Joey Krug on Prediction Markets, Crypto Treasuries & the Next Era of On-Chain Finance (Partner at Founders Fund)

You dropped out of school and then built what was really this first crypto prediction market called Augur. How did that idea come to you? If you have markets where you can basically bet respectfully on anything, that's the ultimate vision of capitalism. And I was really drawn to this vision as well. If you can have markets on any future state of the world, you can then use that information for lots of other things. We're now seeing ETH treasury companies, Solana treasury companies. How do you think it changes the structure of this market? I think it probably works less well as you go down the list of assets in the same reason that a small micro cap stock can't really issue that much debt. People want to buy Apple bonds or Goldman Sachs bonds. They don't really want to buy the small of the mid cap. We've talked about some of these regulatory changes that have been made under the Trump administration and how much hostility there was under the Biden administration. I think the most absurd thing I remember under the Biden admin for crypto was that the SEC actually tried to take the position at one point that stable coins were a security, even though like if you buy USD. You can't really make money. Prediction markets are having a moment. Over the past two years, these exchanges have gone from curiosities to possibly the future of finance. Increasingly, platforms like Polymarket attract billions in monthly volume from traders keen to speculate on just about anything. From political races to sports events to the number of tweets Elon Musk will post in a given time frame. Today's guest, Joey Krug, saw the opportunity in prediction markets long before the rest of the world, building the first decentralized player in 2014 and then backing Polymarket as a partner at Founders Fund nearly a decade later. In this episode, Joey unpacks his history with the concept, why the moment is finally right for prediction markets to take off, and how he expects them to develop. We also cover the crypto treasury movement, including Founders Fund's investment in ETH treasury player Bitmine, and finish with Joey's thoughts on the state of the crypto markets. As a note, our discussion covers tradable assets, so please remember that none of this is financial advice. And with that in mind, let's get to the conversation. I'm Mario, and this is The Generalist. Every revolution in AI creates one question that never changes. Can you trust the output? AI for work is incredible, but without trust, it's just leading to faster mistakes.

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your story and some of the pieces of the crypto market that you've been involved in, particularly I think prediction markets has been a big part of your story, both as a builder and as an investor. But maybe to start out, I wanted to circle back to part of your origins, which I remember really struck me when we talked back in the day, which is that I think you told me that in your early days as a kid, some of the first quote unquote investing you did was horse. was betting on horse races. How did that start? Yeah, that's right. So, you know, I used to be really, I still am really into horses and horse racing. And, you know, when I was a kid, I used to go riding a lot. And I just remember one year, you know, watching the Kentucky Derby, like on TV. And, you know, there was a big kind of like long shot payout for the horse that won. You know, I kind of looked at it and I was like, that's interesting. I wonder. i wonder if there's a way you could like predict you know which horses are more likely to win and then you know bet on that to make money um which which usually is is the start of a story where things are about to go south but um but but but in in my case was able to actually you know i basically borrowed 20 from my mom and um started kind of looking into it and built like a really simple basically like linear model system literally just in you know excel where I'd get all this historical data about all the horses in a given race. And then I'd look at, you know, all the races on any on any given day and then, you know, pick two or three bets to make, basically. Wow. It's fascinating to me that clearly the odds were not sharp enough to sort of have done that sort of work. Like, where was the edge in that model out of curiosity? I think one example where there's probably the most extreme edge was like, if you have a track where it's like really muddy and really rainy. there's some horses that just i don't know if it's genetics or just like personality but some horses really love to run in the rain and so like you know that's one example where there's like massive mispricings because there's horses that look really good on paper but they've only ever read only ever ran you know on like a clear sunny day where the track's super dry and fast versus there's some horses that just really outperform when the track is like super muddy and filthy like that's one example where like

It doesn't happen very often, but if you come across that scenario where there's a horse that has really good pass performance in the rain, that's one market dislocation. Another one is people are really bad. All this stuff is much more efficient now, but back then people were really bad at like, you look at a horse and it's won its last few races, but the distance on those races are significantly shorter than the race that's about to be run. And you have a horse that's maybe gotten second, but it has run that long distance before. that horse is usually undervalued relative to the one that's going up in distance because it's just like a new thing for the horse and and they tend to underperform stuff like that is sort of what what surfaces i love these sorts of stories because you know i think when you're a kid especially you you haven't necessarily have your mind you know trained or warped or sort of uh molded into these strict ways and so you can see just sort of the natural way people's brains work. And so clearly, this was something that, you know, almost congenitally or behaviorally, you're predisposed to look for these opportunities in a way that has certainly served you as an investor today. It sounds like you were, you know, obviously a very technical child, so to speak. I believe that I read that you started learning Applesoft Basic, which is not the most common type of code that someone would traditionally learn to learn to code how did that happen yeah that's kind of funny because because sometimes you know just like over the years like in in business you know i'll come across people that are you know in their in their like 50s or 60s and you know somehow the subject of like how did you start programming comes up and often they they will have started programming on apple soft you know basic right and and they're surprised when you know i'm like yeah me too for me that was just um when i was in middle school my dad got me an old an old apple 2 computer that he just bought on ebay um and you know it's like hey like you should you know learn to learn a program on this like and you know it got me like one or two books about basic and i just started writing you know really really simple programs um which is kind of a good way to start um you know because because there's not there's not that much you can do like you're basically just using like a command prompt or terminal

um and writing you know text-based programs there's not really like in theory i think you can you can you know write a server in apple soft basic but like that's not the kind of stuff most people did it was just sort of like mostly local programs running on the machine so it's pretty like contained way to start programming which i think is actually pretty pretty was a pretty good way to start really interesting um and so you you sort of you know we're obviously interested in computers and you had sort of this uh investor sensibilities whether you would have thought of it that way or not at the time when did sort of crypto enter the picture was this you know somehow discovering the bitcoin white paper and and finding that fascinating was it you know something that happened a little later yeah i mean crypto i first came across um through through gaming i used to play a lot of a lot of video games um when i was a kid and i had this computer that had two um two like amd radian 6870 gpus and I used to be into like overclocking it, you know, making it run faster than, than stock. And there was this form where someone had basically posted like, Hey, there's this software that if you run it, you can earn money kind of like out of thin air with your graphics card. And I came across that as like, that sounds like a scam, but also, you know, this is a really popular thread. So, you know, maybe there's something here and it turns out it was like, I think the program was GPU miner and, you know, it's for mining Bitcoin on your, on your GPU. And that's sort of how I first came across it. And then I didn't read the white paper until like maybe a month later. Cause I had some of these, you know, Bitcoins that I mined and I was like, yeah, should I, should I sell this or, or is there something real here? Like, is, is this a scam or not? And that's when I actually read the paper and kind of thought it was a cool idea. Wow. That's amazing. So you were, I assume like in high school or even, I don't know, uh, sort of mining Bitcoin in your.

