Chris Lehane was once the consummate Democratic spin man and campaign wonk. He introduced the world to the vast right-wing conspiracy against the Clintons.
In 2015, Lehane dove into the high-growth startup world. He joined Airbnb to run policy and communications. He taught the home sharing company how to fight nicely with cities, dishing out data and tax cooperation in exchange for favorable local regulations. Unlike Uber’s confrontational approach that had it going to war with Bill de Blasio in New York City, Airbnb tried to foster a cozy relationship with urban policymakers.Airbnb CEO Brian Chesky and President Barack Obama built a tight relationship.
A year ago, just as the crypto winter was starting, Lehane joined Katie Haun’s self-named venture fund, which had raised $1.5 billion. Haun Ventures positioned itself as a leader in regulation, policy, and communications. Haun is a former assistant U.S. attorney. Rachael Horwitz, the firm’s chief marketing officer, once ran communications for Coinbase. And Lehane brought the political experience, especially with Democrats.
But there’s only so much one firm can do to change crypto’s reputation in Washington, especially with Democrats. Sam Bankman-Fried, the former CEO of FTX, had become the crypto world’s standard bearer with Democrats, donating to their campaigns and speaking to their values. Then when Bankman-Fried’s empire unraveled and he headed to jail, many Democrats grew disillusioned with crypto.
This year, two Republican-led House committees moved forward crypto-friendly legislation that would clarify the regulation of crypto currencies and give the Commodities Futures Trading Commission more power to regulate crypto (denying the SEC some of that power). Meanwhile, the Biden appointed SEC chair Gary Gensler has sued crypto exchange Coinbase and Binance for failing to register their exchanges with the SEC.
I invited Lehane on the Newcomer podcast to take stock of crypto’s status in Washington. We talked about the bills working their way through Congress, the SEC lawsuits, and the crypto winter. Lehane and I also talked about how he believed that America needed to embrace a “common sector” that served as a hybrid between government regulation and corporate self-regulation. Think Airbnb data sharing with cities or Facebook’s oversight board. We also commiserated over co-existing with Silicon Valley Republicans in the MAGA era.
Get full access to Newcomer at www.newcomer.co/subscribe
00:00:01
Hey, it's Eric Newcomer. Welcome to the Newcomer podcast.
00:00:03
This week I have Chris Lehane, A longtime Democratic operative,
00:00:08
Spin Machine spin master, an SVP at Airbnb in charge of policy
00:00:14
and communications, and now the Chief Strategy Officer at Han
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Ventures atop crypto firm. I had him on the episode to talk
00:00:21
about the state of the crypto winter and specifically what's
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going on in Washington, where the regulatory environment is
00:00:27
with crypto. We also had fun and dug into
00:00:31
more theoretical stuff about how Democrats should be trying to
00:00:35
regulate tech and even speculated a little bit about
00:00:38
the Republican primary. Give it a list.
00:00:42
Chris Lane, welcome to the podcast.
00:00:43
Great to have you on. Thank you man.
00:00:45
You know, we're doing this with a couple days left in summer and
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I'm hoping, at least professionally, this will be the
00:00:51
highlight of my suburb. Cool.
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Well, we got to know each other while you were at Airbnb, and I
00:00:55
might touch on that sort of later in the podcast, but you're
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deep in the crypto world and I haven't really caught up with
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you since. And I know we're overdue for our
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coffee. Yeah, exactly.
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So here we are. Everybody gets to sit in on it
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and obviously, you know, you have deep experience from Bill
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Clinton campaigns and White House experience and then sort
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of deep in tech policy world and deep still in sort of to what
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the Democrats are doing, though I imagine you're spending more
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time with Republicans also these days.
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Do you see yourself as talking to both sides of the aisle?
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I do at some level, although both it's because of where I
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have, you know, deep preexisting relationships and also because I
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think it's ultimately with the space needs if it wants to get
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regulatory clarity and certainty.
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You know, I do spend a disproportionate amount of my
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time on the Democratic side. That's where I come out of and
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you know, we can get into this a little bit more.
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But coming from Democratic politics, I was actually
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attracted to this space because of the small dedemocratizing.
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To pass the potential of the underlying technology.
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But the short answer to your question is, you know, when I
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transition from Airbnb over to the fund, which would have been
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March of last year, so 2022, you know, sort of felt like crypto
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as a political issue was what I would call prepartisan.
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Meaning it had really been yet to be defined one way or the
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other. Politically, neither D nor R On
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the natural, I think there was a.
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Particularly given how crypto had been developed, there's a
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bit of a libertarian element to it.
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It was fairly undefined. We just saw what 2 committees in
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the. House, I'm going to get to that.
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That's why I was taking this. That's why I was taking this.
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That's why I was taking this going back to that March, right.
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Thought the challenge is if you really want to have something
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passed, right, almost nothing gets passed in this day and age
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because of just the broader dysfunctionality that exists in
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our political system, in particular at the federal level.
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Amongst that the elements of drive that lack of functionality
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is it's a hyper person that right everything immediately
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becomes partisanized and that because really difficult you
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know when you have a Senate in the house they're both pretty
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closely divided or flip flopping every two years in terms of who
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controls what for anything to ultimately pass.
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And so I do think you know for this sector to ultimately get
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that regulatory clarity that it is seeking, it does need to get
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this issue at some level. To something that's closer to a
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bipartisan to be clear on that. Like, let's be really clear, you
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know, I am not necessarily suggesting, you know, that
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Elizabeth Warren's going to come out tomorrow and endorse right
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crypto. She was ringed like the worst by
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somebody, right? Crypto.
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But I do think what you saw, you know, from the vote that took
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place on the House Financial Services Committee and the AG
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Committee, and this was a vote that took place towards the end
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of July. For those who aren't following
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it that closely, there are two votes.
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There's a vote on stable coins and a vote on sort of an
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overarching cryptocurrency through legislative framework.
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And what you saw was, yes, you know, generally Republicans
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strongly supported it. But you did get a core group of
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Democrats who did support the legislation coming out of
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committee that sets up the potential.
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And I stressed the potential, not the, you know, you have to
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translate this into an actual real vote for there to be, you
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know, a decent number of Democrats.
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They're not going to be the majority of the Democrats and
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the House caucus, but enough Democrats who supported, you
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know, in a similar ratio as you saw in the House Financial
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Services vote. So it emerges from the House as
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not purely, you know, a Republican versus Democrat
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issue. And so that's the political
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reality I think of where you need to get this.
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There is sort of the Democratic strain of like, you know,
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Gillibrand I think is clearly pretty procrypto.
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And, like, you can imagine this sort of like, you know, the
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Democrats who had to support Wall Street or like, who
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defended industry or a core American competitiveness and so
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believe in business in some ways are like, friendlier.
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I think you have that, you know, and I had a lot more hair when I
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could say this, but you know, a Clinton Democrat, right, that
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you know, you would think of. And again, I'm not sure these
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terms really apply in the day and age that we speak in, but
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more of a sort of center, you know, business creates growth,
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business creates opportunities. How we think about our global
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competitiveness, you know, that type of a Democrat.
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But I also think more so if you look at the folks in the House
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and even on the Senate side who are Democrats who support this.
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It actually I think breaks down less along sort of the Clinton
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Democrat versus, you know, the current sort of, you know,
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progressive Democrat line and much more along generational
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lines. I mean, if you look at that
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vote. That took place in the House
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Financial Services Committee and even on the AG Committee,
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because the bill came through both of those committees, a
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little detailed here. The Democrats who vote for it,
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you know, by and large broke down not on ideological grounds
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within the Democratic Party, but more so on generational lines.
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And so you had, you know, Democrats who've been more
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recently elected to Congress, who are younger, who I think
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intuitively get the issue a little bit differently.
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We have the second oldest Congress, right?
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In the history of the Republic right now, right, which is the
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whole separate issue, we can get extrapolate out what you're
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saying, You know we have what one of the oldest president of
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all time and he's been pretty quiet on on these issues right
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though his SEC chairman has been very active.
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Yeah, we can certainly get that. You know, you obviously had well
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not maybe not obviously last March, April.
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I'm trying to remember the exact time period of 2022.
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You did have the by the administration issue an
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executive order. And that executive order both
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extolled the virtues potential of decentralized computing and
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the role that crypto currencies could play both in distributing
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economics but also in U.S. economic competitiveness and
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national security issues, but also called out the need for
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consumer protections and regulations to make sure that it
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was being managed responsibly. So they did put that out.
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Now I would also agree it has not been exactly an
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administration out there leading the charge on this, which I
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think has ceded ground. Where they're basically to be,
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this fight between the CFTC and the SEC, basically taking two
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completely contradictory perspectives.
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I say this as a Democrat who thinks that Joe Biden has by and
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large and a really good job and really difficult time period for
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our country. But we are almost 24 years into
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the 21st century and I think whether you're a Democrat or
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Republican, I think amongst the challenges our country is
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facing. Is, you know, we still are
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effectively operating under what I would call a new deal sort of
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paradigm or structure for government when, you know,
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society has changed a lot and in particular our economy has
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changed pretty dramatically. And how do we begin to sort of
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reimagine, you know, the role of government, particularly for
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someone who is a Democrat and does ultimately believe that the
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Democratic Party is at its best when it is standing for and
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growing a middle class? And how do we do that?
