Invest Like the Best with Patrick O'Shaughnessy
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.
00:36:55 · Patrick O'Shaughnessy, Micky Malka
[00:36:55] S0: Never. Never. [00:36:56] S2: Or that countries around the world have bought it as a reserve currency in their balance sheets. It's been only fourteen years or fifteen. It's insane. I mean, gold has been here for thousands of years. And yet this instrument, this technology, this aspect is doing it in 15. I cannot imagine what the next fifteen look like. It's just I'm more energized. When I grew up in Venezuela, my mother gave me a little note that I wrote when I was eight or nine asking the zooferry to give me dollars because I didn't trust my currency. This is before the first maxi devaluation the country had in thirty years. And when my kids were losing their tooth, I was giving them Bitcoins. And it was $20. So my oldest kid has like two or 3 Bitcoins just from her tooth. And my other one has less and the third one has much less. And for them, was automatic and you can see it. So when you see young people understand concepts, our role as we get older is to see through their eyes. Use our knowledge, but see through their eyes. And that's what excites me about where this is going. I think we're super early still. [00:38:07] S0: Can you explain the importance and just like general concept of stablecoins as you see it and the role that they play in the world that's unfolding?
00:38:07 · Patrick O'Shaughnessy, Micky Malka
[00:38:07] S0: Can you explain the importance and just like general concept of stablecoins as you see it and the role that they play in the world that's unfolding? [00:38:15] S2: So growing up in the early eighties and mid eighties in Venezuela, we were having maxi devaluations. Like the dollar was 4.3 bolivares to the dollar for like thirty years. By 1983, it started to devalue. By 1989, it was probably almost 10,000 bolivares to the $1 So the only way you could save, my family saved, and there were doctors and middle class family, was we were buying American Express travel checks every week. I walked with my mom to the bank branch, we did a line, and whatever bolivares we had in his private practice, in the private practice, we will buy travel checks and we will store travel checks. And once a year, once every couple of years, we'll go to The US and deposit them in a savings and loan institution. That's how we saved. [00:39:09] S0: Isn't that insane?