in your room on your, on your GPUs effectively. Yep. Yeah, that's right. Wow. Uh, and so then you read the white paper, you know, you, you go to college, study computer science before sort of dropping out. Was the white paper sort of a, a moment where you're like, Hey, actually, you know, the way that I see computer science is going to be through this paradigm or how did it sort of go from maybe this curiosity to a thing where you're saying, Hey, I'm actually going to step out of school and, uh, try and build something in this space. I always been really interested in, in, um in medicine as well for a bunch of other reasons that you can get to at some point if you want but basically i was interested in medicine and but i always thought that like you know if you're really interesting you know if you were like a doctor who could also program i thought that would be you know maybe there's something interesting you could build if you did that um then went to school and then you know kind of two things happened one i sort of thought about um yeah i love school but i also thought about you know become a doctor you need to do another four years plus probably another four and like residency you know kind of at the same time the price of bitcoin was rising there's all this interesting stuff happening in crypto um the ethereum white paper kind of just came out and like none of the professors were teaching courses on on crypto anyways i mean now you can take courses about it at stanford where you can like you know write smart contracts and you know do stuff with zero knowledge proofs but back at the time especially in undergrad like that didn't exist and so i found myself just reading lots of papers about crypto and and you know buying and selling crypto and and sort of kind of thought that like i may as well just leave school and build something in the space as opposed to spending another three years there um and not really learning anything about crypto anyways beyond what i was doing on my free time so yes i may as well just do that do that full time with sort of the the high level logic

You had an amazing breadcrumb that I can't help but follow, which is that you have this interest also in health care and this idea of a doctor who can code, I think would have been really prescient if you look at some of the stuff with computational biology, biotech, all of these things that have also grown in sophistication in the time period since. Where did that sort of interest originate from? And to the extent that you have sort of the latitude to explore that interest today, how does it influence how you think? yeah i mean where it originated was kind of way way back um also when i was in middle school like roughly fifth fifth grade my brother got this really really rare disease called uh called atypical hemolytic uremic syndrome it's basically a kidney disorder where your red blood cells basically um basically like destroy themselves uh it's called hemolysis and i ended up just spending a ton of time actually dropped dropped out of school for the first time then, just homeschool myself for a year. And so I could spend time in the hospital with him and also research like any potential treatment for it. Eventually came across this drug called Solaris, which is used for this other blood disorder called PNH. But it's sort of, if you give a patient who has AHUS, to not have to say the whole mouthful every time, if you give a patient with AHUS Solaris, it also basically... effectively treats them and makes them 100 normal and so we we basically it's a really long story but basically we got my brother to this doctor at the university of iowa who was doing um like the first trial with like five patients uh with his disease with this drug um and the company is called alexion pharmaceuticals and in hindsight i should have bought this in the stock as well um but didn't didn't think about that back then but you know he's on he's on it now there's actually a newer version that's longer lasting and Um, and you know, a hundred percent normal versus it was a disease that had, you know, like a 95%, you know, five to seven year mortality rate prior to this drug existing. Um, so that's what got me into medicine. Cause I was like, there's just all this like really interesting stuff you can do. You know, I think the other thing that kind of made me interested in it was like, there's kind of just this like wide disparity between what certain doctors were aware of as well. I think AI is like narrowing that, but like.

He was at Wash U in St. Louis. The doctors there basically didn't believe this drug would work and were like, yeah, there's nothing we can do versus, you know, this random doctor, Iowa, you know, was running this trial that, you know, worked and, you know, made him basically 100% better with it within, you know, six months. And so that's sort of how I first got interested in it. That is an astonishing story. I mean, it's sort of... wild to me because it's clear that, you know, even as a kid, you must have been one, you know, extremely high openness that you're like, you know, I can, you know, I'm, I'm open to the idea of this new kind of money. And also I'm open this to this, you know, different type of drug, but also, you know, I'm, I'm a risk of using jargon that is too tech jargony, but very high agency that you're, you know, you were, you know, as a kid thinking about these solutions and, and able to sort of broker these things. So, um, yeah, wow. I mean, it, uh, It's really remarkable. Yeah. Do you find yourself spending time on that in your sort of nights and weekends? I feel like everyone sort of needs a place very different from their work life to go, you know, almost think about something totally different. Yeah, I mean, my nights and weekends are basically two things. Yeah. One is, you know, kind of looking into what's what's going on in medicine or biotech. Just always been interested in it kind of sparked from from that story. I've also spent some, a bit of time on like Sean Liu and I at Founders Fund are looking at some companies in the space as well. Probably spend more time, you know, over the years there. But I think the other area is trading. I do a lot of, you know, trading in public markets, which is a good way to stay sharp and also has a faster feedback loop than, you know, VC, but also informs your worldview for investing in privates. And so that's the other nights and weekends thing that I do. I love it. That's a great yin and yang. To sort of come back to some of these early formative crypto experiences, I'm going to jump around a little bit because there are pieces that I really want to dig into that I think are especially relevant to the way the markets are today, the place the market is in today.

come to you because it's uh one that has really found its place in the sun you know maybe a decade later it was one of the first use cases talked about after after ethereum kind of came out um it was one of the use cases you know first first mentioned the ethereum white paper even like vitalik wrote wrote about it and i didn't know that wrote a couple blog posts yeah so it wasn't it wasn't like a novel idea but it was sort of an idea i was interested in kind of dating probably back to the to the horse racing you know betting stuff where I sort of thought that back then you couldn't really bet on sports or on horse racing in the U.S. You had to use these offshore places where, you know, it was just like you're betting against the bookie, right? And I always thought that that should be a market. So that's one reason I was interested in it. But then the other reason was that I thought that, like Shane from Polymarket talks about all this all the time, but we both kind of read some of the same papers from like Hayek and there's also like these two economists, Arrow and Dubrow, that... had this idea of like complete markets or complete securities where if you have markets where you can basically bet or speculate on anything, that's sort of like the ultimate, you know, at least in their view, ultimate vision of capitalism. And I was really drawn to this vision as well because it's like, if you can have markets on any future state of the world, you can then use that information for lots of other things. So that's sort of like the intellectual reasons why I was interested in it. Super interesting. You know, I think, Probably the vast majority of listeners will have heard of prediction markets, but if for some reason someone hasn't, I think you encapsulated it so well there, this idea that, yeah, betting on anything. It can be a presidential election, a mayoral election. It can be, you know, what the Fed rates are going to be in a certain period of time. It can be if China's going to invade Taiwan and being able to, you know, do that in a sort of centralized location where there's, you know. lots of liquidity, hopefully, and, you know, a sort of robust system of resolution. It's interesting to me because I think there's a lot of people who actually came to crypto sort of nerd sniped by what you were doing with Augur and prediction markets in general. Like I remember talking to Dan Romero from Farcaster and he mentioned that that was like something that really got him excited about crypto in general. What do you think it is about that concept that like seems to really intrigue smart people? I think.