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You know, in a totally new type of economic context.
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And so when you talk about the age that we see, you know and
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I'll speak to Congress again, the 2nd oldest Congress in the
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history of the Republic. You know, if you get older and
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not like I say, this is someone who's in his mid 50s, right, How
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you reimagine the world and re envision the world.
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I mean there's all sorts of studies that just show that
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becomes harder the older that you get.
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And I think amongst the challenges that we face as a
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country is beginning to really rethink.
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What is that relationship between the national government,
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local government, state governments, you know,
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individual age? All right, well, to stay on the
00:08:42
Democratic point, because I'm very interested in that, I want
00:08:45
to sort of outline the crypto part of it here too.
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But you know, I work for the Obama campaign as.
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What you say that I'm open about it, I'm independent like that
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was, you know, I'm very clear, like I'm an opinionated reporter
00:08:58
now, you know, I feel like the challenge is sort of like a
00:09:00
Democrat and pro government sort of person.
00:09:04
Is that the tech policy strategies often to move fast or
00:09:08
like especially with Uber. I mean I think Airbnb to some
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degree and crypto it's like and not even necessarily with policy
00:09:14
in mind. You know these businesses just
00:09:16
want to grow fast so they establish a reality before
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there's a regulatory regime. And then Even so, someone like
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myself who believes in tech but also in regulation, then get
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sort of frustrated that the government, by the time they're
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coming, consumer behaviors already set and there's a
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certain fatalism to it. On the other hand, you don't
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really want government to act so quickly that people aren't even
00:09:41
allowed to innovate, right? I mean, we're sort of seeing
00:09:44
this question with a I right now where the Democrats have sort of
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learned this lesson over and over again and they're like, oh
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man, we actually need to jump really fast before anything
00:09:54
forms because once it does, it's so hard to regulate.
00:09:57
On that very broad point, I'm curious what you think, how the
00:10:00
Democrats should respond to this problem of how quick to move?
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You're articulating a version of what I was just sort of alluding
00:10:08
to, which is structurally how do we think about how government
00:10:14
can appropriately intersect with the economy and specifically
00:10:18
technology in post industrial age and in this, you know,
00:10:22
digital world that we live in. And you know, I certainly do not
00:10:27
believe that the structures that currently exist, and it's really
00:10:29
easy to diagnose this. It's a lot harder to come up
00:10:31
with the solutions. You know what?
00:10:33
We're designed for a different age.
00:10:35
I mean, you can take a big step back and I'll do a short version
00:10:37
of this. But, you know, when our country
00:10:40
was first formed, Alexis de Tocqueville does a great book on
00:10:45
democracy in America and, you know, talks about this idea
00:10:47
that, you know, at that time people just thought democracy
00:10:50
was scary. They didn't think it was going
00:10:52
to be able to succeed. In many ways, it's similar to
00:10:55
how people talk about some of the technology that's emerging
00:10:57
now. And you know his book.
00:11:00
At least the first version of it, there are two versions of
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it. The first one's a little bit
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more optimistic than the second one.
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But the 1st edition, you know, talked about the fact that, you
00:11:07
know, the US had basically created an entity that existed
00:11:11
between sort of government and business, and that was civil
00:11:15
society that almost served as like the regulator.
00:11:18
If you think about an engine or controller, if you think about
00:11:21
an engine for democracy to really work, you get to the
00:11:26
1930s, that Great Depression. Post World War One.
00:11:31
And that begins to break down. Like civil society is not really
00:11:35
serving the function in many respects because you've got this
00:11:38
new industrial economy that's not the same as an agricultural
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age economy. And FDR steps in with a vision
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of a New Deal, which is a large government basically stepping in
00:11:48
for what had been civil society. You know, as we stand here
00:11:52
today, I mean, I remember I was, you know, as we've touched on
00:11:55
working with Bill Clinton, President Clinton, why that was
00:11:58
an awesome president. And he gave this famous speech,
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you know, the era of big government is over, but what
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comes next? Right.
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And I still don't think we have answered that question of what
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is our structure and vision for government that actually allows
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democracy to flourish and deliver for its people in this
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current economic age. And my short version, and I'm
00:12:23
happy to go deeper on this, of where we need to get is I think
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for the last you know. 506070 years we've serve been operating
00:12:31
under this paradigm of a public sector and a private sector and
00:12:34
sometimes you get public private partnerships, right.
00:12:36
That was the, you know, concept that you heard about.
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And I actually think we're going to need to design stuff that is
00:12:41
a little bit more fully integrated.
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You know, something along the lines of you know, a common
00:12:47
sector and what that common sector ultimately is able to do
00:12:51
if done well. And by the way, this is a little
00:12:53
bit of the vision that we had at Airbnb frankly, but what it is
00:12:57
able to do well. Is exactly what you were just
00:13:00
talking about, which is it allows innovation to happen, it
00:13:03
allows it to happen quickly, but it also allows government and
00:13:07
really by extension the public to have a much bigger voice and
00:13:11
how that technology is evolving, being deployed and assuring that
00:13:14
is actually. Optimizing for the broader good.
00:13:17
Now that's really utopian, probably at some level.
00:13:20
Why say I was worried that you'd been a crypto for a year now and
00:13:22
you're going to be like it's defy.
00:13:24
We need to like, put everything in the blockchain and we're
00:13:26
going to solve it. No, no, no.
00:13:28
But you know where I come in on this on on the crypto piece in
00:13:30
particular is I think you know, right.
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We're going through some massive technological shifts.
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You've got crypto, you've got quantum, you've got enormous
00:13:39
stuff happening. Biotech, obviously, AI and.
00:13:44
Back to both points, I think both of us have made, like I
00:13:46
don't feel particularly good about our government's ability
00:13:49
to be able to effectively address us.
00:13:51
And I remember back in the spring, I spent the day and 1/2
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in DC, the White House on the Hill, talking about some of
00:14:00
these things with some friends and other folks.
00:14:03
And you know, and the government's approach was very
00:14:07
much looking through the rearview mirror.
00:14:10
Here's what we missed with Quote UN quote Web 2.
00:14:13
And so here's how we have to approach these next big
00:14:16
technologies. And I came back to San Francisco
00:14:19
and I was at a small conference where you had folks like Sam
00:14:23
Alton from from Open A I. You had the woman from Berkeley
00:14:27
who's in charge of the CRISPR project.
00:14:30
You had someone talking about driverless cars.
00:14:32
You had someone talking about crypto, and they were looking
00:14:36
through the front window 10 years down the road, right?
00:14:39
And there was no one sort of thinking about okay, where are
00:14:41
we now and how do we? Get there And really no process
00:14:45
or structure to do it and was just really struck by that and
00:14:49
do think we ultimately are going to need some of these new
00:14:51
structures in place. And by the way, like, it's
00:14:54
really easy to say, as I said earlier, but really hard to do.
00:14:57
I mean, you look at the history, right?
00:14:58
Like we got the first version of our democracy only after a
00:15:02
revolution, right. The New Deal came in place after
00:15:06
a World War and the Great Depression.
00:15:09
You know, typically you don't get these massive structural
00:15:11
changes. Absent some real existential
00:15:13
crisis, what's the phrase using common good?
00:15:16
Common sector, Common sector. Is there an example entity or
00:15:20
like how would you structure one?
00:15:22
Or is this, I mean crypto I can think of like Oh well we should
00:15:26
you know, have a crypt. Well, it's not really a company,
00:15:28
but you could have a government controlled coin or something
00:15:31
like that. Yeah, you could have.
00:15:32
I mean you could think about dows and you know.
00:15:35
The government's putting certain requirements around whether the
00:15:37
house should include in his decision making could be an
00:15:41
example of that on the crypto side, right?
00:15:42
So it's not government doing it, but government building and
00:15:45
sent. You can imagine, if you know, to
00:15:47
get approved by, you know, a government, right, a government
00:15:51
agency, whether it's a CFTSEC or a whole brand new agency, right,
00:15:55
that you could build certain, the government could identify
00:15:57
certain incentives, where the jobs take place, where the
00:15:59
economics go, who participates in it, right.
00:16:02
And those basically get built in to the Dow and even the coding
00:16:06
that we go into the Dow as a way to think about the distribution
00:16:09
of the economics and decisions. You could even imagine, you
00:16:12
know, thinking about that from a sustainability climate
00:16:14
perspective in terms of how some of the technology works.
00:16:16
I think some early examples that you can maybe point to outside
00:16:21
of crypto. By the way, this is amongst the
00:16:22
reasons why I was attracted to crypto.
00:16:24
Like, I think you know, the structure of crypto lends itself
00:16:26
to supporting some version of a common sector.
00:16:30
So I think the two examples and the first one I think people
00:16:33
roll their eyes when I say, but bear with me a little bit you
00:16:35
know was when then Facebook now meta you know, set up it's
00:16:39
effectively its court system right now.
