Raoul Pal: The Journey Man
00:24:58 · Micky Malka, Raoul Pal
[00:24:58] S1: I think it does. I think for the bigger projects and the bigger things, I think it does. And I think we're still in early stage experimenting everything around meme coins and what what are they and AI agentic coins and what are they, and that's the whole new new thing. But everything on top of that is just... They're just tokens. What is Equity. Yeah. [00:25:19] S0: One of my thesis has been, and I just wanted to bounce this off you, is that that, you know, I think of meme coins as just a speed test, you know, stress test of instant capital formation. And you can... Before, you'd have to build a business, go to a v... Go to a bunch of VCs or angel investors, you know, beg them and everything else. And now it's like, if it captures attention, you can coalesce capital in seconds globally through a distributed network. How are you thinking about how disruptive that all is to the VC industry or the investment industry overall?
00:25:19 · Raoul Pal, Micky Malka
[00:25:19] S0: One of my thesis has been, and I just wanted to bounce this off you, is that that, you know, I think of meme coins as just a speed test, you know, stress test of instant capital formation. And you can... Before, you'd have to build a business, go to a v... Go to a bunch of VCs or angel investors, you know, beg them and everything else. And now it's like, if it captures attention, you can coalesce capital in seconds globally through a distributed network. How are you thinking about how disruptive that all is to the VC industry or the investment industry overall? [00:25:54] S1: I think it's super disruptive. I I think most VCs don't understand what's coming. Even for us. We... I'm I'm not a 100% clear. We know exactly what it means. But I I am shocked on the velocity of capital formation and attention that you can get. It's... It has... It's it's never been faster. You and I have met people that are are doing this full time, and what they're building is insane and how they get attention. So I will say we're not there yet because we're not at scale. It's, there's not a great, the early projects have not been great communicators on what they're doing. They've been a lot more of giving attention but not knowing what to do with it. I think we're gonna start to see a generation of founders who are 22, 23 that actually are so crypto native and so AI native that they will take it to a whole new level. So I'm very bullish on what's coming there. Extremely bullish.
00:26:54 · Raoul Pal, Micky Malka
[00:26:54] S0: Yeah. I think I think it's gonna be super interesting. We could see it again. There was the market stand of ICOs. We kinda tested it there. It failed a bit, but we got some learnings. Now we're doing it at scale because Solana and stuff is able to, you know, to move at this kind of speed and scale. And out of this, I think, will come the final result, whether it's, you know, in two years or three years, but it's coming. And I think it's it's incredibly interesting. The other thing about the bet that you have is it's not just about fintech because the whole smart contract platform is basically the feature of the Internet itself, whether it's digital ID, all of that. So the bet is kind of twofold. It's the financial system bet, but really, there's the whole of web two to web three conversion. [00:27:39] S1: That's correct. And and the way we're about it is that if you ask me what's what's the what's a big one sentence way that we're investing for the next ten years is money until now was fine with no context, with no knowledge. But for the next decade, money without knowledge is not money. It's not valuable anymore. [00:28:02] S0: What do you mean by that?
00:28:02 · Raoul Pal, Micky Malka
[00:28:02] S0: What do you mean by that? [00:28:04] S1: I mean that if you don't attach, if money has no knowledge of what it's doing, it has no smart contract, it has no rules, it has no decision tree that was made to move from one place to another, it doesn't hold that information, it's not valuable. It's still money, but it's not as valuable as money that has knowledge. So what I'm saying is that the whole infrastructure grid that powers money, it's not designed to carry information packets with knowledge alongside money. It's being completely separated. And we think that in the next ten years, as we have more agentic experiences and computers and machines are doing much more of the work and the decision making, the knowledge part with the money part, they need to be combined. So we are spending a bunch of our time figuring out what that looks like. It's gonna be invisible for the user. Its infrastructure is not consumer facing yet, but you will see it in ways that, it may look to you as personalization. All of our founders for the last ten years promised personalization of of our money. They never deliver. Why? Because we have no way to attach knowledge to money. And in the next ten years, we will. Like, today, if you go to a great example is if you go to ChatGPT and you ask them, tell me a restaurant I should eat in Toledo, Ohio because of everything... That was [00:29:31] S0: a truly terrible experience, but we haven't talked about that.
00:29:31 · Raoul Pal, Micky Malka
[00:29:31] S0: a truly terrible experience, but we haven't talked about that. [00:29:34] S1: Because because of everything that I've asked ChatGPT about my past, they have better knowledge of what kind of food I like. So the recommendation will be very different. That is search with knowledge. Right? Now, let's do the same with money with knowledge, it will behave extremely different. And that's where I think the world is going. [00:29:53] S0: So you recently sent me the thesis that you guys are building at Ribbit about tokenization and how this all fits together. Because I see a lot of people talking about AI and crypto and kind of forcing a narrative. But I think your narrative was the largest, most cohesive understanding of what is really happening. So talk a bit about that tokenization context. The idea that I think in the piece, it was talking about rendering information for computers was a really big concept. So why did AI start coming into your portfolio? How are you thinking about it in context with all of what we've been talking about?
00:30:33 · Micky Malka
[00:30:33] S1: Yeah. So we tried to run an essay that didn't mention the word AI as much because we think we're all... AI has a different definition to all of us. We ask 10 people, what's AI? And you'll get 15 answers. So basically, but the underlying, what pins everything, is tokens. And if you're in... Are listening to your podcast and you are listening to Google's earnings calls, they talk about how many tokens they do a month, and they brag about how they kintuple the number of tokens per month that they process. If you listen to the earnings call of Visa and Ryan's the CEO talking about it, he talks about tokens. And yet, they're different tokens. And if you talk to energy compute companies, they talk about tokens. And you've talked about energy should be measured by the power of of of of of of of the intelligence... The output of intelligence that it creates, and that's a token in many ways on on a measure... On a unit of measure, which is different than just gigawatts. So society is moving to measuring everything in token, but it has a different meaning. So we we we took that principle and said, okay. What does it mean? It means that we are... All companies are token factories. You have a supply of different tokens that you need to do something. You create something new, and you have an output of tokens that are given to somebody else to do something new. And if you think like that, then you can say, okay. If I'm a factory, what tokens do I need to do what exactly? And we basically categorize them in four different buckets. We call them the identity tokens, the tokens that talk about you, have information that is only you will know about yourself, your personal name or driver's license or your ID or your bank accounts or your credentials to banks or your health care records, anything that is about you. Those are needed in different ways depending on the kind of factory. You have what we call the knowledge or expert tokens. These are tokens that are provided in a service that you don't know yourself, but there's an expert that doesn't. It could be your wealth adviser. It could be your tax planner. It could be your travel planner. Any kind of expert knowledge token that you can use. You have the asset tokens, which are the tokens that are used to actually deliver the goods, the exchange of goods. And it could be stablecoins.