You know, where I go back to is like, okay, if you look at Bitcoin, you know, the thing that intrigues people about it is it's like this first, you know, whether you call it a monetary or gold-like asset that's, you know, kind of digital and independent of any government. And then if you look at smart contracts, you know, they enable you to basically do that for anything in the financial system. And then so the next kind of level of logic is like, well, okay, he has smart contracts. What's kind of the most logical thing to do? um well it's to create a financial market that's you know independent of the traditional financial you know institutions where you can basically speculate on anything you could possibly want to speculate on and you know not only that but you can create these markets you know fairly quickly in a matter of minutes um and it basically kind of democratizes like you know most people have seen like the big short if you remember the scene where they're going around getting all these is the agreements in place with you know the big banks take on the specific bets they want to make um in theory like you could get a really informed counterparty who's willing to let you speculate millions of dollars on almost anything and fit it under a swap agreement right in practice you know if you go to jp morkan and say hey i'd like to bet 10 million dollars that you know russia invades ukraine or whatever yes um they're gonna be like what do you what are you talking about um And so I think people are interested in prediction markets because it allows you to basically take the same kind of intellectual underpinnings of things like Bitcoin and smart contracts and then apply them to any financial market where it's just like a pure free market where anyone globally can trade them. And so I think that's sort of why people got excited about this idea. And also just even for folks that maybe don't see themselves as the the speculator themselves there is just this value of having this crowd wisdom or you know what you know there's probably better ways to really describe it but uh getting to to see the odds or the you know the prognostications of a group of people that are actually putting some some amount of asset at risk to uh to sort of justify their opinions it gets you sort of closer to truth hopefully uh or at least uh the perceptions people have of that moment which i think is

you know, now extremely valuable. I find myself going to the Polymarket and, uh, and Calci and looking and saying, you know, okay, what are the odds in this race? Or, you know, what are the sort of the view of the world right now? So there's this sort of informational aspect that is really valuable. Yeah. Yeah. I think, I think that's totally right. Like I go to Polymarket multiple times a week just to inform my view of the world. And often there's like interesting trades you can do around that too. Like what, like one small example, you know, for, For someone who's skeptical of this idea, one small example right now is you go to Polymarket and there's a greater than 50% chance that the United States does a military action in Venezuela by the end of the year. If you ask most people on the street, they would probably say it's below that. I'm buying a couple of stocks that are exposed to Venezuela right now because I think it's probably mispriced. There's a bunch of different things like that. If you go back to the tariff stuff earlier in the year. where prediction markets were like super, super useful to understand what's actually going on. So to come back to what you were doing with Augur, why was it structurally that crypto was such an unlock for this idea? You've sort of mentioned parts of it there. But yeah, if you sort of put yourself back into your teenage self there, what were the sort of theses that you were operating under? The unlock for crypto for prediction markets, and it's sort of similar for why crypto is useful for other things as well. is one, it's inherently a sort of global market. So, you know, you just need an internet connection and a way to access, you know, back of Augur, you needed East to bet, you know, now you can use stable coins. And then the second thing that it does is, and this is probably kind of a bit more slept on thing, but if you look at sportsbooks, part of the reason their fees are so high is one, they're taking the other side of every bet. So it's not a market. But I think the other reason that people don't think about as much is a lot of the payment methods are reversible. So there's the risks that you, you know, bet $500 on the Yankees game and then charge it back and say, oh, actually, I didn't make that bet. Someone must have stolen my card. And so you have to price that in. Crypto doesn't have that problem because it's, you know, once you send it, it's settled and there's no way to kind of reverse like a stable coin transaction with the exception of some obscure edge cases, like if you're, you know, a terrorist or something.

And so I think that's another reason. And I think the third reason is that it's sort of just the most efficient way to operate or run financial markets. Like if you think about, you know, how you would create something like this in, you know, kind of the traditional finance landscape, like you can do it, but it's just a lot clunkier and it's a lot harder to kind of share the liquidity pool, you know, in countries outside the U.S. And you end up having some of the same, you know, chargeback risks that the sports books have. And so I think back when, you know, I was working on Augur, the main unlocks were just like it's global, you know, 24-7. And yeah, you can create these financial markets pretty easily versus having to go through a lot of steps and paperwork and stuff like that that you have to do in that. traditional system. And in terms of the sort of reasons that Augur didn't ultimately work, it feels like a lot of that was just sort of hamstrung by the state of crypto infrastructure at the time. You know, the speed of these transactions, the cost of the transactions, what were the pieces that you feel like, you know, even if we'd had, let's say, 100% perfect execution, we would have really hit a wall because of X, Y, Z. There's a few reasons. I think some of them were things, you know. in our control and some some of the more things not in our control i think if you look at you know back then um for most of that period the government was especially under biden the government was quite hostile to crypto yeah true um there was even like a speech given by you know one of the cftc commissioners at the time that like um i haven't talked about this before so this is maybe new to some people but it's it's basically like clearly like 100 about you know auger Oh, really? Yeah. And it's about prediction markets. We were the only prediction market, you know, in crypto back then. And it was saying that, you know, developers of smart contracts should be held liable for the actions that take place using those smart contracts, which is sort of like saying that, you know, Microsoft should be held liable if someone writes a ransom note with Word. It's really absurd. But also a lot of the legal stuff, you know, hamstrung us because we were trying to build it with kind of...

you know one and a half arms behind our back so to speak where there's a million things we could have done to make it like so much easier and faster and quicker to use but we just took the maximally decentralized approach because the thing we were optimizing was that like if the government ever did sue us and it went to court we wanted to win which meant that we did like almost nothing you know we didn't create the markets on auger we never traded in them we never market made in them we never resolved them ourselves um we didn't even host the website And so it's like, you know, there's a million reasons why it was just so hard to use. And I think, you know, like if you went back and looked in, like the Augur Discord is public. A lot of those chats are public. You can see, you know, it's almost always a legal reason why we took something that was clunkier or harder to use as opposed to like a, you know, UX reason. I think that was a big part of it. And I think another big part of it, even if we took all the legal risk and... you know i think the second piece was just that the the kind of like tech and infrastructure wasn't ready like when auger started eventually there these got built by companies like alchemy but when auger started there weren't even like you know ethereum node rpc endpoints where you could talk to an ethereum node you had to spin up your own node to to use auger day one also transactions were very expensive you know on ethereum uh and auger was kind of fairly gassed and efficient as well like doing a trade in auger would cost like 50 you know no one wants to pay 50 to do a 500 bet or whatever and so there are kind of all these reasons that you know that's kind of gotten solved by layer twos the infrastructure is a lot better faster and cheaper stable coins are a lot more widespread it's a lot easier to on-ramp into crypto and so i think even if we took all the legal risk it probably wouldn't have taken off like the timing was just wrong we were way too way too early but you know hopefully we we like inspired some people to uh to to build in the space um so yeah that's that's sort of my like sort of my read of it is like maybe maybe augers augers napster and polymark spotify or something like that i love that uh yeah an idea ahead of its time and that certainly did inspire a lot of people and i think brought a lot of people into crypto and intrigued a lot of people to sort of you know go forward in your career a little bit you know after auger