00:16:41
I think of Facebook had done that proactively and not from a
00:16:45
deep dark hole that they had put themselves in.
00:16:48
They'd have gotten a lot more credit for it, right.
00:16:50
But that was an example. And imagine taking that a step
00:16:53
further, where. You know, does the FCC have some
00:16:56
participatory role in that or some agents where there are
00:16:59
legal standards? That right, that gets built into
00:17:02
that right. But the Facebook is paying for
00:17:04
it. Facebook is staffing it, but it
00:17:06
has legitimacy and credibility and people have real
00:17:08
transparency into what it's doing.
00:17:11
And you know this is somewhat self-serving, but Airbnb amongst
00:17:14
the things we ultimately got to was building in and providing
00:17:20
local government cities. A PI's so that the city's pipes
00:17:24
were built right into that Airbnb tech and so therefore
00:17:29
cities had the ability to regulate and enforce their laws
00:17:33
in real time right through the Airbnb platform itself, right.
00:17:38
And so as you know from having covered Airbnb, one of the
00:17:41
issues was what we have these laws.
00:17:42
But. It's really difficult for the
00:17:44
cities to enforce them. They can't, and Airbnb certainly
00:17:46
use that to advantage. It's like we don't have to be
00:17:48
cooperative, but we can be. That's right.
00:17:50
And ultimately it served as a really powerful tool that
00:17:54
there's no question that Airbnb building those API's made it
00:17:57
more effective for cities to be able to enforce against Airbnb.
00:18:00
And in almost all these situations, the company took a
00:18:03
haircut. But the long term benefit of
00:18:07
being in a positive, constructive relationship with
00:18:10
the city ultimately, actually. Was a real driver of sustained
00:18:15
longterm growth because you took teeth down, people had
00:18:18
visibility, hosts were then able to come and sign on in a way
00:18:21
that, you know, made it a lot easier, right, All of those
00:18:23
things. So again, those are just two, I
00:18:26
think, you know, maybe rudimentary or crude or early
00:18:29
stage examples of what you could imagine.
00:18:32
I mean, think about driverless cars and how this could all
00:18:34
work, right? There is always some sort of
00:18:37
industry wants to say, oh, we can self regulate and that will
00:18:41
replace government and that is not new and can sometimes be a
00:18:43
dodge and that's the critique obviously of Facebook.
00:18:48
So do you have a quick response to that or I mean in some ways
00:18:51
that's what you're proposing? Right, Facebook.
00:18:52
An earlier version, Airbnb went a step further and actually
00:18:55
allowed governments to be able to use the technology to make
00:18:57
their enforcement better, right. I think a Facebook had gone
00:19:00
proactively and built in that additional component.
00:19:03
I was like feeding data. Yeah, that's definitely beyond
00:19:06
that. You're helping the government
00:19:07
actually do a better job. Of coming.
00:19:09
Yes. And taking direct feedback from
00:19:11
the government about how this can work better.
00:19:13
OK. So crypto, I mean the broadest
00:19:16
level. And you know, I'm not deep in it
00:19:18
and I don't think, you know, many of our listeners even sort
00:19:20
of in venture world, I feel like it's like, oh, it's sort of down
00:19:23
there in a winner. Like we're paying attention to
00:19:24
AI right now. So I think part of the goal with
00:19:26
this episode is just like make sure those people sort of know
00:19:29
what's going on. I mean on the broadest level,
00:19:33
there's still this question of whether tokens are securities,
00:19:37
right? And part of what's going on is
00:19:40
that Gary Gensler at the SEC is going after Coinbase and Finance
00:19:46
and as part of those cases sort of regulating through legal
00:19:50
action to say that there are securities.
00:19:52
And then on the flip side, you've got these, you know,
00:19:56
bills coming through the House, the Republican controlled House
00:19:59
that want to make. Crypto tokens regulated through
00:20:03
the Commodities Futures Trading Board, right?
00:20:06
Which is seen as. Is that there?
00:20:09
Did I get the acronym? Yes, the FTC Commission, yes.
00:20:13
Yeah. Yes, the.
00:20:15
All legacies at the New Deal that we've already, I know, but
00:20:18
yeah, well, we've already sort of alluded that it's going
00:20:20
through the Agriculture committee, which is like as it's
00:20:23
like always a good sign. Yeah.
00:20:25
And so, you know, the crypto world seems to want to avoid
00:20:28
especially this hostile SEC, move over the CFTC, and avoid
00:20:34
being a security. You think that's a fair gloss of
00:20:36
the situation? And what else would you add to
00:20:38
that? Yeah.
00:20:38
I mean, I think first of all, I think because of just the nature
00:20:41
of the legislative process, it's, you know, effectively
00:20:44
become, you know, a binary choice as it go to the CFTC or
00:20:48
SECI think, you know, there's versions of this where some of
00:20:52
it that goes does go to the SEC and some does go to the CFTC.
00:20:55
So it's not like they all go to one or they all go to the other.
00:20:58
Depending a little bit on the attributes of what the actual
00:21:00
coin looks like, what I would emphasize though, just, you
00:21:04
know, because we're trying to have, you know, make this
00:21:07
conversation as interesting as possible, that's ultimately very
00:21:10
much of A looking through the rearview mirror, right.
00:21:13
Which is, I would argue that, you know, these tokens are
00:21:17
neither a commodity nor a security, but something that is
00:21:22
just really totally different and that, you know, if we really
00:21:25
wanted to reimagine or reenvision.
00:21:27
You know how the world could work or how this particular
00:21:29
sector could work. You could be approaching this in
00:21:32
a way that really looks to lever, optimize for the
00:21:35
opportunity while really putting strong regulations in to help
00:21:40
protect consumers. That's not where the
00:21:42
conversation is. That's not reality, right.
00:21:44
The reality is that this is going through, you know, a
00:21:47
legislative process, and that legislative process is seeking
00:21:50
to build on existing structures. For something that is just, you
00:21:56
know, very different and very new.
00:21:57
And so as a result of that reality, right, it is this whole
00:22:00
debate about whether it is a commodity or security and what
00:22:04
the current legislation does. Yes, most of it, it pushes into
00:22:07
the commodities range, right? There will still be things that
00:22:09
could have attributes where it ends up becoming a security.
00:22:12
How bad is the current situation for crypto?
00:22:15
I mean one name we haven't brought up that obviously is
00:22:18
huge, especially in the democratic perception of this.
00:22:21
Is Sam Bankman freed? Right.
00:22:23
Sam Bankman freed. FTX was doing a lot of the heavy
00:22:27
lifting for, you know, crypto with Democrats by sort of
00:22:30
cozying up to them and sort of speaking to their values and all
00:22:34
that. And then when FTX sort of proved
00:22:37
to be what you know, which seems to be a sham, it's really
00:22:40
embarrassing for those electives and teaches them sort of a very
00:22:44
negative lesson about crypto. Yeah, I mean I was going to say
00:22:47
earlier when we're talking about the pre partisan to the
00:22:49
bipartisan, I thought the space was actually on a pretty good
00:22:51
path as reflected in the Biden executive order.
00:22:55
And at the FTXSBF explosion, however you want to describe it,
00:22:58
the Baco Royale, you know, has, you know, with a huge impact on
00:23:02
that, a huge impact on the ability to get this to a
00:23:05
bipartisan place and, you know, a huge impact on momentum for
00:23:10
regulations. It unleashed the skeptics and
00:23:13
the cynics to be even, you know, more forceful in their
00:23:16
skepticism and cynicism. And you know, if you came at the
00:23:19
space with questions and skepticism, right?
00:23:21
That was certainly a pretty powerful.
00:23:23
Proof point for you and so somewhat understandable for
00:23:26
those who are genuinely coming at this with integrity and
00:23:29
questioning it. I think there are some others
00:23:31
who are just you know, trying to jump on the issue.
00:23:33
But yeah, no, it had a huge a huge impact both on the timeline
00:23:37
and you know and how people perceive it.
00:23:39
And that's you know, that's a hole that ultimately the sector
00:23:42
needs to be able to dig out. Now you're asking a better
00:23:45
question of where things are in crypto right now or Web Three
00:23:48
depending how you wanted to find it.
00:23:49
I think about it is. Decentralized computing, But I
00:23:52
think first of all this is a space that has gone in cycles
00:23:55
and you've heard a little bit about this.
00:23:57
But for those who haven't, there's crypto winters, crypto
00:24:01
summer, sometimes crypto springs and crypto falls and that has
00:24:04
really been the history of this sector.
00:24:08
And there is a specific reason for that, which I think is
00:24:12
different maybe than some other technological errors which is
00:24:16
crypto basically emerged. All at once as sort of like a
00:24:20
technological sector, whereas in the past for the most part as
00:24:26
new technology has evolved and come out, it's typically been
00:24:30
much more sequential, right? Like, I go back to the early 90s
00:24:36
and you know, network computing, you know, which had been a goal
00:24:41
since the end of World War 2, but there had never been the
00:24:45
technology to allow for protocols.
00:24:48
To allow for, you know a computer in San Francisco to
00:24:51
talk to computer in New York and do it in a safe and secure way,
00:24:55
right. You got HTTP, you got other
00:24:56
protocols that came out and really made that happen.
