that they were going to do if they got a bunch of money from investors and investors gave them money and they didn't actually deliver on what they said they were gonna, and they got swindled.

And there is swinton story after swingle story that you can read about. And we saw this even with the I C. O craze of a few years ago, right, where people tell the tell tale. You expect some value or some asset that you're kind of putting capital into that will pay off over time. And there's a swindle behind IT. And that's really the origin of security laws in in large parties to protect the individual from being swindled, to protect the storyteller that can take money away from people and figure out how to kind of rip them off um and create A A set of laws that the government commit in force through the risk of imprisonment against doing those things. The chAllenge becomes when there is this more thought ful way of running capital markets on the other side.

And how do we actually resolve to some medium ground here? I'm not sure that you're gonna have as quick of a resolution to say, well, let's go back to the old way where anyone can say anything anyone they want, and anyone can put money into any project that they want because the role of the arbiters is to protect those from being taken advantage of. If eighty five percent of those projects are great and eighty five percent of the investors are intelligent and know what they're doing, it's the fifty IT doesn't matter.

It's the fifteen percent that the government is here to protect, and that the reason we have an institution called the government is to create systems of protection for those who are otherwise unable to protect themselves. Now a free market liberty ia might say we should have added, but the problem is we all have a we all feel as a group at some point of moral obligation to protect those who run protected. And that's why these systems emerge over time.

And that's why these institutions exist. That's why the government exists and is why the security laws exist. And so it's difficult to assume that we can just go back to the kind of you know uh prototypical days of, you know let me raise money for anything with any story without any regulation and assume that it's gna work at well, because all it's gonna is a few of these stories before you have folks standing up in congress saying, this is unbelievable.

We can let this have anymore. Let's go shut down the minors. Let's go shut down the data center. Let's go after every asset we can. And by the way, they will cause look at what just happened with russia, the way that governments can kind of coal s around digital systems now and make significant change and blockers from happening.

I don't know if there is a world where we can assume that even with the free and open internet, that these systems can truly be decentralize given the reach the governments have. And IT is gonna in my mind. I said this in the past.

Part of the great tension of the twenty first century, socially, is the decentralized systems that really want to chAllenge what we believe to be a lot of overreach that happening by governments against the government's believed role to be protecting those who who need the protection. And so I don't know. That's a very long winded moral statement. Well.

I mean, I think it's a very interesting when brand, what do what do you think of this?

I get these are complicated issues, right? We want to baLance protecting people, but we also want to not have the government be in a position where it's picking winners and losers. And so you know you just because something is legal doesn't make IT make IT a good investment.

I guess you know you have you could have owned netflix last week or something like that. You might talk about that a minute. But look, I think we all want to get rid fraud, right? So if you commit fraud, meaning you lie to investors, then that should be a crime, right?

Like, I want to I want to work with anybody in government to go, but that make that stuff not happen. The danger is if we ever get into a place where we say, well, only wealthy people can now invest. Because somehow there's an a credit investor test that's inherently exclusionary.

I I don't like the credit investor law. If we ever get them to a place where the government is saying, know what you have to you have to have X, Y, Z criteria. And a person with this many years of experience on the resume.

And then now we get into like the government sort of designed by committee to pick winners and losers. And that's that's inherently flawed because a lot of true breakthrough innovation, they look like bad ideas at the beginning of the kind of things that a government body would never invest in or put money into you, right? So that's the inherent attention we have to worry about. We're protecting people, but not putting the government in .

the role of picking winners and losers actually have any input on this sort of framework. You are investing traditionally in stocks, but you have also um allocated some money to multiple in capital and other folks are are buying tokens and then you have to distribute them and you have to deal with these downstream legal issues. How are you dealing with them? And then what do you think is a is a proper framework here in the U. S. For protecting consumers while allowing innovation?

I think the big picture framework that we is correct, which is you this economy between security tokens and utility tokens. So security tokens basis is a issued that is basically like a share of stocks of a fractional ownership in some business doesn't really have a lot of functionality associated with IT. That's kind of an end run around the security of laws to between securities.

On the other hand, though, there are a lot of tokens that are issued um as part of creating a new kind of technology network and those tokens of real functionality. And if you were to subject them to security laws and impose K Y C in a creditors, you have to go through all these hoops just to add to your wallet. IT would destroy the potential functionality created by these systems.