You became sort of co-CIO of Pantera Capital, which I only in researching this episode did I learn that it's a tiger cup, which, you know, it's sort of a I didn't necessarily expect that from a really early crypto fund. But anyway, you went to Pantera and then, you know, landed a founder's fund. And this is sort of where the, you know, I feel like the prediction market story comes full circle, which is that founder's fund led the series A and has become a, you know. very large investor in in polymarket how did you know polymarket first come up on your radar the first time i came across it was was a long time ago where back when i was doing augur shane had sent me an email and you kind of a list of like it was a good email it's like a list of all the ui ux stuff that was that was wrong with it um and you know i i sort of agreed with like 90 of it um but a lot of we just couldn't couldn't do due to kind of all this stuff i just kind of went through and um and then i think maybe a year later i forget the exact timing on it but a year later he was just like you know decided to to create polymarket and build a prediction market and he wanted to um basically kind of build a vision that he thought made sense for it and we sort of stayed in touch like in loose touch off and on over the years and then the thing i kind of always told him was like if you get to if you get to like clear kind of product market fit you know i i will invest um was was basically what i said and i was like you know prediction markets is probably like the hardest idea to build because so many people have tried it it's so like intellectually interesting everyone wants it to exist you know but it but it's still just really really tough i guess it's probably the hardest digital idea like like fusion is probably the real world you know thing that's harder yes but that that's sort of why i said and then you know i kind of gave him a benchmark where i was like you know if you get to like four or five million dollars in volume a week and it's sort of repeatable that seems like real enough to me that i would i would take a bet on it and then he called me you know late 2023 and said hey we we hit the number do you want to do you want to invest and i said you know let's let's talk about it and let's also loop napoleon in because he's also interested in prediction markets and in betting um and we ended up

agreeing to invest pretty quickly. And so that's sort of how it started. That's amazing. It's funny, you mentioned the Napster Spotify example, but it really has that echo even from the connection to Founders Fund, right? Obviously, Sean Parker goes to Founders Fund and finds Spotify after founding Napster. So there's a fun symmetry there. Had you looked at a bunch of these other prediction markets sort of along the way? considered investing in them like was it really just hey this is the one that seems to be breaking out and so you know this is the one to to bet on yeah i mean i looked at ones over the years because given the auger history you know i'm i'm kind of one of the first people that people think to pitch you know when it comes to prediction markets um but none of them really had the right you know kind of like founder market fit that polymarket had and then um i think the other thing that i really liked about polymarket relative to you know, anyone else I ever talked to was sort of the crazy kind of relentless focus on like the UI UX and the user and like why Shane is building it and those sorts of like founder reasons that are relevant to why Founders Fund likes to invest in stuff. I think it was very clearly, I think even in the memo we sent out about Polymarket to the rest of the Founders Fund team, I think there was a line there that was something like, you know, if anybody can do it, it's this team. If they don't do it, it's probably not going to work for another five to 10 years was sort of the rough mental model. What were the sort of founder market fit pieces that really spiked in terms of Shane? And when you looked at the team that made you think, okay, this is the folks, if anyone's going to do it, it's going to be these guys. I think the way I would describe it is like, if you look at Shane, he's basically super, super obsessed about just like there being more efficient markets. and there being a way to basically get data about kind of anything in the real world that people care about. You know, I think one of the kind of frequently used lines is like, if it's on the front page of the New York Times, like there should probably be a probability on it for how real it is. And Polymarket's the best place to go to get that. The other like founder thing is the sort of extremely strong perseverance and relentlessness. You know, he did take the legal risks that...

that we did it and there there was kind of the first cftc settlement and then after after biden lost there was you know the fbi raid and i think you know a lot of people like reasonably probably would have just like you know folded um and not wanted to take on the extreme risk but you know he sort of had this extremely high conviction that this needed to exist it was right you know the government was was wrong to be going after them and that he wanted to build it anyway and i think that that is just sort of it's impossible to fake and then it's also really good for rallying people like around you to your cause and if you think about like what's important for a founder to be able to do it's be able to have a clear compelling vision and then get other people to support that whether that's you know investors people on the team partners of the business and you know i hate he really spiked on all those things. And then the second piece that I kind of alluded to earlier is just like this really high obsession about product. And having like wanted to have the product for himself, you know, sort of thing, I think is really a big part of that as well. You mentioned sort of the interest of the CFTC and the FBI, right? For folks that, you know, maybe didn't chart that story, what was sort of the... the pricey of of what happened and and how he was you know able to sort of manage that process so so the short story of it is basically you know the first version of polymarket completely global um based on smart contracts they didn't block us ips or anything um i think it was under the under the biden admin they had to settle to cftc and basically block us ips for very obscure reasons the u.s government says the prediction markets are swaps um And there's kind of a great Matt Legeon piece, which is like everything is a swap. If you Google that, it's kind of interesting to read. And then if you fast forward, you know, it's like 22-ish, something like that. And then if, 2022-ish. And then if you fast forward right after, you know, Polymarket predicted the Trump election win and Biden lost, roughly a few days, maybe a week after the election, you know, the FBI raided Shane's apartment, took all his electronics and phone and everything.

It's kind of sort of unclear exactly what the thing they're trying to get at or go after was. I don't think it ever really kind of fully got explained. And eventually ended up getting basically dropped earlier this year. But that's sort of what I was referring to is they burst into his apartment at like 8 a.m. or whatever and took all his stuff. didn't give up like i spoke to him you know like a day or two after and he seemed in as good as as good as spirits as as usual um which which is just crazy crazy impressive and and yeah it's hard it's it's it's like i would be pretty sad if the fbi rated me to maintain your focus yeah uh but you know he he stayed focused and on track and and you know they've I think they just did more volume than the election month, you know, last month. So it's crazy where, you know, again, another situation where like, if you look at what Polymark has done over the last year, you think for a majority of that, you know, they were again fighting with one hand behind their back because the government was incorrectly trying to go after them. Now that they're not, you know, imagine what they'll do with like 100% full focus is sort of how I think about it. Yeah, I mean, also, just from, you know, the perspective of your investment, it feels like it was astonishingly well timed and that you, you know, guys first invested ahead of of the election cycle. And I think there were probably a lot of folks that were questioning, you know, OK, maybe it works during an election period, but it's going to cool off. And, you know, this is going to crater to, I don't know, five percent volume, one percent volume, you know, however bearish I suppose you want to be. And, you know, while there obviously has been. a correction it seemed that there has been still this sort of growing variety of use cases and sort of a higher base uh you know naturally there are these spikes but um was that something that you felt confident about at the time that you were making your bet or was that sort of one of the pieces that that felt like an unknown even to you the way i think about this stuff is always like what what's the market pricing versus what what are v pricing right and i think um you know in in this case the way i thought about it was like