00:24:59
But imagine if like suddenly the Internet had shown up and there
00:25:03
was cats, videos and porn stuff and all of that happening and it
00:25:07
was available to everyone at the same time.
00:25:09
And you know, and that's a little bit you know that the
00:25:11
opportunity and challenge on the crypto side and amongst the
00:25:14
reasons why. You get a little bit of this of
00:25:17
the cycles I would offer that sort of crypto is set up in a
00:25:20
way to front load the financial reward and now that sometimes
00:25:25
viewed as a feature and. A challenge, right?
00:25:27
It's like two sides, no pun intended.
00:25:28
Two sides of the Bitcoin, I guess or you know, pick your
00:25:31
currency. You also have had it sort of
00:25:34
emerge, you know, in a time period where as you know, having
00:25:38
covered the tech spacing of money was effectively free right
00:25:42
when it's different today than it was, you know.
00:25:45
March of 2022. And you know, and so this
00:25:48
particular cycle, you know, you get crypto, you saw the whole
00:25:51
tech cycle go up and then go down.
00:25:54
Crypto is probably the sort of frothiest, the end of that tail,
00:25:57
right. So it in particular has been
00:25:59
impacted by that swing. The one thing I would, I guess
00:26:02
two things I would really just focus on is every time it's had
00:26:05
these cycles, the water line gets higher and higher, right.
00:26:09
So today, you know, more than one in five Americans hold.
00:26:13
Cryptocurrency, you know, there's 400 million, more than
00:26:16
400 million people around the world, you know, who hold a
00:26:19
digital currency, right? That's a significant.
00:26:22
I've never had. I'm an amateur.
00:26:24
I like to fashion myself. Eric, as an amateur historian,
00:26:26
I'm not sure whether I rise to that level or not.
00:26:28
But you've never had in, you know, in human history,
00:26:32
currencies created at scale that do not involve A sovereign
00:26:37
entity or the government, right. From a societal, historic
00:26:39
perspective, it's an amazing thing to think that you've
00:26:41
actually created currencies. They're based on mathematical
00:26:46
formulas that drive people to people trust over those
00:26:48
currencies. The other thing I would just
00:26:51
point out is the rest of the world is in a really different
00:26:54
place than the US. You basically look at every
00:26:58
major financial capital or aspiring financial capital in
00:27:03
the world and they're all moving way ahead of the US to embrace
00:27:08
the technology, whether it's the UK.
00:27:11
You know, having even this week, I think there's some additional
00:27:13
activity happening there where they're, you know, putting in
00:27:16
place a pretty robust regulatory framework that does address
00:27:20
consumer issues, but also is designed because they want
00:27:24
London to be a center of this Abu Dhabi, Dubai, Brazil,
00:27:28
Singapore, the EUI. Mean these are all places,
00:27:33
Australia, Japan that have moved well ahead of the US on putting.
00:27:39
The regulations in place with an understanding that you know
00:27:44
crypto is going to be a significant part, you know of
00:27:47
the financial world as we move forward and wanting to make sure
00:27:52
and in many respects they took lessons from the 90s from the US
00:27:56
that the US currently hasn't applied to itself right which is
00:28:00
US 96 and I was part of this put in the.
00:28:02
Telco act like that set the US to become the center of the
00:28:05
digital economy, right? The rest of those places missed
00:28:08
that are a lot of them missed it and you know, they are seeing
00:28:11
that this is going to be a big part of the future and wanting
00:28:13
to make sure they have a piece of it.
00:28:15
What's the sort of worst case scenario here for crypto?
00:28:18
I mean, it's crazy to me that Coinbase is allowed to go public
00:28:23
and then the government says actually, even though the SEC
00:28:26
approved it, we can now sue you for your core business violating
00:28:31
SEC. Rules on the business That
00:28:33
hasn't changed all since it was approved, right?
00:28:35
Right. I mean there's nothing different
00:28:37
today from ploy based and was in there S1.
00:28:39
You know the document that they show that needs to be reviewed.
00:28:42
The government sort of argument is that they should be allowed
00:28:46
to take all the legal time. They have to sort of come to a
00:28:49
view, I don't know. Yeah, right.
00:28:51
But you look at the mission statement and purpose of the
00:28:54
SEC, right? They're supposed to.
00:28:57
Be there to help protect consumers, you know, they
00:28:59
allowed or they at least reviewed and then you know, as
00:29:02
one went forward and you know those shares are offered to the
00:29:06
public and nothing has changed, you know, since then.
00:29:09
Also amongst the SE C's mission and purpose is to help support
00:29:14
an economy where more people are able to participate in the
00:29:18
economics of our country, you know and today. 10% of the
00:29:22
country owns 90% of the web. Like if I was the SEC and you
00:29:26
really want to take some big swings at things like I would
00:29:28
focus more on that. Then, you know, a technology
00:29:32
that was allowed to go forward and where nothing has changed
00:29:37
and the technology that ultimately is actually trying to
00:29:38
update the financial system to make it more fair.
00:29:43
I find it very hard to believe that like Bitcoin or like
00:29:46
Ethereum or that they're going to be like illegal in the United
00:29:49
States, right? Well you obviously have a court
00:29:50
rule right as a District Court but you know from the Southern
00:29:53
District of New York and you know and that well respected
00:29:56
Obama appointed judge who has made me a points that were
00:30:00
adjacent to what you were just saying.
00:30:02
Right. In terms of being particularly
00:30:04
on the security commodities issue and just given the scale
00:30:07
of people and. That work found it was a
00:30:10
commodity. Right, Yeah, right.
00:30:11
But you had mentioned something earlier that I think is relevant
00:30:13
to this, which is amongst the challenges the government faces,
00:30:17
particularly at the federal level is that you get consumer
00:30:19
adoption of a new technology and then the government has a
00:30:22
challenge of how they keep. I mean, you know this is an
00:30:24
example of that, right? You live in a time period where
00:30:27
80% of the country does not believe the financial system
00:30:30
works for them. You look the folks who own
00:30:34
digital assets, you know it over indexes.
00:30:38
On cohorts of the population that in particular have been
00:30:42
impacted by a financial system that doesn't work for them,
00:30:46
right, younger people, people of color, people who make less than
00:30:50
$100. And one of the things that I
00:30:53
thought was really interesting is the fact that over 60% of the
00:30:57
folks this is from data from a year ago.
00:30:59
So it may have evolved a little bit, but directionally I think
00:31:02
it's pretty powerful. Which is, you know, over 60% of
00:31:05
the people who own digital assets voted for Joe Biden for
00:31:07
president. It tells you a little about who
00:31:09
they are and you know what their values and politics are, right?
00:31:14
I get the strategy of like do what your constituents want or
00:31:17
like they have crypto, so vote for them.
00:31:20
I mean, the crypto industry at its core, just like hasn't
00:31:23
delivered a great case study for why people should cheer for it
00:31:29
yet. I mean, I'm sure you're going to
00:31:30
come up with a couple, but there have been so many frauds.
00:31:34
There's so much financial speculation.
00:31:36
I feel like part of the reason for the delay on the side of the
00:31:41
government is just like, oh, well, maybe we should give it
00:31:43
time to see if anything really good does come out of it.
00:31:47
And then that's why stuff like FTX is so hard for crypto,
00:31:51
because it's like, oh man, this was sort of one of the things
00:31:54
you were holding up. What's worth saving?
00:31:56
Yeah, I think the fact that you have.
00:31:58
You know, more than 400 million people around the world, 50 +
00:32:00
1 in this country, you know, does speak to the fact, I
00:32:03
mean consumers do get the vote with their wallet at some level,
00:32:06
right, and with their feet at some level.
00:32:08
And you know, even the polling I've done in this country and
00:32:11
stuff that we've seen from around the world like amongst
00:32:14
the reasons folks are buying it is because they are using things
00:32:18
like stable coin as a hedge against inflation.
00:32:21
You see that globally, right? You see people wanting to use
00:32:24
it. You know, we looked at voters in
00:32:26
Ohio and Pennsylvania. And you know, over 40% of the
00:32:30
folks who own digital assets said they bought them because
00:32:33
they wanted to help them be able to do remittances, right?
00:32:35
These are immigrant families who are sending money back to real
00:32:38
relatives and family members in different parts of the world
00:32:41
where they're able to do a lot quicker for a lot less.
00:32:44
Those are still just early versions and, you know, and
00:32:47
examples. But I do think when you get
00:32:49
people at that scale using it right, they're obviously finding
00:32:52
some utility and they're using it despite the fact that it's
00:32:56
very janky. Very hard to use, right?
00:32:59
It's not easy. It's really complicated.
00:33:02
And these are not engineers who are using it, right.
00:33:04
They're figuring out how to use it because they're so
00:33:06
dissatisfied with what the current option is for them.
00:33:10
Now, everything you said, I just want to be clear, like
00:33:11
everything that you said about the scams, about the utility,
00:33:15
Yeah, that's amongst the challenges.