So where there is really utility like that, I think the government should Foster innovation by having a lighter hand. Don't subject them to security laws. And really, what entrepreneurship in the space are some safe harbors, really clear lines around what would trip them up and and have them cross over from utility token and security token so they know to avoid those things so they can conductivity on their core project.

I think that's well said. I I have a three ideas brand I want to run by, number one, a sophisticated task for investors in crypto and in startups. So just like you get a gun test, or you know your test drivers' license, we come up with a way for people to become sophisticated.

They take a simple test, maybe to whatever number of questions. And then second, maybe some safe harbors around the scale of a project, or any crypt of project under ten million can be an experiment. And you it's kind of like no need to have rules.

People just have to sign a disclaimer or waver. This is an experiment. Then things maybe between ten and one hundred million, you implement K Y, C, and maybe throttle the number of.

are some good ideas for when you're time out. The bucket of security tokens. If you want to start imposing those kinds of rules on utility tokens, you can have a functioning network with like all these sort .

of fiction all on. But if then if the project gets scale, then you just have to file a little more, have a little more K. Y. Then finally, the founders of these projects, they can just launch them and disappear. They have no director like duty to the project. Do you think there needs to be something similar to directors in corporation? So just three ideas there that i've heard other people talk about or I ve been thinking about pretty.

I like actually, I mean, the nice thing about a driver's license test for financial literacy is that IT doesn't measure how much money you have. So IT would allow smart you know aspiring people who didn't start a lot of money um like a lot of us to to also be able to participate early on in these, which would be really great. Um yeah I think and you know some kind of a safe harbor or sandbox provision, I think this is a really great idea well and lastly, yeah I mean, if you were able to um i'm basically I think you are three ideas are great, so are good.

I think they are good for securities. But I mean, if you just want to buy gas on a blockchain to run your program or your user of of a application that's being wrong, block changes, want to buy a token for gas, do you ready to go through all these.

like K, Y, C type hoops? Hopefully not, especially if it's I an s APP or die s. Are this huge art of innovation that, you know, you ouldn't want to like?

Imagine if the U. S. Government has said you need to come in to register to make a website or something like that. That would have been a terrible thing for innovation globally.

So, and you have to remember to that, a lot of this is going to flow to the country with the most permissive laws. So a lot of governments around the world, not the most permissive, but the most well structure that baLances all all the problem. Maybe clear. Yeah.

the thing that I would just add to this, those that there's a lot more than just A M L N K Y C guys that has to happen for this to be a functioning system. We average, I think, one hack a week in the cypher ecosystem, right? This being stock a happened. But just a few days ago, that was almost two hundred million dollars. Last month, axy infinity, what was at almost six hundred million dollars.

So there's a lot of stuff where in the in the Normal security world, like if you are uh a director of a company and you don't have these adequate procedures and by you live this everyday where there's like a not a committee and there's somebody that cheers audit that has to go and think about information security and blab a blow. And all these disclosures have to happen insurance, but all these disclosures are really about actual work being done. If you don't do that work and then you get hacked, you're actually liable, right?

There's no version of this in the world where IT is a little bit of the wild west. So that stuff also has to exist. This is what I but I mean by I actually think congress, this needs to kind of like update the set of laws that actually allowed the C F T C in the S C.

To do their job, to include this and say, now go and incrementally figure this out, because even if you get the A M L in K Y C stuff right, then there's all the other stuff where you, these folks that had their basically, you know, all this, all this value deprived, who do they go to, to try to get the money back? You know, in in the case of axy, I mean, this is an incredible thing. But like, you know, they went to and and and they raise the new round.

They're like to make everybody whole, but that's insane, right? That's like you can't expect that to happen with every single project. Every single company is going to be possible.

Yeah, but I think a couple of things will happen. I mean, in in the custodial world of gypt o they'll be more regulation early is right? Like we have a new org trust company that we get audited for various um control environments and safety and things like that.

But in the south custodial world, everyone is going to start to be in control of their own assets. And I think that you know the tools are getting Better and Better for that, like the social recovery of keys, if you if you forget your password, these kind of smart contract wallets. And so you know both are growing. Um and I think in the future, people may actually start to take more responsibility lies restoring their own a wealth if if they want to choose to do that and that allow them to kind of access a broader ecosystem of of things.

Let me ask question right uh everybody seems to be very concerned about tether. You, I don't believe, participate in the tether ecosystem at coin base as I correct.