the market was pricing that there would be like a 90 decrease in volume you know that was come to school twitter that was the common sentiment we thought that was wrong you know i i our view is sort of that like or at least my view is sort of that you know maybe there'd be like a 50 decrease and then it would kind of take a while to to rebound but um there wouldn't there wouldn't be this like 90 drop and the reason behind that was like if you looked you know polymarkets volume i think the percentage was like 50 maybe 60 elections like there was still this chunk that was not not elections. And so to think it would drop a ton, you had to believe that all the users that came in for the election would just leave and not trade anything else. But that wasn't really what it looked like from the underlying data, which is all on chain and you can verify it. And so, you know, I think it's probably the volumes have performed probably better than we thought they would have a year ago. But, you know, we sort of priced in them doing better than the market did, which I think is like, When you think about edge as an investor, you don't have to predict everything 100% precisely. You just have to, you know, the delta between you and what the market thinks just has to be wide enough to be right. When I sort of looked at some of the data over the past year, it's clear that, you know, Polymarket has seen the most volume of any of the prediction markets, but that it is sort of, you know, I don't know if you would say it's closing or it's quite close with Calci in particular. When you look at sort of the way this space shakes out. How do you see it progressing? Is this a winner-takes-all space or are certain parts of it sort of cordoned off in a winner-takes-all dynamic? If you look at financial markets in general, historically anyways, they tend to be basically duopolies. So you have Coinbase and Binance. You have CME and CBOE. You have New York Stock Exchange and NASDAQ. it's that's one one lens is like maybe there's a duopoly thing why do you think that is out of curiosity i think it depends on each like if you look at the finance and coinbase one that's a clear split of just like international versus you know predominantly western u.s markets um if you look at if you look at the like options and futures markets like cme cvoe i think that one was probably more of like a product type split in the fact that they've just been around for so long that

it's sort of naturally developed where there's one place you trade grain futures another one where you predominantly trade oil futures you know so on and so forth and the liquidity kind of concentrated um i don't have a good explanation for new york stock exchange and nasdaq i'm sure there is one i just haven't looked into that too much if you tie this back to like polymarket and calci and other other people trying to compete i think um you know the the us versus international lens i think you know polymarket's the the clear winner internationally and then they're about to launch in the in the u.s i guess and then in terms of the market categories you know if you look at um again you know poly markets roughly bank sports is like 40 something percent and the rest is other things cal she's like 90 sports which is another interesting lens but i guess to more directly answer the question i i do think it'll end up being a bit more of a lopsided duopoly than the than the other stock exchanges like my mental model is closer to you know, Uber versus Lyft than, you know, NYSE versus NASDAQ. There's a bunch of different like vectors upon which the competition will be fought. But I think when it comes to like product, I'm pretty bullish on Polymarket being able to ship like the best consumer product, which I think is where most of the value capture will end up kind of long run here. You mentioned that Shane has maybe this product sensibility and this sense of what the UX should be back to even emailing you at Augur and saying, here's what you should be doing. When you look at it today, what are the pieces of the Polymarket product that you think, hey, it's actually really important that this thing that maybe doesn't look that significant is done in an XYZ way or is represented this way? I think for the non-US product, I think part of it is like, I do think crypto is like the ideal market structure for something like this, where if you're having to have like a decentralized system, you know, you look like Uniswap as an example. If Uniswap was instead a centralized exchange where, you know, they had to KYC people from like 150 countries. Yeah. I think the liquidity pool would just be a lot, a lot less deep. Another interesting factor on the product side is you look at kind of the different

players in this space there's sort of a split i think in terms of like do you view prediction markets as a a betting exchange like in like the sense that like betfair is a betting exchange or do you view them as like a financial exchange and a lot of people would probably like meme that sentence on on twitter and say you know it's just sports betting or whatever but but to to concretize it and make it something that's actually like um something that you can discuss and it's not just qualitative if you look at that fair you know they take 50 of the winnings of the market makers on the platform uh 50 of their their profits if you look at some of the other players in the prediction market space you know like the fees are quite high you're talking multiple percents if you look at most financial exchanges the fees are very low you know we're talking basis points and so one one lens is like do you view this as an actually as actually as an exchange yes or do you in the financial market sense or do you view it more as like like betting and i think um you know the polymarket ethos is is closer to the financial market exchange and i think as a result especially once they launch in the us i think the volumes are just gonna are gonna skyrocket um because it will be like the most efficient most liquid place to trade um i think that's one ethos difference and then i think um I probably can't talk about the US product, but it should launch, you know, maybe by the time this podcast is out, you know, in a few weeks. And I think the user experience on that is just so much slicker than anything else that I've seen in this space. Like, it's something where, you know, once it's out, I look very forward, much, much, very forward to using it myself, probably multiple times a week. I think it'll be really, really cool. One of the, you know, things that... has maybe been tricky for some of these markets, and Polymarket has had issues with this in the past, is how you manage resolution. And sometimes you think these things will be straightforward, and they end up being more complicated than you might ordinarily imagine. The example that I think comes to mind most is, is Zelensky wearing a suit at XYZ event? And he sort of is, he sort of isn't. And that's when there start to be these questions about...

you know, how manipulatable are these different markets, et cetera, et cetera. How do you sort of like get comfortable with the constraints and the different trade-offs that, you know, these companies make and particularly the ones that Polymarket makes? Yeah. I mean, I think this is a problem that I thought a crazy amount, probably too much about, you know, when I was building Augur. You know, we spent all this time on the resolution system. and i think in terms of outcomes it worked pretty well but in terms of speed it was just you know horrendously slow um and so that was the wrong trade-off um i think if you look at kind of the state of things today yeah i think one one lens is that you know nobody has as perfect even the big sports books sometimes according to the betters you know will pay it pay things out wrong it's so it's a problem for the industry writ large um i think the suit the suit thing you know, is one where there's an incentive for, for, you know, competitors to create, you know, FUD around this stuff. Like if you read the, um, if you read what the actual designer posted, um, you know, he, he says that it was like cut from separate fabric, which according to some of my friends and, and in sort of the fashion space, that, that means it's not a suit, but ignoring, ignoring like the specifics of that market, I think it is a, a kind of. thing that needs to be addressed for at large i think this best way that i can think of to to addressing this is probably actually to utilize like ai in terms of like writing the market descriptions you know i think i think they may be doing this to some extent already but you know i think the companies in the space should basically provide like their draft you know description to like you know dpt5 pro or whatever yeah and have it analyze it like a really you know nitpicky you know lawyer would um and just try to cover as many edge cases as possible the one caveat is that you still want like you want to cover all the edge cases but you also want a huge like what is the common sense person's understanding of of of what happened you also want to cover edge cases of like you know i i think like technically there's there's some types of like pajamas that are very technically are a suit because they're cut from the same cloth right like you don't want slansky to wear pajamas and then be like oh yeah it was a suit you know um

