1 00:00:00,040 --> 00:00:03,800 The Tensor is a federation of hundreds of thousands of Tau 2 00:00:03,800 --> 00:00:08,360 holders that no company can buy. There is no single AI company 3 00:00:08,920 --> 00:00:11,240 that has hundreds of thousands of equity holders. 4 00:00:11,600 --> 00:00:16,680 Not Entropic, not Open AI, not Mistral, not Grac, not Cerebrus, 5 00:00:16,720 --> 00:00:19,680 not even NVIDIA. Bitcoin is not a hedge against 6 00:00:19,680 --> 00:00:22,680 inflation, it is the solution to inflation. 7 00:00:22,920 --> 00:00:25,880 In the context of Fiat, necessity is the mother of 8 00:00:25,880 --> 00:00:27,520 invention. Constraints. 9 00:00:27,720 --> 00:00:31,120 Dr. Creativity. When you have an absence of 10 00:00:31,120 --> 00:00:34,440 necessity and an absence of constraints, guess what happens? 11 00:00:34,680 --> 00:00:37,640 Things fall off the rails. It is not a right, it is a 12 00:00:37,640 --> 00:00:42,520 privilege to have the world reserve currency be the dollar. 13 00:00:46,040 --> 00:00:47,840 So, JJ, how's it going, James? Yeah, good. 14 00:00:48,400 --> 00:00:51,280 It's been about a week. I feel like, I feel it was like 15 00:00:51,280 --> 00:00:55,440 20 years ago, the last podcast, because in crypto years, every 16 00:00:55,440 --> 00:01:00,640 day so much happens that basically the day before is 17 00:01:00,640 --> 00:01:05,519 already out of date. Like even in the Tau ecosystem, 18 00:01:05,760 --> 00:01:08,840 there's non-stop stuff happening that, you know, with new 19 00:01:08,840 --> 00:01:13,120 subnets, old subnets in the in the Tau ecosystem itself, 20 00:01:13,120 --> 00:01:15,920 there's going to be, you know, an upgrade with raising the 21 00:01:15,960 --> 00:01:18,560 subnet cap and there's going to be the registrations. 22 00:01:19,000 --> 00:01:22,960 And it's always fascinating. What I really love, one of the 23 00:01:22,960 --> 00:01:25,880 things I really love about talking about bit Tensor and 24 00:01:25,880 --> 00:01:30,520 thinking about bit Tensor is the creativity of these subnet 25 00:01:30,520 --> 00:01:34,160 designs, of all the different ideas being plugged into these 26 00:01:34,280 --> 00:01:38,280 subnet spaces. You know, one thing though, 27 00:01:38,280 --> 00:01:40,800 that's always hard. And you know, bit Tensor has got 28 00:01:40,800 --> 00:01:42,920 such a strong community compared to other cryptos. 29 00:01:43,320 --> 00:01:50,560 But it's like if somebody asks me what is Tau, it's actually, I 30 00:01:50,560 --> 00:01:52,480 can answer it. And I feel like I'm pretty good 31 00:01:52,480 --> 00:01:55,800 at answering it, but it's always difficult. 32 00:01:56,080 --> 00:01:58,240 It's always because First off, it's difficult to explain. 33 00:01:58,240 --> 00:02:01,880 If someone asks what is Bitcoin, that by itself is difficult to 34 00:02:01,880 --> 00:02:04,720 explain. What are stable coins that 35 00:02:04,720 --> 00:02:07,720 should be easy to explain but turns out to be more difficult 36 00:02:07,840 --> 00:02:10,240 to explain the evil thing. And then you throw in bit 37 00:02:10,240 --> 00:02:12,880 tenser. You know, it's difficult. 38 00:02:12,880 --> 00:02:16,040 Like how do you normally explain it when someone says, hey JJ, 39 00:02:16,040 --> 00:02:18,400 what's what is this bit tenser thing you're obsessed with? 40 00:02:19,080 --> 00:02:23,760 It's a really good question and I'm remember to have a quote by 41 00:02:23,760 --> 00:02:33,560 Satoshi Nakamoto on July 28th, 2010, which was on the Bitcoin 42 00:02:33,640 --> 00:02:37,080 Talk chat and someone was asking some questions about what's the 43 00:02:37,080 --> 00:02:39,320 solution to sort of explaining Bitcoin to people. 44 00:02:39,320 --> 00:02:42,360 I know it's too complicated. It's like very complex system 45 00:02:42,720 --> 00:02:45,920 and Satoshi responded with some technical comments and then 46 00:02:45,920 --> 00:02:48,480 said, if you don't believe me or don't get it, I don't have the 47 00:02:48,480 --> 00:02:50,200 time to try to convince you, sorry. 48 00:02:51,560 --> 00:02:55,080 Well, to help, unfortunately the Bitcoin community has had this 49 00:02:55,080 --> 00:02:57,200 issue. It still has this issue 50 00:02:57,320 --> 00:02:59,360 obviously. Yeah, I remember when I was 51 00:02:59,360 --> 00:03:02,840 first kind of writing a lot about Bitcoin. 