Invest Like the Best with Patrick O'Shaughnessy
00:28:39 · Micky Malka
You have money getting tokenized in ways that we've never think from crypto rails, token existing rails, to the way all of these aspects of smart contracts are working. And you have electrons, which are becoming more and more decentralized, which are powering all of those at the same time. So this moment is probably the most interesting moment of the last one hundred years, in terms of the opportunity sets that is going to come from it. So when you take those things and you put them all together, you say, okay, what does it mean? It means that knowledge, money and power are interconnected in ways that allows you to create use cases that we've never seen. AI agents are gonna need access to money. AI agents are gonna need access to the crypto rails to do that. So when we think about the grid as a concept, we look at it and say, Oh my God, how do we invest into this? How do we think about if you buy that vision of the world, which we have bought ourselves into, and then you start to ask a question, how do you deploy capital in it? How do you think about the opportunity sets? What needs to come first? What needs to come second? What are the use cases that we should expect to see in ten years, in five years, in one year, that will show that this is going the right direction? That's what we mean with the grid. It's probably the most exciting opportunity set that I've seen in my life.
00:30:05 · Patrick O'Shaughnessy
[00:30:05] S0: How do you dig into aspects of that? I mean, it seems correct that everything you just laid out means that the world is already different and changing so quickly around these dimensions. How do you go from that insight down to tangible opportunity?
00:30:22 · Micky Malka
[00:30:22] S2: So I don't have a great answer. There's no light bulb that I can tell you, hey, this is what we're doing. But there's always a but. First, you go from the macro and then you look at the micro. The most smaller aspect where I can see this happening, it's actually in art. So to me, artists are called artists because they are always ahead of society. In many ways, artists always tell you where the world is going. That's what they did. The best sci fi films when we were kids shape where we are going. Mars. The way we think about lens, I was talking to Matt Vaughn the other day with The Kingsman. He was saying, I have the meta lenses on my movies ten years ago. Like, all of these things, they'll tell you where these things are going. And if you follow art today and you see how they're using all of those aspects at the same time, you're seeing artists using AI in different ways than the Silicon Valley engineers are using it. You're seeing how they are using NFTs as a method of distribution, of ownership. People will read in the media, NFTs are dead. I think they're wrong. When you really look at how they use artists are using it, it's just different. It's... And the way they're using power and knowledge to express dynamic aspects of the world. So if they can do it in art and they can express it visually like that, where will it take off in businesses? So then we sort of peel that and say, okay, what next? What are the first variables that we need? Do we need to figure out identity? Is identity a big component of society solving a lot of these things? Because right now, we have ideas, but we don't have an identity that allows us to connect our knowledge to ourselves, ourselves to our money, ourselves to the grid. So can we go and find stuff happening there? Can we find the grid on financial services that will be decentralized? What will be the way it will operate? How will AI agents speak on your behalf and move money on your behalf behalf and sign contracts? Because a piece of NFT... A piece of art that lies on an NFT, it's a smart contract. Now imagine an AI agent using that on your behalf to do something. What would it look like? So when you start to go down that path, we try to figure it out. What are the use cases?
00:32:44 · Patrick O'Shaughnessy
[00:32:44] S0: It's funny that we're having this conversation behind us is this piece of art that is radically changing on the fly generative art based on what we're saying. So literally, it's so fun for me to have this conversation literally behind you. I can see the topics visually on the screen in this remarkable way. And it does feel sort of like seeing the future. It does feel like everything is going to be a version of this that reflects back on the individual. And that ID, digital identity, is a key linchpin of that. Why don't we have it yet? What do we need it for? Why is somebody that nails digital identity and what that means to you so important for what might be possible in the future?
00:33:27 · Micky Malka
[00:33:27] S2: If you listen to OpenAI when they do their presentations or you listen to the earnings calls of Visa, the payment rail network, or you listen to Mark Zuckerberg at Meta, anybody's using an analogy called tokenization or tokenizing data so they can compute, they're tokenizing payments, they're tokenizing other aspects. I think tokenization is still misunderstood what it truly will become. And if we don't tokenize your identity, you will not be able to connect to all of these data sources. You will just not be able. It will mean a lot less. The iPhone is a token instrument. It has all of those identities sitting there, but they don't talk to each other. They're siloed. What would happen if Apple allows you to really use it as an identity, not as an ID? What would that do? It has the most knowledge that you need to do. Will they win? Will they be allowed to win? Will there be somebody else? Will there be multiple players? So I think that if you don't have this, you're not gonna be able to connect to the grid of knowledge and to the grid of wealth in the same way because you will not be able to augment yourself the best you can. So that tokenization aspect is number one. And a proxy to this, Patrick, is what happened in India. We're very active in India. We've been there for a decade. We've done a lot of investments. And when we got there in two thousand thirteen and fourteen, the first thing that they built was the Aadhaar system. It was an ID national system. It was the first time ever a country, even at that scale, created fingerprint to 1,200,000,000 people identification. Like, you needed just your finger to do anything in India. When that was put together, their identity system now has OTP, it has multiple ways to connect to it. Then they turn on the payment grid called UPI. And then they turn out the e commerce grid. And then they turn out another grid in transactions between physical stores and B2B. It is all logarithmically growing. If they hadn't solved the first piece, it wouldn't happen.
00:35:39 · Patrick O'Shaughnessy, Micky Malka
[00:35:39] S0: If you think all the way back to your original investments in the crypto ecosystem, you're probably the earliest of the well known investment firms that was involved in Bitcoin very early and then tons of businesses in that space. What has surprised you about how crypto has evolved based on your early expectations in 2011, 2012? And how do you think about it today? [00:36:05] S2: We started doing this. People looked at me and said, what are you doing? The only people using this are drug lords and money laundering. But yes, if you read history, money always starts with those use cases. It always finds low hanging fruits, but then over time, it just gets better and it gets clean and bad actors move on to something else. And I think that's what's happened here. What is blown away if if you ask me in 2011 or '12 that in 2024, in the presidential election of the USA, the topic of Bitcoin as a reserve for the country will be a debatable aspect that candidates will be talking about. I will say no f way. Or that we had a listed ETF in the same year that the SEC chairman said [00:36:55] S0: Never. Never.