And so there's a lot of these edge cases, but I think this is probably one of the one of the things in the space like AI probably is actually uniquely suited at at helping with. Really interesting. OK, well, I'd like to maybe move on to one other part of, you know, the crypto landscape that I know you've been involved in and that I think feels like a big, big part of the market today, which is really the sort of emergence of crypto treasury companies. I feel like that's been something that. has really gathered a ton of steam over the past 18 months. And Founders Fund is involved with one of the sort of front-running ETH treasury companies. How did you first get involved with Bitmine? Yeah, we had, you know, ETH position, then, you know, bullish on ETH for a while. It's sort of been a tough, tough cycle for ETH. But when we came across Bitmine, yeah, that was sort of kind of... two or three things kind of converging at once once was that this sort of you know treasury narrative thing had started to happen two was that we knew um one one of the kind of creators of it is this guy shen from this fund called mosaics and he was actually you know found one of the founders of of war cries which is one of our portfolio companies so we knew him there's some level of trust there and then tom lee i'd known a bit you know off off and on over the years or passed across a little bit And if you look at what these vehicles do, in my mind, it's basically they are a way to accumulate an asset popularized by Michael Saylor with MicroStrategy. In this case, it was with ETH. Bitmine sort of launched at a time when ETH was pretty, in my opinion, oversold. I think it was like the low 2K range. They had kind of a combination of two things that I think is really important to make this work. One is like the capital markets expertise with with Shen. Mosaics is a hedge fund. He ended up starting a hedge fund. And then Tom Lee, also with the capital markets expertise, but also like the branding and marketing and awareness building that he's really good at. That combination of things is why we decided to invest. And I think that the ETH ones have some kind of interesting elements to them that I think makes sense for them to trade it. Not a crazy premium, but still maybe a slight premium, which is like, if you look at ETH staking,

the ETFs, since they can be minted and redeemed, won't be able to stake 100% of their ETH even when the SEC approves it. And so if you have a capital structure where the corporation can basically stake the ETH, one, you can stake 100% of the ETH. And then two, the other interesting dynamic is that you basically get capital gains treatment because the company is the one paying the tax on the staking yield versus it being directly income to you as a shareholder, which is like, somewhat interesting. And I think there'll probably be some demand for that from capital markets. Those are kind of like the longer term reasons why it's interesting. And then the more shorter term, like why we invested or kind of tied to the people, like almost, you know, anything else we do, that's sort of where it starts. You know, that's such an interesting point on the sort of difference between an ETH treasury company and a Bitcoin treasury company. There are these sort of quirks to it. For folks that maybe haven't really followed this as a trend in the crypto markets, what is the value of someone, at least in theory, investing in MicroStrategy, which is a Bitcoin treasury company versus an ETF versus the underlying asset? Let's start with the underlying first. The underlying benefits of that are it's traded 24-7. You can just set it to any exchange that you have an account with and you can trade it there. You know, it's self-custodial. If you're really, really libertarian and, you know, think that the government's going to seize your Bitcoin or something, I don't think that. But, you know, if you were paranoid about that, you know, purely self-custodial spot is a good way to go. And there are people who live in countries where, like, that is actually a valid concern, right? And then if you go kind of, you know, one step up, you have the ETS. For the ETF, I think the benefit there is just convenience. If you buy a Bitcoin or ETH ETF in your interactive broker's account, even if your computer gets hacked or whatever, you kind of have the legacy financial rails to protect you there. It's not like you're going to wake up one day and all your Ether Bitcoin is stolen. And then I think when it comes to the treasury companies, these are sort of more like a higher beta, kind of supercharged version of the underlying asset where they own Ether Bitcoin.

There's sort of a couple of reasons why one might be willing to pay a premium for that. Think about a company like Apple or Tesla or Facebook. There's like debt for it that you can trade. It gives you some exposure to it. It's higher yield than like treasuries. But you don't really have the same downsides you have as investing in underlying meta stock, as an example. For Bitcoin and Ethereum, prior to Saylor, that didn't really exist. And so he basically created this way for people to buy convertible bonds where it's collateralized by Bitcoin. There's some sort of capital stack. They get some amount of upside if Bitcoin does well, but they're able to invest out of via debt structure and it's lower downside. And there are people who want to invest in that or who can only invest in those sorts of vehicles that do want exposure to crypto. They can't buy the underlying. So there's this interesting financial instrument that he created as a result that has some value. And then you can debate around the margins like, what is the premium of buying Microtrategy stock that it's worth in exchange for him providing that service? And I think my view is that the answer isn't zero. It's probably not 3x either. But I think that's sort of the notion of why you would buy it because he's basically selling this service. And as an equity holder, you're basically getting the monetization of that service or the benefits of it, sort of the high-level way that I would think about it. And the fact that we're now seeing, you know, ETH treasury companies, Solana treasury companies, you know, other ones coming up the pike, like, do you see that as, I don't know, simply mimetic behavior? Is it telling us something about the maturation of this market and the players in it? How do you think it changes the structure of this market? Yeah, I mean, it's definitely mimetic. And Napoleon and Peter, I've talked about that to some degree as well. Yeah, in some ways, I'm like, you guys must have had an alarm bell going off in making this investment because there is such a mimetic quality in a way. Right. Yeah, so there's some mimetic element to it, which I think, if you think about financial markets, if you're early to a mimetic phenomenon, that's good. That's kind of the classic Soros argument. If you're late to it, it's bad. One thing that I think people kind of overcomplicate, especially last year, you'd see on Twitter all these people talking about,

you know oh michael saylor is buying all the bitcoin you know there's there's not any real demand and it's like well if you zoom out one layer more strapped from that like why is michael saylor buying the bitcoin it's because people are buying his stock they want bitcoin exposure that's really there's still someone who's like you know pressing the buy button yes that is then triggering that inflow it's not like saylor is just magically you know printing all this money out of thin air even like the stock issuance he does that then buys bitcoin someone is buying that stock which is really you know in a world without michael saylor i think that money would have eventually found its way to crypto um but he's created a way for people to buy it that for for whatever reason like the idea of maybe getting some extra you know beta on this like bond trade that we talked about or maybe they just can't buy spot or etfs for some reason like there are certain asset managers that can only trade underlying stocks and so a hacky way to buy bitcoin is or or east is to just buy one of the treasury companies right yeah and then to answer your question about the medic or the mimesis you know of other companies doing this i think it probably works less well as you go down the list of assets um and the same reason that like you know a small micro cap stock can't really issue that much debt um you know it's like people want to buy apple bonds or goldman sack bonds they don't really want to buy like The small, the mid cap. Yeah. Well, HIMSS is maybe sufficiently large. That's not a potshot at HIMSS, but just that sort of comes to mind. But yeah, like three years ago, they wouldn't have wanted to buy HIMSS bonds as an example. Taking a step back and reminding listeners that none of this is financial advice, as I'm sure they know. What is your view on the state of the crypto markets today? Like, where does it feel like we are in the cycle? There hasn't really been any sort of euphoria this cycle. um you know in prior cycles there was this there were points where it got super super crazy i think maybe the craziest this cycle got was some of them some of the meme coin stuff on on solana but even then that didn't get really that crazy that was it was more of like um it was more of like a new version of like betting or gambling almost because like with a small exception there's a few that that did actually persist most of these you know traded way up and then traded way down versus in prior crypto cycles