52 00:03:03,240 --> 00:03:07,400 This was in 2017, and people in the crypto world actually were 53 00:03:07,400 --> 00:03:11,640 very angry at me because I didn't like using any words like 54 00:03:11,640 --> 00:03:16,200 huddle or, you know, any of the normal words that the Bitcoin 55 00:03:16,640 --> 00:03:19,080 community was using. I wanted people to understand 56 00:03:19,400 --> 00:03:24,960 this was an evolution of money, just like every industry evolves 57 00:03:25,000 --> 00:03:28,080 ultimately. So like medicine evolved from 58 00:03:28,440 --> 00:03:32,160 praying to your shaman to, you know, take two aspirin and call 59 00:03:32,160 --> 00:03:36,040 me in the morning to now AI read your X-rays and can totally 60 00:03:36,040 --> 00:03:38,480 diagnose you. Like medicine in general has 61 00:03:38,760 --> 00:03:40,800 evolved over the years and centuries. 62 00:03:41,120 --> 00:03:43,640 Every other industry has now money is so. 63 00:03:43,720 --> 00:03:50,440 So of course we went from barter to gold to Fiat to crypto and 64 00:03:50,440 --> 00:03:54,160 it's such a huge evolution. But now you can finally say if 65 00:03:54,160 --> 00:03:58,040 someone says, Oh well, is there really, is anybody use crypto or 66 00:03:58,040 --> 00:04:00,960 Bitcoin? Yeah, there was $27 trillion 67 00:04:00,960 --> 00:04:04,040 worth of stablecoin transactions last year. 68 00:04:04,400 --> 00:04:07,160 Enormous use case is only growing and there's all the 69 00:04:07,160 --> 00:04:10,280 infrastructure around that with lenders and exchanges and 70 00:04:10,280 --> 00:04:12,000 payment systems and blah, blah, blah. 71 00:04:12,320 --> 00:04:17,600 And then now with bit tenser enormous use case ridges is 72 00:04:18,360 --> 00:04:22,680 going to be the leading, you know, AI for generating code bit 73 00:04:22,680 --> 00:04:25,680 minds leading AI for deep fake detection. 74 00:04:25,920 --> 00:04:29,360 I forgot the name of it, but the subnet that it does the three 75 00:04:29,360 --> 00:04:33,320 Dai leading AI, it's the leading AI in the world now for 3D yeah, 76 00:04:33,320 --> 00:04:36,000 four O 4 Gen. so and and on and on. 77 00:04:36,000 --> 00:04:39,640 I can we can keep listing these subnets and they're only like 6 78 00:04:39,640 --> 00:04:42,600 months old. So it's like ridiculous and 79 00:04:43,320 --> 00:04:46,280 these are like the two two biggest use cases of crypto 80 00:04:46,480 --> 00:04:53,280 essentially AI and defy and you can't even argue about Bitcoin 81 00:04:53,280 --> 00:04:56,000 anymore. But but it's still hard to 82 00:04:56,000 --> 00:04:58,760 explain. It's still really hard to 83 00:04:58,760 --> 00:05:03,240 explain. And I think I saw a tweet from 84 00:05:03,240 --> 00:05:06,360 Michael Saylor recently kind of going on about, you know, 85 00:05:06,640 --> 00:05:09,760 Bitcoin is these sort of properties. 86 00:05:09,760 --> 00:05:16,320 It's money, it's digital, you know, capital, it's sort of this 87 00:05:16,320 --> 00:05:19,560 bank in cyberspace. You know, it's all these things 88 00:05:19,560 --> 00:05:23,000 that, you know, he kept going and going and, you know, he said 89 00:05:23,000 --> 00:05:27,960 it's all these things. And I think when a complex sort 90 00:05:27,960 --> 00:05:32,800 of concept satisfies many definitions, it's sort of like 91 00:05:32,800 --> 00:05:35,480 is many different things at the same time. 92 00:05:35,840 --> 00:05:37,840 This is sort of inherently confusing to people. 93 00:05:38,040 --> 00:05:39,520 Humans don't really like to think. 94 00:05:39,680 --> 00:05:42,000 This is something that I've like realized as I've gotten older. 95 00:05:42,400 --> 00:05:45,040 I enjoy thinking, like I get pleasure out of it, like being 96 00:05:45,040 --> 00:05:47,400 alone and just thinking. I think most people just think 97 00:05:47,400 --> 00:05:52,080 that. They regard thinking as a chore, 98 00:05:52,360 --> 00:05:55,120 as sort of like work. To some people it's pleasurable. 99 00:05:56,080 --> 00:06:00,240 But when you have a concept that is sort of like a paradoxical 100 00:06:00,240 --> 00:06:04,000 that requires thoughtfulness to sort of have a holistic 101 00:06:04,000 --> 00:06:07,280 understanding, a lot of people just tune out because they have 102 00:06:07,280 --> 00:06:09,440 to actually think in order to understand something. 