Well, we're not participating directly, but we support many assets as people want to use. And there that is one of the ones that we've supported. People deposed, withdraw and .

they've been um banned in new york. They've had uh regulatory action in canada. Uh people are concerned about their attestations or black of clarity on their commercial paper.

What what do you think of these stable coins getting very big? And maybe U S D C seems to have a pretty tightly um covered, but there's all these concerns and regulatory action against other. Is that A A big nothing burger? Or does IT concern you that there's a lack of transparency into their holdings?

yeah. So I would say you know some of the early stable coin efforts definitely didn't have all the government arrow from a reputational point of view. Not i'm not an expert on to the reminder standing is that there have been some investigations and enforcement actions which have required them to go in there and clean up some things.

And um you know our digital asset listing group kind of look at a lot of this in depth and made that judges called that where they where they were and where they are now. But yeah, I do think that we're seeing the emergence of new groups like you know U S. Decline is is one of those that I think has some Better controls around IT. And there's actually a bunch of um set stable coins now that are decentralized. You die and france explain .

what that isn't why it's important.

Well, so okay, so you really comes down to trust. I mean, you know you can trust, uh, you can decide to trust something like U S, D, C. That has of audit requirements and big four counting firm.

Come in and look at IT things like that. Or you can look at smart contract code and know thousands of people around the world can look at that. And there's an inherent bug bounding if you find an issue there and if IT hasn't been found that you can start to think about trusting that.

Now I think stable coins like like die and and others, they've been able to create these relatively complex systems that have sort of the one asset which is intended to be stable, but another one, which is sort of the collateral. And you could imagine various black song events where you know the pig would get broken and things like that. But that really hasn't happened yet and dive and it's shown a lot of have been very impressed bite there.

There's one actually one other um type of coin, which I think is even maybe more interesting than just wrapping a fiat. uh. Like a dollar or a ruby or something like that because Frankly, you know, the dollar is seen a lot of inflation. You guys have talked about IT many times on the show. So do you really want to have a stable, stable coin that is playing eight percent a year?

Exactly there.

There is some new coins coming out, which i've been really excited to see, which are I think ology calls them flat coins, but they're basically looking at the consumer Price index and they're trying to the basically have flat purchasing power and assume that the dollar and various special Prices around the world, lexi, you going to go through more inflation? That's a pretty cool idea. And you can do that a creative way on a blockchain by having various oracles, which are these sources of truth. And if enough of them, you know, fifty one percent of them tell you the C, P, I, we think, is this this year, I can kind of keep, keep pace with C, P, I, which is a really cool.

Thank you so much for brian on strong for joining us for the first hour and now will come on with our network discussion brians. But he was a very honest. He is a lot of questions very honestly.

and he's a super fan of the show. That business is a great business.

That business will be a great like somebody.

I really think that the chAllenge of brian face year and a half ago and the policy decision he face is now being faced by every CEO across america. And that's the broad relevance is, you know, what are they going to do? And you see this this quote by the mcDonald E O, the former cdl CEO at rent on wednesday said companies have no business being in politics and has launched a new advocacy coalition to fight, vote corporate politics. He said, corporations have no business being on the right or the left because they represent everybody there, and their sole job is to build equity for their investors.

Wait, the people who make flay of fish are not at a chain in on ukraine anymore.

Yeah, but think about that because that actually is a pretty radical .

IT is a line in the cent. Yeah, he's standing on brian sheldon. That's be honest.

I think you to see your mcDonald, I mean, that's like a traditional fortunae of under type corporation. And they're saying, like we're not doing this anymore. Well.

you know what? They were more than willing to do if it's scored red the points, but they realized was it's going to be never once you engage that you're never going to be able to disengage remit. All right, let's pick IT over to netflix.

They reported a drop in net book ribes for the first time in ten years, uh, and the stock dropped thirty five percent. Market cap from one hundred fifty five billion to about ninety eight billion, according to bloomberg. As of wednesday, netflix was the worst performing S N P.

Five hundred so far in twenty twenty two stock, sixty three percent year to date, admin, uh, dumped his entire stake and booked day four hundred thirty million dollar loss and a large part of this was because they didn't hit there two point five million or so uh target uh increasing subscribers and they in fact lost all seven hundred thousand russian subscribers as part of a boycott. Um uh russia because of the ukraine war, what do we think is happening here? Is this a bell weather trim's for something more important going on? Or is this just a netflix s not executing well?