00:33:16
It comes back to a little bit of, I mean, if the Internet had
00:33:19
just emerged and all people knew it was that it was being used
00:33:21
for cat videos and pornography, like.
00:33:24
And I do remember 2001. Afterthe.com bomb Like major
00:33:28
articles and major publications like the New York Times.
00:33:31
I'm doing this off the top of my head, so don't hold me this
00:33:33
exact title, but the Internet is dead, right?
00:33:36
Right. You know, a I was, you know,
00:33:38
initially really pushed in the late 1960s.
00:33:42
And then people said why you can't actually use, you know,
00:33:44
great algorithms that can replicate neural networks and
00:33:47
then all of a sudden, you know, chat G, PT3 or 3.5, you know
00:33:52
emerges and suddenly. You know, the world shifts in a
00:33:55
pretty significant way, I think. You know, crypto has created a
00:33:59
high challenge for itself. Maybe it's a high class
00:34:01
challenge, which is it's all happened at the same time.
00:34:04
I will say as someone who's at a fund and you know looking at the
00:34:07
projects out there, you know that there's a lot of really
00:34:10
interesting stuff going on. And at the early stage that
00:34:13
really is looking at that infrastructure for what you call
00:34:16
level to the sort of the app, conventional language app level.
00:34:20
You know, that then ultimately translates into a lot more
00:34:23
utility. But I want to be clear, I do
00:34:25
think that you are hitting on something that is a core
00:34:27
challenge for the space. How do you demonstrate utility
00:34:31
for why this should matter to the world so that policymakers
00:34:35
care about it, right. That's I think ultimately what
00:34:37
you're getting, why the public, you know, more broadly cares
00:34:39
about it. I do think the public is ahead
00:34:41
of the policymakers on this, which is typically the case,
00:34:44
because you wouldn't have that level of engagement unless
00:34:46
people are finding real value for it.
00:34:48
And seen it as a solution. Are there pieces of crypto web
00:34:53
three that Han ventures won't invest in because of policy
00:34:59
concerns? Or how much are you letting sort
00:35:03
of your policy expertise influence your investing
00:35:07
decisions? It's a great question.
00:35:08
So we do both an accelerator fund, right and then that an
00:35:11
early stage fund and we have a rubric that we use for you know
00:35:17
when we make a decision. To invest and one of the key
00:35:21
elements or criteria in that rubric is that the founder does,
00:35:25
the company does, the leadership team does a project.
00:35:28
Understand that you know policy is going to be a very important
00:35:32
issue. They don't necessarily have to
00:35:33
have all the answers, right because some of this technology
00:35:36
is so forward-looking. It's difficult to sit there.
00:35:39
You're with a a founding team of three or four to be able to
00:35:42
answer where they're going to be in two years, but they have to
00:35:44
understand that they are going to need.
00:35:48
To manage for that and build with that in mind and if we do
00:35:52
not feel comfortable that they don't have an appreciation for
00:35:57
that, then that is certainly a criteria that would block us
00:36:01
from making an investment. And without naming names because
00:36:05
I know you'll ask me that if I for the following sentence, we
00:36:09
have made a number of decisions where we did not invest because
00:36:14
we were ultimately concerned about.
00:36:16
Sensitivity and understanding that these are issues that need
00:36:18
to be navigated and done in appropriate ways.
00:36:20
Well yeah, because there's certainly a strain of crypto
00:36:22
person who's like anti government regulate.
00:36:25
So it's not. As I mean Katie Han, right,
00:36:27
Katie is the founder of this fund, right.
00:36:29
As you know she was a long time, very high profile prosecutor to
00:36:33
the Justice Department and she joined Coinbase, you know as a
00:36:37
board member early on. And look, I think you know a
00:36:41
very receptive founder and Brian Armstrong an executive team.
00:36:46
But certainly was a major voice about the fact that you know,
00:36:49
Coinbase should work within the legal system even if that meant
00:36:54
it was going to impact, you know, its overall shortterm
00:36:58
growth and you know you stand here today.
00:37:00
Yes, Coinbase is in litigation with the SEC, but it it
00:37:04
certainly is a company that went through the public process,
00:37:06
certainly a company that seeks to work within the regulatory
00:37:10
framework, you know, particularly when it's
00:37:11
understandable. You know just even I think in
00:37:14
the last couple weeks has gotten you know approvals for some
00:37:18
initiatives you know through that process and I think is
00:37:21
positioned for long term growth because it made that decision
00:37:24
early on to work within the system and in fact I think is
00:37:27
understood to be in that position.
00:37:29
What's the state of actual venture funds like risk exposure
00:37:35
for the like, you know, particularly I guess token
00:37:38
purchases, right. I mean there have been looks at,
00:37:41
yeah, firms investing in, I guess I'm going to blur the
00:37:46
boundaries here like Icos and tokens and then in some cases
00:37:50
sort of selling out, I don't know, Do you think that is sort
00:37:54
of safe? Are you still investing those
00:37:56
types of things? What's your view on?
00:37:58
That so we're not a hedge fund, let's be clear about that and I
00:38:01
know you know that, but just in case anyone's out there, you
00:38:03
know we are a venture fund and you know our Lps understand.
00:38:08
That we're investing for the long term.
00:38:11
And I'll get even more specifically to your token
00:38:13
question in a second, but just as a little background, you know
00:38:16
we raised our fund in March of 2022 in the midst of, you know
00:38:22
the market going from that suburb into a winter, right?
00:38:25
Right in the roots of that correction, it's like 1.5
00:38:27
billion or? Something 1.5, right, But we're
00:38:29
raising that in the midst of a volatile market and the team,
00:38:33
you know, led by Katie, really called out when we're doing, you
00:38:37
know. Those sessions with prospective
00:38:39
Lps that we thought we were going to be entering a winter,
00:38:43
that this was going to be a longterm process and that you
00:38:47
know venture, you know by definition means that there's
00:38:50
going to be an element risk. But obviously we built in a
00:38:54
bunch of systems to make sure that we were optimizing for that
00:38:58
longterm return. But we are very straightforward
00:39:00
with folks and also made really clear and I think this is an
00:39:03
important point. That we were going to approach
00:39:06
our investments knowing the time period that we're about to go
00:39:08
into with real prudence. To take some what you're saying,
00:39:12
we're a venture fund. I think people take two things.
00:39:15
You're saying, OK, we're long term oriented.
00:39:17
Some people would say, oh we're a venture fund.
00:39:19
We only invest in equity. You know we invest in companies,
00:39:22
maybe they do a token offering, maybe they don't.
00:39:25
That's part of their business. We invest in the equity.
00:39:27
I take from your answer and just actually knowing the firm,
00:39:30
obviously do also invest, Oh yeah, in tokens directly often
00:39:35
when you see those supporting the company as you were just
00:39:37
saying, yeah, but I think there's just trying.
00:39:38
To support the ecosystem because tokens, unlike equity you know
00:39:42
like the rest of crypto, are not well regulated.
00:39:45
It exposes the venture fund itself to some of these same
00:39:48
legal risks that the companies face like how do you guys
00:39:51
navigate that or what's your. Yeah, I think, you know, we risk
00:39:54
at the moment. It helps to have Katie over here
00:39:57
as someone who you know has A been involved with the space
00:39:59
from the really beginning. B obviously is extremely
00:40:03
sophisticated. On how government agencies think
00:40:06
about these things and see we're able to take you know that
00:40:09
information and be able to you know to the public and private
00:40:12
tokens in a way that you know we know is really certainly have
00:40:16
the all reason to believe is as responsible as anyone could be.
00:40:19
It was part of our value proposition.
00:40:21
You know I think frankly for those LP's you know who looked
00:40:24
around and you know look as things turned out, we've touched
00:40:26
on this with FTX and some others you know has you know people
00:40:30
right to be sensitive to some of the folks who are in the space.
00:40:33
And you know part of our value proposition is that we're going
00:40:36
to take a a very responsible approach in terms of how we
00:40:39
deploy our capital and how we think about this regulatory
00:40:42
policy issues in that context. I mean how do you think you know
00:40:46
Solana, which is you know, a currency was a case where it
00:40:50
seemed like a lot of venture funds sort of got early access,
00:40:55
the price drives up, you know? They cash out at some point and
00:40:58
eventually the price falls like I don't know, like do you, I
00:41:03
mean then they're very different examples where like there are
00:41:06
companies that have valuable tokens that never produce sort
00:41:10
of the underlying thing and at some point firms decide they
00:41:14
don't believe in the value anymore.
00:41:15
So they sell out like, I mean I'll just say that you know
00:41:20
there is a pump and dump type accusation to certain crypto
00:41:23
projects. Yeah, I don't know.
00:41:25
What's your view on those? Actually, I think it relates
00:41:27
back to one of your earlier questions about, you know, how
00:41:31
elected officials and governments think about this.
00:41:33
I mean, as a Democrat, it strikes me as interesting.
00:41:35
The Democrats are not necessarily leading on actual
00:41:38
putting it in place like regulations from a legislative
00:41:41
perspective to actually build all these consumer protections
00:41:44
in. Because I do think the whole
00:41:46
space would be better off if we are building in those types of
00:41:50
consumer protection. Sure, we have a fund, you know,
00:41:54
apply our own, you know, that effectively is seeking to make
00:41:57
sure we're protecting and doing it in a responsible, smart way.