you had assets that for years traded really like way, way up. Maybe that's like too many people got burned last cycle. Maybe it's that like more money is flowing into like sports betting and prediction markets and stuff. Um, maybe it's just that we've kind of been through like this, like rolling consumer recession kind of thing in the U S where like the vibes are bad. Like the Kyla Scanlon thing. Like, I think that's real. Like do you look at the Michigan consumer sentiment? It's been kind of negative recently. Maybe that's why retail hasn't come in. But then I think on the flip side, you do have a lot more institutional inflows. And people that are just kind of fairly long-term investors that buy Bitcoin wreath and kind of just hold it and sit on it as a small percentage of their portfolio. But their portfolio is very large. So it ends up making for a good amount of net inflows. Yeah, I think you kind of combine those things. It sort of feels... like you look at prices today i don't know it doesn't really feel like anything's like crazy expensive or crazy undervalued it kind of just feels like we're in this like you know interregnum period or you know purgatory or whatever and um i i think i i tend to be pretty bullish you know there's a lot of fundamental catalysts coming over the next couple months you have you know you have the next east hard fork you know upgrade um which i think is positive because if they If they ship it, you know, that'll be two in a single year, which kind of means they have reverted to a faster shipping cadence. You have, you know, the Clarity Act, which I think will be a huge deal because it basically legalizes. It's already legal, but it makes it official that it's legal, you know, the kind of overall crypto market structure in the United States. And then I think that'll be big for kind of more institutional inflows. And then you have kind of some macro positivity with, you know, continued rate cuts. the fed ending ending quantitative tightening which sort of if you look if you look at alts they tend to really not do very well when the fed is still tightening and and then you have the government shutdown which i think you know hopefully gets resolved for the next week or two yes and i don't really have the mechanism why but crypto historically is underperformed in government shutdowns for whatever reason it's kind of ironic but yeah it is um uh maybe it maybe it just goes back to like the vibes thing um where

people are just like not bullish because they just feel like stuff is broken or something. I don't know. Yeah, you're not in the mood to take new risk in that way for whatever reason, maybe. I sort of remember covering this in the Founders Fund series that we published in The Generalist that you guys made a pretty remarkable and prescient investment into Bitcoin and ETH primarily in sort of the summer of 2023 when I think the first buys were somewhere around like 30K for Bitcoin. And I remember hearing, I think, that You guys had basically exited the Bitcoin position, but were maybe still holding ETH. What is your sort of model for ETH and what needs to happen and why it's maybe still worth hanging on to, given that you've maybe made a different call with Bitcoin? I think the high-level logic there is basically that ETH tends to kind of run and outperform kind of later in the cycle, often after. often after bitcoin is has topped because people sort of rotate into it and then you know i think and so i think that's that's sort of part of it and then i think part of it is that you know it's sort of got the narrative got sonic so oversold especially like during april where you know there's kind of this narrative that like solana is everything and it's just going away and yeah it was a real real bummer vibe on on x yeah exactly and and you know the ethereum foundation can't ship and all this stuff and i think you know sort of the the new leadership at the ef seems pretty strong they do look like they're going to ship you know this upcoming hard fork in early december and so i think sort of holding on to the eth is more kind of like a i think there's probably some mean reversion and repricing that that will take place because also if you look at you know, kind of fundamental usage. It's still the number one platform for stable coins. Polymarkets on Polygon and Ethereum layer two, or investors in this other company called LIDR, which is, you know, one of the, you know, top couple, you know, perpetual decentralized exchanges. They're also an Ethereum layer two. And I think they've proven that you can actually get a really smooth onboarding experience as an ETH layer two. It's pretty easy to deposit and withdraw funds. Like I do some of my own trading there now at this point.

um and so yeah i think i think sort of like kind of got way oversold and became very contrarian this this spring and i think there's probably there's probably some room to to go on eth as sort of minus a model alongside you know these catalysts like the clarity act where you know basically clarifying that defy is legal eth is like the number one beneficiary of that and so similar to kind of all the media you saw around stable coins in the summer I think the same thing happens around the Clarity Act, you know, whenever that passes over the next couple of months. We've talked around, you know, talked about some of these regulatory changes that have been made under the Trump administration and, you know, how much hostility there was under the Biden administration. You shared, I think you'll have to remind me where you were on stage. Maybe it was ETH Denver talking about some of the pieces of Operation Chokepoint that you sort of got to see. maybe not firsthand, but heard from folks that went through it firsthand. Yeah, I'd be curious to hear that story. And maybe, you know, a few months later, if folks came out of the woodwork after you gave that speech and shared that, and maybe even more of those sort of horror stories came to light. On the Operation Showpoint stuff, you know, where you basically have, you know, had all the banks kind of cracking down on crypto. People have definitely shared that more. I think after that talk, I made a tweet about it where I was like, you know, retweet this if you had a bank account shut down as a result of being in crypto and is kind of one of the more one of the more viral tweets I've I've had. And, you know, the Trump admin is definitely kind of reversed all that stuff. You know, a lot of the banks that, you know, wouldn't wouldn't bank me or some of them have have reached out now, you know, offering me to join their. private wealth management. And I've ignored all those because you didn't want me back in the day. Yeah. Yeah. It's like, um, so, so I think, you know, that, that stuff seems to have gotten fixed. I think the other thing is just, that's been even a bigger deal has been kind of all the, all the regulatory stuff, like, you know, under the, under the Biden admin, there was this thing, you know, the SEC, which was infuriating, you know, they would say, come in and talk to us. But, um,

you know, probably like 95% of the founders I know who tried to get a meeting, you know, they wouldn't meet with them. And then the very few that did get a meeting, you know, the SEC would kind of just listen and then, you know, usually later use anything they said against them in some, you know, BS lawsuit. I think like the most absurd thing I remember under the Biden admin for crypto was that the SEC actually tried to take the position at one point. that stable coins were a security even though like if you buy usdc like you you can't really make money um you know it's pegged to a dollar that's the entire point um and and you know there there are some like very obscure legal arguments you can use to say that it is but like everybody knows it's not like in practice it's not it's like trying to say the sky is is you know green or something it's just like it doesn't have any real logic to it but yeah so i think the trump admin is basically fixed essentially all that stuff. The new SEC chair seems really good. The new person that they're hopefully getting confirmed soon for the CFTC seems really positive. So I think that's taken a complete 180. Taking clarity as red, let's say, what are the sort of other pieces that maybe feel like they're still missing or you would still like to see further action on? I think the other, you know, area that, you know, probably doesn't get into the Clarity Act that I think would be good is, you know, there's kind of these like regulatory exemptions for like spot exchanges that are decentralized, like Uniswap and things like that. It's kind of unclear whether they're going to exempt and probably not, you know, things like decentralized perpetual exchanges, you know, things like hyperliquid and lighter and stuff like that. The same thing for prediction markets. Anyone in financial markets would clearly tell you that a global liquidity book is just going to be far more liquid and better than where poly markets currently happen to end up, which is you have US exchange and then you have kind of the offshore one. I think a much better long-term, I think over many years, regulatory structure would be