I think there there's a macro thing and then there's a netflix specific thing. The macro thing is that we are learning the broad sweeping impact of apple's privacy changes, in my opinion, new first sight flew through into facebook earnings and basically them saying, this is gonna be really tough.

And you had netflix, even if you add back the russian subscribers, basically spend almost six hundred million dollars in the quarter on customer acquisition to effectively, they would have generated five hundred thousand subscribers net of turn right, which was still about a million and half and where they needed to be. So the point is that I think reflex in some ways was a little bit of A A enery in the call mine for the the shrinking, the effectiveness of online advertising. And I think that's why you then saw two days later, facebook got taken to the wood, had in two days was down nounce down, I don't know, fifteen twenty percent.

Google, I think it's been down a lot today, is just greeting, absolutely smoked relative to the market. So that's the macro issue, which is I think um it's really hard for these ads to be as effective as they used to be. And it's only going to get worse because google is also said that they're going to implement a lot of the same versions of what apple did inside of entry.

So customer acquisition is going up. So if you look at them, all the companies that have to live and die on cake, it's going to be uh an expensive um road. That's the macro thing I think that not enough people are talking about.

I think the micros inside of netflix is that you know people turn out of a service when there isn't enough value. And I think that's the most basic explanation of why so many people are leaving netflix is that it's not that valuable. So when you're spending twenty billion dollars, you're on content, but people more than ever are leaving the service, you have to inspect.

How much are you really spending in these areas in what is IT actually creating in terms of like library value? Disney plus, I think, has gotten has done an incredible job in a much shorter period of time. Apple, after only a few years, wins the first outskirt of any of the streamers, right, beating netflix, eval theyve been in there. And when you put all these things together, um I think networks probably has lost a little bit of the script, but they're also suffers from a really micro o headwind, which is the advertising businesses broken.

I would imagine that like total subscribers to streaming services and if you were to add up total subscription service dollars is probably growing a lot. sure. Netlist is relative share is going down because the quality of the competitors is improving so much.

Even companies that are not able to deliver like CNN shut down CNN plus this week after investing three hundred million dollars in trying to build up the service. I mean, folks are putting serious dollars behind these projects. Um and so the competition is fierce and you've got deep content libraries behind them.

I personally think H B O max is the best screaming service now awesome. Followed by disney, followed by maybe a mix of amazon, netflix and um you know uh prime. And so like netflix is relative value is going down because there's so much other content.

When I kind of thinking about what to watch, i'm looking at disney plus. I'm looking at H B O max and i'm like, hey, you know what should I watched and hike? And then I look at net fly.

Netflix doesn't have a monopoly in content anymore. And so when i've got limited dollars, I I person I look at this after we were texting about IT. I subscribe to seven streaming services right now, and if I didn't care much about how much I was spending month, I would probably got three of and that hundred.

Yeah you you also then highlighting the second, I think macro thing that is, is actually equally important, maybe even more important, which is you know the the first rule of capitalism says that excess returns will always get competed away. So you know, netflix had the run of the place where they were an effective monopoly. Now when everybody I woke up and got religion, they decided to invest. And they have created some really compelling content. And so all of those returns will now get spread across seven, eight or nine competitors, which means such as by definition, mathematically netorks can't when the way they use to and .

the network advantage in the streaming model is content and consumers. So you have Better content. You get more consumers, you but you get more money from consumers. You spend more and content at some point, you get diminishing returns in that network model. And now we're seeing those diminishing returns hit netflix. They haven't built advantages in search and discovery or in other or in social sharing or other features into the upper into the service that will give them more of the lock in value. Because all i'm doing is buying on is.

is watching the also three times there also three times the Price of disney plus and other services. So they are in the competition space. People are starting to look at and go, is this worth, you know, a disney and in nbc? Or is this worth a hulu and in nbc, a shrimp service? Sax, you had some dead.

Well, mean, I grew with that. I would just add one factor to this, which is what elon said, which is he said the oke mine virus is making that flicks unwatchful. I mean, the quality of the programing has gone down.

I mean, reflex used to be really good. I can't think of like the show now that I watch on netflix, and I do watch israel max right now and disney plus because they got some shows that I like. So I think somehow the programme people are netlist have gotten ata touch yeah.