00:42:01
But the whole space would be better off and you would avoid
00:42:04
and mitigate, you know, future FT X's or future pump and dump
00:42:10
schemes as you've described it. You know, if they're really
00:42:13
clear lines out there about what you know, what you don't know,
00:42:16
Like, I actually think that there's incredibly powerful ways
00:42:20
for tokens to serve as a much more small deed democratizing
00:42:24
distributive economic tool. You know, if you're someone out
00:42:28
there who's participating in a chain, you know, and you get
00:42:31
tokens in return for being a validator on that, or you get
00:42:35
tokens in return for building a really interesting project on
00:42:38
that, right, you're getting the direct economics for your IP
00:42:43
right for your work. You know, imagine a world where
00:42:47
you know people are able to actually really own a piece of
00:42:50
what their actual labor produces.
00:42:52
That's just a completely different way of thinking about
00:42:55
the relationship between management and labor and I think
00:42:58
these tokens really. And so this is a long winded and
00:43:01
you can see I'm thinking aspirationally, but this amongst
00:43:03
the reasons I get excited for this space that like if
00:43:05
government starts to think about it that way, right.
00:43:07
There's ways for government to build in all the consumer
00:43:10
protections, building incentives as we've touched it on, but also
00:43:13
begin to reward people. I mean, you know, I think you
00:43:16
know this story, but I remember, you know, Airbnb, you're two out
00:43:21
from going public. You know, I think it was from me
00:43:23
actually. We sent a letter to the SEC and
00:43:25
I remember doing meetings there where we asked whether we could
00:43:29
make equity available to our host in advance of going public.
00:43:34
You know, and we're told, you know, because the rule, I think
00:43:36
it's 500, you know, where once you're over a certain number of
00:43:39
people who have equity is considered a security that we
00:43:41
couldn't do it. And I had countless meetings
00:43:43
where I would make the argument that look at, you know, our host
00:43:45
particularly a core subset of them, you know, are
00:43:49
disproportionately responsible for the generation of the wealth
00:43:52
is going to take place here. And you know SEC, you know,
00:43:56
refused to even really engage I think in a in a conversation
00:44:00
with a seriousness of purpose around it other than just
00:44:03
putting into that, you know their their rule and how we test
00:44:06
and you know these various things that exist for the 1930s.
00:44:09
You know, long before there was any type of an economic model
00:44:11
like a sharing economy model, Airbnb goes public.
00:44:15
You know it goes up to 100 billion that day.
00:44:17
You remember the number, you know that that day you had a
00:44:20
bunch of banks that really put, you know relatively very little
00:44:24
at risk, you know, who end up making a bunch of money on that
00:44:28
right. And why should that be the case?
00:44:30
Why can't we come up with a better system?
00:44:33
Why couldn't those hosts have been able to participate in the
00:44:36
upside that they were responsible for helping to
00:44:39
create and generate? And so I just use that as, you
00:44:42
know, crypto actually can help that.
00:44:44
It's actually an underlying technology that can make that
00:44:46
possible, and the tokens play that role.
00:44:49
But to really get that you would need government to really begin
00:44:52
to think about this and imagine ways that you could distribute
00:44:56
economics in a fundamentally different way.
00:44:58
And as I say all that, I want to be clear, like I think that
00:45:00
there's going to be a spectrum of this activity.
00:45:02
I mean look at there are some people and I'm big believers in
00:45:04
them, you know, who believe you know, 5-10, fifteen, 20 years
00:45:07
from now, like the entire world in the economy is going to be,
00:45:10
you know, a crypto based economy.
00:45:12
There are others who think it's going to happen in a couple
00:45:14
narrow places. I tend to be somewhere in the
00:45:16
middle, like there's I think going to be a spectrum of stuff.
00:45:18
There'll be some spaces that lend itself to this so that
00:45:21
people can participate more and there'll be somewhere, you know,
00:45:24
if they will benefit from being a just a little bit less
00:45:26
centralized. I mean, one response to what
00:45:33
you're saying is that there are laws about like sort of, you
00:45:38
know, scams, confidence schemes and stuff and like why do you
00:45:44
need a particular 1 to ferret at them out on crypto?
00:45:47
You know, it's sort of like crypto creates this level of
00:45:50
like, it complexifies everything, You know, it makes
00:45:55
it so. It makes it like, I mean.
00:45:57
You're talking about sort of validators, right?
00:46:00
Getting tokens? You're sort of like lending your
00:46:02
brain or someone building a project, right?
00:46:05
This idea that a brand validator is, you know, it's just
00:46:09
promotion for a token sort of going up in some way by lending
00:46:13
your brand to it? Yeah, I mean, look, if there
00:46:16
people have different views about brand validators, right?
00:46:18
Should you be able to participate in the economics or
00:46:20
something that you're lending your name to?
00:46:21
Could you change the advertising model out there?
00:46:23
I mean, yeah, we could take this any number of ways.
00:46:27
To me it's a little bit less like, yeah, if you put really
00:46:30
strict, you know, there's strict guidelines around what you can
00:46:32
and cannot, you know, as a brand validator, right.
00:46:35
And you know, you didn't have that for FDX, right.
00:46:37
And so I think building that in. But I also think that's a little
00:46:39
bit of sort of and I know this is not really directed at you,
00:46:42
but it's missing the broader piece here, which is in the
00:46:44
absence of regulations, you are not being able to take advantage
00:46:49
of something that could have a pretty significant impact, you
00:46:54
know, on our financial system and the economics and how they
00:46:58
are distributed. You know, I mean I've written
00:47:00
this, but you know, if you look at the underlying technology of
00:47:04
blockchain, it's inherently progressive technology, right,
00:47:09
Redistributes economics. So it goes to the people whose
00:47:11
labor are responsible for it. It's decentralized, meaning
00:47:15
there is not one centralized authoritarian entity that is
00:47:19
driving it. It requires community engagement
00:47:24
to make decisions. I mean if you sort of look at
00:47:27
the progress it. Rewards capital values.
00:47:31
I will say the other piece of it is like early money in sort of
00:47:35
tends to get multiplied when things are going well.
00:47:39
I mean World Coin is like a fascinating example where it's
00:47:41
like okay, we're gonna sort of assign money to a person.
00:47:45
Yeah, I mean, it's all sort of how it's.
00:47:48
Yeah. I mean, look, here's a really
00:47:49
simple version of it to think about.
00:47:51
And I use this one sometimes, you know, with elected
00:47:53
officials, just because I think it brings it home and makes it
00:47:55
really easy. We've talked about some other
00:47:56
examples, you know, remittances. I think it is an obvious one.
00:48:00
But just think about how art works, right, which is, you
00:48:04
know, an artist does a painting. I'm just going to make up
00:48:07
numbers here. You know, they sell it to a
00:48:10
gallery for $1000, like a local gallery.
00:48:13
That local gallery then sells it to a bear gallery, maybe for
00:48:16
$10. You know, maybe eventually that
00:48:19
art really takes on, you know, significant value.
00:48:22
Maybe you actually have an art house that corners the market on
00:48:25
this particular artist and creates an artificial supply and
00:48:29
demand, you know, dynamic, but that artist doesn't have, you
00:48:32
know, a retained interest in that piece of work.
00:48:36
And then take that example and apply it to all other, you know,
00:48:39
could be writing, right. Could be books.
00:48:41
It could be even, you know, and this is pretty farfetched.
00:48:44
But since we're having, you know this conversation, imagine if
00:48:47
you're someone who's a Carpenter and you're working on a house.
00:48:49
You could get paid a salary, but maybe you also get to retain an
00:48:51
interest in that house or you make it sold, you get to
00:48:54
participate. I got these are fairly
00:48:55
farfetched and and there's a lot between now and you know some of
00:48:59
those examples for it to happen. But this does create that a way
00:49:03
to sort of re envision how you think about this in the same
00:49:06
way, right, When you move from an agricultural age into
00:49:09
industrial age, how economic, even getting from required a
00:49:12
complete re envisioning of how money and currency would work
00:49:16
and where the economy would work.
00:49:19
Yeah, I mean, I feel like. On the intuition or on sort of
00:49:21
the thought experiment level, crypto does great.
00:49:23
I mean, I love the idea and this is the challenge, right?
00:49:25
You could do the thought experiments, you could do all
00:49:27
these great tokens. I think some of the lesson is
00:49:29
like. You still need great
00:49:31
institutions around them. You know what I mean?
00:49:33
It's like I think you need to create trust around, right,
00:49:36
exactly right and look at the. Space, you know, it's
00:49:39
interesting because there's such an engineering culture to it.
00:49:41
Like they end up using lexicon that maybe is not doesn't
00:49:46
necessarily work as well for the general public.
00:49:48
Like crypto itself is a scary name.
00:49:50
Trustless, even though it's actually being used in a
00:49:52
positive way where you're not relying on a centralized
00:49:54
authority. For a normal person like
00:49:57
trustless doesn't sound like a great idea, right?