Sort of like what Hester Pierce kind of proposed the SEC back in the day, which is she had this idea that it's like, DeFi should exist. You should be able to trade on it. It should be legal. It should not be illegal. But the one negative of trading on DeFi is that you don't get the regulatory protections if you trade on a regulated platform. And then if you want those regulatory protections, you can build like a regulated thing on top of it. And so I think like if you look five, 10 years, like the ideal way, that something like Polymarket should work, is you have the core platform, decentralized, smart contracts based, the liquidity book's completely global. And then in the US, you can also trade on that if you want. But there's also like a thing on top that feeds directly into the same liquidity pool. And that has kind of the regular regulatory licenses. If you're Citadel and you want to bet $100 million on some Fed action or something, that's probably what you use. because you want the full regulated financial system, but you still get the same share of liquidity. Like that's, yeah, that's sort of for like over a five to [redacted address] I hope this stuff goes. Versus right now, you know, kind of feels like we're trying to, you know, the market structure of having these things be separate doesn't really make sense. And like, it's very clear that the smart contract based way of doing it is superior. And so it's just like a matter of time and who knows how long that takes. But that's sort of the one thing that I think probably doesn't get done in this admin. I think there's probably people in the admin who do want it to happen, but it's more like, you know, with Congress, you got to be practical and get what you can get done versus trying to, you know, get everything all at once. Yes. Well, before we maybe go into a wrap up question, one final thing that I was curious to hear about is maybe how your investing lens has changed since joining Founders Fund. You know, obviously, When I sort of looked back at your Medium post announcing that you were going to Founders Fund, you talked about how prescient Peter had been in sort of predicting the contours of cryptocurrency back in the late 90s. And, you know, the value of being part of a really high quality generalist investing team and how that can influence your thinking positively. So after, I guess, a couple of years of this or maybe longer.

Yeah. How has that maybe changed the way you think about your work? A bunch of different ways. You know, I think one of the, you know, one of the things when I first joined Founders Fund is there's like a, I forget who, someone on the investment team sent me a link and it's all the historical, you know, annual meeting talks Peter's given. And I kind of just flipped through all the slides of them. And, you know, one of them is this thing where there's a slide and it's like Michael Jordan and it's a slide of him when he was playing baseball. And then there's another slide, you know, right after where he's playing basketball. And I forget what the slide said, but it's something like, you know, founder market fit is probably like the number one thing. You know, incredibly important. You know, Michael Jordan was not a very good baseball player, but world-class at basketball. That's something I think a lot about. You know, it's Founders Fund in the name. It's about backing the best founders. But then I think there's this other aspect of like... Is this the right founder for a different market and product that they're building? And then I think the other really interesting thing is there was another slide like this. I've heard Peter talk about this sense as well. It's like this notion that really great founders, they're not like this checklist. In fact, they're really, really great at some things and really, really bad at other things. And I think that's probably true for greatness writ large. And that's a really interesting thing. So then it sort of forces the question when you think about investing. I think one of the things that we do well at Founders Fund is try to zero in on like, what are the most important one or two questions for whether this will work? And then also, how do those tie into who the founder is and what they spike at and what they're bad at? And that's probably one area. And then I think the other thing that has kind of affected the way I invest is just looking at things from the lens of like, if you read like zero to one peter talks about this a lot but it's like you know people really underestimate the power law and then there's kind of this notion that that like getting to scale matter matters a lot um and you know i think i think if you look at that like one way to apply it to crypto that i've kind of applied it to is if you look at things like polymarket as one example uh we you know we doubled down again and then you know early earlier this summer um

And some VCs I know thought that that was like a too expensive price, you know, and then they raised a way, way higher price, you know, a few months later because the traction forexed. And I think it just comes from like, people tend to really underestimate the power law and how there's many cases where something that, you know, feels expensive actually isn't or something that feels not expensive is actually incredibly expensive. And I guess the last thing on this question, you know our our growth team recently kind of did this analysis of like if you look at companies and how long it took them to get from of the ones that made it how long it took them to go from like you know 10 billion to 100 billion market cap and then 100 billion to a trillion it's actually faster for for the larger scale um within tech which is kind of surprising now of course the hard part is making sure you're in in those companies as opposed to the ones that that failed yes which makes being really selective really important. But I think those sorts of lenses are, some of them are things I thought about, but hadn't realized how important they were prior to being at Founders Fund. And then some of them are just, the growth one is kind of counterintuitive, but empirically true. What a thoughtful answer. I'm going to be mulling that one over for a while, I think. Well, as a final question, I always like to ask guests. If you had the power to assign a book to everyone on earth to read and understand, what is the book you'd want to assign people? I think one book that's really good is there's this book about the history of hedge funds. A lot of people listening to this have probably heard of the power law and the venture side, which I actually haven't read. But the same author wrote this book called More Money Than God, and it's a history of... you know a lot of history of financial markets and of hedge fund investing and trading and it's probably the um probably the most interesting investing book i've ever read maybe alongside like soros the alchemy of money um or finance or whatever the title is um because both of them provide like a really insightful window into how like really great investors thought about the investments they were making at the time that they made them um versus i think a lot of them a lot of investing books talk about you know

oh, we did this, this, and this, and it was sort of obvious, and we're so great, and all this stuff, versus these books kind of walk you through the trades and investments at the time. Nothing's ever as certain as it sounds in hindsight, but you can see how people think, and there's a lot of interesting stuff that I picked up from those books. That is a great recommendation. have read The Power Law, but I have not read More Money Than Got. So that's a good prompt. Joey, thank you so, so much for taking this time. I really enjoyed it. Yeah, me too. Thanks for having me. That's it. Thank you for listening to this episode of The Generalist Podcast. Please subscribe on Apple Podcasts, Spotify, or your preferred podcast app. Ratings and reviews help others discover these discussions. So if you enjoyed the conversation, i'd be grateful if you could take a moment to leave one for all past episodes and more visit us at thegeneralist.substack.com see you next time as we continue to explore the future