Are they pandering to that audience sex, you think? And you know similar to kind of how disney ended a panda. And do you think that there's broadly this kind of media problem of trying to panda to the wrong audience?

I mean, they almost three shape off. He is the number my far, the number one comic and you in american comedy. And they absolutely would have thrown chip out off and done what a lot of those employees wanted if they didn't have such a big deal with him, if he wasn't such a big deal.

Now I think they held the line preta.

Lot of a lot of I they reason heard .

the concerns of their employees and reasoning yeah at the team .

IT show IT showed IT but yes but what I look yes, maybe. But what i'm saying is that that episode reveal that the people are doing the programing and reflex. Obviously, I like they're not like I think they've lost touch with where most of the country.

I will give a shout out. I have not watched a series on netflix .

in probably a year.

No, but I will give a shota to never have I ever which min dicing created. She's amazing and that series is incredibly funny and points and cool and awesome. But outside of that series, I cannot think of a single reason why I actually pay for netflix.

You get let me ask you guys the question. So going back because you know, there is the whole .

disney max. However, oh my god, 这个 the whole industry .

is suffering this problem。 Remember the doctors, we don't even watch anymore.

This is the question I have for you. Do you guys think that there is a difference culturally in the management of the media company? So let's go through them. Warner media. Disney, netflix, amazon.

And do you think that that cultural difference may create an advantage and success? You think that Warner media is Operating H B O max differently because they're culturally different? Culturally different?

Has oil culture different for shock for years?

They got .

a few good shows. Now it's more .

they of the director, the vision of the writer, and taken a lot of risk. When you hear .

that H B O logo .

I was going .

to be until the last couple of years, I was like pretty business business.

But I mean, I two three books point you know that netflix.

I would say I would say disney has marvel and that's why the marvel and .

star wars and and that's kept .

them extremely really much of is the a rematch ability of their content. I don't know how many kids your kids have all watched moana. My kids have watch. I've had to watch on .

a hundred and seven .

times already.

Are welcome.

Yeah welcome. And the and the star wars content, as you guys know, you could reach ch star wars and marvel. I mean, like the the content is very different and right makes our movies too.

You can watch a hundred times over. That's very different content. H B O max is thrilling and engaging and doesn't feel like it's panda.

H B O right now is Operating at the next level .

five years ago. So but we're not talking .

about the past. We're talking .

about new flix went with these very big deals with big celebrity names. And you know, I think they just lost their uniqueness in terms of risk king. So they went with adam seller.

No offence to adam sandler fans, and they're doing a lot of reality T V now. And if you look at hulu like dope sick and then the drop out, if you look at apple TV lassa we crashed. And then you look H B L max with， can .

you .

magine you .

never.

Risk H, P, S, like for adults, it's paid and they're gona take risk. And disney doesn't can touch that. I think who lose a sleepers?

I mean, who is great? Have you guys watch the series called the great on you? No, it's about Catherine. great. IT is in diable.

I, I, i'm watching severs right now.

That's amazing. It's like, really like.

by the way, I started paying for youtube, T, V, so that .

I could get streaming cable.

I one, would you have youtube without ads?

yeah. I youtube is .

such .

a good time.

how do you do that? I recall youtube bread or premium youtube premium.

It's nine a month. You you afford.

You see no ads on youtube.

Ask your system to ask your system to sign you up and and you will have to watch as on youtube.

you functioning, not able to use the internet.

I actually have people to do for me.

Do they type your email passport for you?

Like does this work?

And there there's a first x bt on IT. If I can get them out.

he's got the VP of product from question, who lives in a little shack in the house next door, who comes over and uses the remote for him. Thanks for tuning in, everybody. For the dictator himself, the salt of science, David sacks, we have a jam impact agenda.

My god, the suit is going to be amazing. But just do a little weak caio of what's happening. Um we've got some pretty great speakers, ryan Peterson, a silver clear dal uh, brother, uh, palmer, lucky is coming.

Ell's coming key thread. Ys coming. Jan, steam urban.

But do you .

say you just coming on website .

on the .

coming of paypal and .

we've got Green, Green automat today.

we are coming yeah, that's going to be amazing. And so it's going to be really great all at everybody. We ll see you next time on the only in podcast .

by bye your.

World, man.

We open sources to the fans and .

just got crazy with.

You should all just get a room to have one big, huge orgy because they like, like sexual attention.

We should get more.