00:50:00
And so you know some of the language and even lexicon around
00:50:02
us because it comes from such a deep engineering, you know,
00:50:06
mathematical type of background. You know this is a, you know, a
00:50:10
tech within crypto that's being developed right now.
00:50:12
Zero knowledge proofs, which I actually think is a potentially
00:50:16
game changer in terms of that utility cases.
00:50:19
But even in the name like 0 knowledge proof, that doesn't
00:50:21
sound like a great thing when in fact but it really is actually
00:50:25
helping the resolve the age-old conflict that has existed
00:50:28
between can you have privacy and can you have security?
00:50:30
Can you have privacy? Can you have identity zero
00:50:33
Knowledge proofs actually solve for that.
00:50:35
But that's not what the name is, right?
00:50:36
And some people hear that initially and it causes
00:50:39
concerns. Changing gears The Republican.
00:50:41
Primary and I guess the Democratic primary such that it
00:50:44
exists. I don't know any stakes for
00:50:47
crypto specifically. And then just given your
00:50:50
experience, any hot takes more broadly?
00:50:54
Yeah, I think there is. I mean, stake, no pun intended,
00:50:56
obviously. Like I think my belief is
00:50:59
someone who spent a lot of time in government, politics and
00:51:01
policy is that, you know, in democracies, politics drives
00:51:06
legislation. Legislation ultimately impacts
00:51:10
regulations. How does regulations are
00:51:12
interpreted, you know, becomes, you know, how the legal process
00:51:16
works. It all begins foundationally.
00:51:18
If you think about that as a pyramid with politics, and I
00:51:24
think it's going to be a real challenge, I always am an
00:51:25
optimist and believe that cup is 1/4 full or half full.
00:51:30
That will get legislation done this year.
00:51:32
But it's hard, right? It's hard to get anything
00:51:34
passed. It's hard to get anything passed
00:51:35
in an election year, hard to get something passed that's as
00:51:38
complex as you know as crypto, right?
00:51:40
So while optimistic, I am looking beyond the 2024
00:51:45
election. And where I'm going with this is
00:51:48
in a world where, at least in this country, where there are
00:51:51
more people who own crypto than hold a union card, and I'm all
00:51:55
for the people having more people having union cards
00:51:57
tomorrow than have them today. So.
00:51:59
But there are more people who own crypto than on the union
00:52:01
card. Who those people are, you know,
00:52:04
disproportionately young, disproportionate people of
00:52:07
color, the crypto digital asset. How the people hold digital
00:52:11
assets in this country could be an incredibly interesting voter
00:52:16
cohort if they begin to understand and actually vote at
00:52:21
some level or cryptos amongst the issues they care about as
00:52:25
they listen to these candidates. And you think of a place like
00:52:28
Georgia, you can make the argument of Georgia, maybe
00:52:31
Arizona are the two most important states to determine
00:52:34
who the next president is going to be.
00:52:36
There's a subset of about five of these states.
00:52:38
But let's look at Georgia. I mean Georgia is a place where
00:52:41
you know that one in five, you know, voters across the country
00:52:43
actually over indexes even more in a place like Georgia.
00:52:47
And if the presidential candidates from both parties
00:52:50
begin to understand that there are voters out there who are in
00:52:52
fact crypto voters who will vote one way or the other, or at
00:52:56
least their decision making will be impacted one way or the other
00:52:59
by where a candidate is on crypto.
00:53:02
If the sector space is able to do that in the context of the
00:53:06
2024 election, I do think that has a huge impact on where the
00:53:12
pulse he goes. I got politics drives policy
00:53:14
right. If both parties emerge from 2024
00:53:18
knowing that there's a crypto voter out there who matters and
00:53:21
who will respond to what they're doing on issues, then suddenly I
00:53:25
think crypto ends up being in a different place when it comes to
00:53:28
how the legislation and regulations will play them.
00:53:31
So it's outgoing. It's sort of the classic type of
00:53:33
issue where. No politician is like defining
00:53:36
their political principles and identity around being anti
00:53:41
crypto. Like they didn't.
00:53:42
Most of them really care one way or the other right now.
00:53:44
So. So if suddenly there's like you.
00:53:45
Know a vocal minority that really cares about it.
00:53:49
It's a very swayable issue. On the other hand, like.
00:53:54
Do I mean I get people want their coins to go up in value
00:53:57
but you know are people that emotional about their like
00:54:01
crypto holding. It's also and I'm sure you deal
00:54:03
with this a lot. Unfortunately for crypto a very
00:54:06
anti sort of or at least the origins of it were sort of anti
00:54:09
government which means often can mean anti government involvement
00:54:14
so that it's like it's a hard crowd to get to go.
00:54:17
I think their legislator yeah. So I think let's break.
00:54:19
That down a little bit. I think you're right.
00:54:21
Like I think where this emerged or and we talked about this at
00:54:23
the very beginning like a libertarian you know element to
00:54:25
it that said is that we've talked about you know the
00:54:28
majority of the people who hold crypto voted for bite.
00:54:31
And again younger people of color.
00:54:33
And if you think that there's roughly 5760 million people who
00:54:36
hold crypto in the US. If 5% of those people engage
00:54:41
politically on it, that still represents one of the biggest
00:54:44
political constituencies out there.
00:54:47
And I mean you're very adroit in terms of your observation that
00:54:52
like if it's a vocal minority of 2345 million people on an issue
00:54:56
where politicians don't have a strong view one way or the other
00:55:01
and all they're being really asked to do with the past
00:55:03
regulations to help protect consumers and for a politician
00:55:06
that. That's a pretty easy place to go
00:55:08
to now. Can the sector, can the
00:55:10
industry, do these people get excited?
00:55:12
Do they get enthused about this? And I think that's, you know,
00:55:14
that's what needs to happen between now and Election Day in
00:55:17
November 2024. And if the space can do that,
00:55:20
then I think it puts itself in a different position.
00:55:23
Do you have a view on Vivek if you I?
00:55:24
Mean is tech aligned or have you guys talked?
00:55:27
Well, I mean, yeah, yeah, I'm still a hardcore, deep blue
00:55:32
Democrat. I do think that, you know, the
00:55:35
generational aspect is interesting.
00:55:36
I mean, you know, as someone who's been in politics, right,
00:55:39
You know, he has an interesting cohort that he can appeal to.
00:55:41
I do wonder, you know, how much can you grow, you know, beyond
00:55:46
that, even within a Republican field?
00:55:48
I thought I want to be clear I disagreed substantively with
00:55:52
virtually everything that he said and and you know have very
00:55:55
strong views on some of the positions he took in that debate
00:55:58
and said he has subsequently taken on a variety of issues as
00:56:02
a pure how he handled himself on the debate stage.
00:56:06
You know when he had a lot coming at him.
00:56:08
I thought the fact that he went in there from the just just pure
00:56:12
like analyzing from a political consultant perspective, like he
00:56:15
didn't go into that debate thinking I was going to play
00:56:17
defense. He went in that debate thinking
00:56:18
I was going to play offense. You know and I think some of the
00:56:21
others on that stage potentially could have taken some lessons
00:56:23
from that. I came into crypto because I'm.
00:56:27
I'm ultimately an optimist. I do believe that this is an
00:56:30
incredible country. You know, I personally have
00:56:33
benefited from the opportunities that exist in this country.
00:56:35
I came from a middle class, working class background and to
00:56:38
end up where I am today is only possible because of this
00:56:41
country. And I think this country has its
00:56:43
challenges, but it's still a remarkable place.
00:56:45
It is still an amazing place. I sit here in San Francisco,
00:56:48
right. We talked about, you know,
00:56:50
what's going on in San Francisco.
00:56:51
San Francisco still an awesome city.
00:56:53
Like you walk a couple blocks in San Francisco, you'll end up in
00:56:56
conversations on where the world is going that nothing in the
00:56:58
world can compare to. I traveled around the world over
00:57:00
the course of summer. Nothing compares to what's going
00:57:02
on in San Francisco. So it's along with the way of
00:57:04
saying like, I don't think this country is in a dark place.
00:57:07
I think like anytime we have challenges and we need to
00:57:09
address them and we're better off addressing them collectively
00:57:12
and we do need to improve our politics.
00:57:14
But I fundamentally and just the ground level just have a
00:57:18
completely different view on where we are as a country.
00:57:20
I find covering like. Business.
00:57:24
Like businesses have an incentive in some ways to treat
00:57:27
the parties as like the same or like or just like they're two.
00:57:32
Entities like we're trying to win both over, like, whatever.
00:57:36
Like. On the other hand, if you
00:57:38
actually like, pay attention to politics.
00:57:41
It's like. I, you know, feel like they
00:57:44
operate totally differently. Like Democrats are legitimately
00:57:47
trying to govern and like are a serious party, like don't enable
00:57:51
their voters and say the election was stolen and go
00:57:53
anyway. I could go on and on.
00:57:55
Like, I feel like they're very different.
00:57:57
I feel like as somebody, you know, even though I'm like a
00:58:01
reporter with opinions, it's still like, you know, I want
00:58:03
people to feel represented. I'm always going back and forth
00:58:06
from. I'm not.
00:58:09
I think you get what? Like I wrote about founders Fund
00:58:11
the other day like as part of a sort of clinical description of
00:58:14
each fund. And I'm like they're
00:58:16
conservative. They are upset about DEI and
00:58:19
like and I feel like they were annoyed with me and I'm like,
00:58:22
but this is what you guys are saying like I I don't
00:58:24
understand, like it's hard for me to understand as a non
00:58:27
conservative this is what you're talking about or do you not want
00:58:30
to be celebrate? So it's very hard like as sort
00:58:32
of a. Real sort of Democrat.
00:58:35
I can, I could understand sort of the old school Republicans
00:58:37
worrying about tax issues. But like, I don't know, how do
00:58:41
you deal with like sort of the maggot type Republicans as
00:58:43
somebody who's like job in some ways is to engage with them when
00:58:48
you put your Democratic cat on. And it's like they're
00:58:51
unconscionable. Yeah.
00:58:53
It's a look at this, a question that I think so many of us in
00:58:56
this country are struggling with and challenged by.
00:58:59
You know, I do think it's important to understand and
00:59:02
recognize that there is, you know, a significant population
00:59:07
in this country that are profoundly unhappy.
00:59:09
And you know, while I think that objectively speaking, this
00:59:13
country's and, you know, people are should be blessed to be in
00:59:16
this country and feel great about it and feel great about
00:59:18
the American experiment generally, you have to
00:59:20
understand that people and recognize and appreciate that
00:59:23
that people are unhappy and there's reasons why they are
00:59:26
unhappy and I think, you know, be willing to accept that at
00:59:31
least some of them are unhappy for real reasons.
00:59:35
I think there are some. And again, my politics here who
00:59:38
are unhappy for reasons I do not think are legitimate and I think
00:59:42
there is and this, you know, this is sort of woven in through
00:59:45
this entire conversation. I do think that there is an
00:59:48
interesting opportunity, particularly for Democrats, if
00:59:52
they can really begin to think about how can we actually begin
00:59:56
to talk to some of these voters because they do have, if you're
01:00:00
in parts of this country, right, you do have real profound
01:00:02
concerns about your economic opportunity, you know, the
01:00:05
fairness of the system and frankly I think some issues
01:00:09
around what you've been told for 30-40 fifty years.
01:00:13
That has not necessarily played out in what was represented to
01:00:17
you and not feeling that either party is effectively addressing
01:00:20
it and then that allows you to default.
01:00:22
You know these some of the positions that people are
01:00:24
taking. But I do think Democrat, like
01:00:26
I'll say this, I think my friends and I have this
01:00:28
conversation a lot of dinner parties in San Francisco.
01:00:31
I think it's worth it to go spend some time in these parts
01:00:33
of the country and understand you know what people are going
01:00:35
through and think about that. I agree with what you're saying
01:00:38
in the. Sense that it's easier to have
01:00:39
empathy, you know, with Republicans if you think about,
01:00:41
sort of. The regular Republican voter who
01:00:44
like, you know, yeah, in some cases as legitimate reasons,
01:00:49
even if they're reasons I don't find legitimate, maybe I find
01:00:51
their situation sympathetic. Yes.
01:00:53
I feel like the challenge in Silicon Valley, though, is like
01:00:56
the Republicans, that the elite Republicans we have to deal with
01:00:59
are sort of often the ones happy with sort of the game of the
01:01:03
Republican Party, which is fire up populism.
01:01:06
We want low taxes and low regulation.
01:01:09
And so you're dealing with like. Sort of a disingenuous sort of
01:01:13
political ideology, though I they often don't admit that.
01:01:16
First of all, I think there's there was an element of that was
01:01:18
part of the Republican compact for a long time, right?
01:01:20
Like business would work with the more extreme elements of the
01:01:24
party because that would get you 50 + 1% extreme.
01:01:28
They'd throw some things, the extreme elements and they would
01:01:30
get their low taxes right. I think that has now been
01:01:32
coopted as any number of people have written about and spoken
01:01:35
to. I thought where you were going,
01:01:37
but I wouldn't take it. What's that?
01:01:40
Coopted meaning that, you know, for there was a time period
01:01:43
really, you know, post World War 2, up until, you know, through
01:01:46
the Bush administration roughly where the business Republicans
01:01:51
called the Mike Pence Republicans may be in charge,
01:01:54
right. Would work with other elements.
01:01:56
And, you know, of the Republican Party, I mean, Pence is a little
01:01:59
bit of a combination of both. But, you know, maybe the
01:02:01
evangelical wing of the Republican Party and they would
01:02:04
say certain things about cultural issues.
01:02:07
And, you know, by combining those two forces, again, this
01:02:10
is, you know, this is a generalization, be able to win
01:02:13
an election when the presidential campaign, you know,
01:02:15
national security was also part of that.
01:02:16
That was a trifecta, right. Lower taxes, cultural issues and
01:02:19
the military. And they would get their lower
01:02:22
taxes. And they did.
01:02:23
That's regulations. And when I made the whole lot,
01:02:25
it is, Yep. The more extreme element now
01:02:28
actually has, you know, controlled the whole part.
01:02:30
Right. And so but where I thought you
01:02:32
were going and maybe if I could be permitted to take it here a
01:02:35
little bit is what what gets me is there will be people,
01:02:40
particularly in San Francisco but really the whole Bay Area
01:02:43
who have been living credible lives with incredible benefits
01:02:50
and incredible resources that over human history are like
01:02:54
historic in terms of what and, you know, amongst the first to,
01:03:00
you know, complain about what's going on in San Francisco where
01:03:03
the first complaint about, you know, what's happening in San
01:03:05
Francisco. And like yeah, there are things
01:03:08
that legitimate issues to be concerned about San Francisco.
01:03:11
But like, you know, the people that city have voted these folks
01:03:14
in the office. And if you want to
01:03:15
constructively engage, there's a lot of ways you could really
01:03:17
constructively engage And like I'll share someone who I'm like
01:03:20
a huge fan of like Chris Larson founder of E*Trade Elon.
01:03:25
You know, at Ripple. You know he's a tech guy in San
01:03:27
Francisco. Like, he spends enormous both
01:03:30
resources and time, like on the ground working to improve the
01:03:34
city. Like, he's a great example of
01:03:36
it, right. And I, you know, I, and I'm sure
01:03:39
I'll get a lot of grief for this.
01:03:40
But like, like the people who have the least to worry about,
01:03:44
at least to be concerned about, you know, I mean, look, I'll,
01:03:46
you know, another person. I think that's amazing.
01:03:48
I was like a Ron Conway. I mean Ron spends his time, his
01:03:51
effort, his treasure, You know, I'm trying to improve things and
01:03:54
commits himself to those things, you know, and it's not on
01:03:57
podcasts or ex, you know, complaining about things.
01:04:00
So that that's why I thought you were taking this.
01:04:03
I mean, I agree with you. Yeah, there there is sort of, if
01:04:05
you're so mad about San Francisco, have a constructive
01:04:08
vision for it. I mean we saw, I mean the New
01:04:10
York Times had that fascinating story about, you know, Mike
01:04:14
Morris and others, Mark Andreessen supporting sort of an
01:04:17
$800 million project to build a city, I think South of Solano
01:04:22
County or something. Yeah, I mean that that sort of
01:04:25
straddles the boundary of what you're saying.
01:04:26
It's like it's constructive but it's sort of opt out or like I
01:04:30
don't know, do you have a strong?
01:04:31
View on that sort of thing? Yeah.
01:04:33
Look, I think there's a spectrum of people who are involved in
01:04:35
that. I think there are some who
01:04:36
probably more constructive than some others.
01:04:38
But I do like, I like, I guess where I come down is like San
01:04:41
Francisco and the Bay Area has contributed to the success.
01:04:45
All these folks have had included myself.
01:04:47
Like I would not have had the success to except I've had any
01:04:50
if I had not been out here. And and I think you can be a
01:04:53
constructive part of the solution.
01:04:55
And I think there's ways to do that, and it's a lot more than
01:04:57
putting out a tweet. Alright, I'll give you the last.
01:05:01
Thank you so much for coming on. Yeah, this was great.
01:05:03
I really enjoyed it. I hope we get to do it again.
01:05:06
Yeah, it's awesome. And let's make sure we actually
01:05:08
get that coffee in person. Yeah, I loved it.
01:05:10
Great. OK man, great to.
01:05:11
See you. Thanks for having me.
01:05:12
Thanks so much. That's my episode with.
01:05:14
Chris Lehane Shout out to Tommy Herron, our Audio Editor, Riley
01:05:18
Consula, my chief of Staff, Annie Wenner producing intern,
01:05:21
Young Chomsky for the wonderful theme music.
01:05:23
Please, like comments, subscribe on YouTube.
01:05:26
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01:05:29
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01:05:31
Goodbye, Goodbye. Goodbye.
01:05:33
Goodbye. Goodbye.
01:05:35
Goodbye, Goodbye. Goodbye.