103 00:06:09,760 --> 00:06:12,960 And so that's why we have the useful sort of short phrases, 104 00:06:13,280 --> 00:06:17,360 catch phrases for things. You know, Bitcoin is digital 105 00:06:17,360 --> 00:06:21,960 money or digital currency. Bit tensor is digital, you know, 106 00:06:22,120 --> 00:06:23,960 decentralized AI or permissionless. 107 00:06:23,960 --> 00:06:28,280 AII think what we've done in this podcast over almost 10 108 00:06:28,280 --> 00:06:33,600 episodes now is really try to peel the onion on what is bit 109 00:06:33,600 --> 00:06:38,520 tensor beyond decentralized AI or this notion of humanity owned 110 00:06:38,520 --> 00:06:42,600 humanity controlled AI, and it really goes to incentives. 111 00:06:43,360 --> 00:06:47,080 I think you've kind of changed my points of view a lot on kind 112 00:06:47,080 --> 00:06:50,800 of looking at capitalism and how does bit tensor kind of 113 00:06:51,200 --> 00:06:56,800 intersect with upgrading capitalism or kind of providing 114 00:06:56,800 --> 00:06:59,920 a new way of doing capitalism. And then we talked about the 115 00:06:59,920 --> 00:07:03,280 purpose of incentives and what is the fundamental usefulness of 116 00:07:03,560 --> 00:07:09,600 an incentive that anyone can shape and harness to deliver a 117 00:07:09,600 --> 00:07:13,720 more powerful outcome then would be possible with a company or 118 00:07:13,720 --> 00:07:17,720 with a startup where you have to go and get permission from 5 or 119 00:07:17,720 --> 00:07:20,200 6 different entities just to make progress. 120 00:07:20,640 --> 00:07:23,840 And a lot of these things are not really familiar to the 121 00:07:23,840 --> 00:07:26,720 mainstream because most people don't start companies. 122 00:07:27,160 --> 00:07:30,400 Most people don't encounter interfacing with the government 123 00:07:30,760 --> 00:07:34,440 to get permission to run their business or to do any of those 124 00:07:34,440 --> 00:07:35,880 things. Most people are just sort of 125 00:07:35,880 --> 00:07:38,560 passive and they're either they have a job or they don't have a 126 00:07:38,560 --> 00:07:42,160 job and they're sort of like reliant on the actions of others 127 00:07:42,160 --> 00:07:45,560 to produce prosperity in society and to produce economic 128 00:07:45,880 --> 00:07:49,960 outcomes. My personal sort of most 129 00:07:49,960 --> 00:07:52,960 compelling way of understanding bit tensor, like what is bit 130 00:07:52,960 --> 00:07:58,200 tensor is it upgrades equity. And when I use the word equity, 131 00:07:58,200 --> 00:08:00,840 what I think a lot of people might hear is sort of like, you 132 00:08:00,840 --> 00:08:04,080 know, fairness or outcomes or whatever. 133 00:08:04,240 --> 00:08:05,760 I'm not talking about that type of equity. 134 00:08:06,000 --> 00:08:09,040 I'm talking about company equity stock, right? 135 00:08:09,720 --> 00:08:12,200 When you're an employee of a company, you might be given 136 00:08:12,200 --> 00:08:14,920 stock options. When you're trading on Robin 137 00:08:14,920 --> 00:08:17,720 Hood, you're going to be buying stocks of companies that are 138 00:08:17,720 --> 00:08:19,960 traded on the NASDAQ or some Stock Exchange. 139 00:08:20,200 --> 00:08:23,040 That's what I'm talking about. I'm talking about this invention 140 00:08:23,320 --> 00:08:28,080 that goes back about 400 years where we created basically a 141 00:08:28,200 --> 00:08:30,720 third party entity called a corporation. 142 00:08:31,240 --> 00:08:35,120 And that corporation has a sort of embodiment of its own. 143 00:08:35,120 --> 00:08:37,400 And the representation of that is this thing called shares. 144 00:08:37,960 --> 00:08:43,559 People own those shares and you can stake claim to some future 145 00:08:44,039 --> 00:08:47,400 outcome of that business based on your ownership of those 146 00:08:47,400 --> 00:08:49,840 shares. And so this notion of shares has 147 00:08:49,840 --> 00:08:54,640 been around in society for actually much less time than the 148 00:08:54,640 --> 00:08:57,080 notion of currency, than the notion of Fiat currency. 149 00:08:57,080 --> 00:09:01,160 Go back to the Roman times and many years before that, like 150 00:09:01,640 --> 00:09:04,240 there's there's coins and then seashells and then paper 151 00:09:04,240 --> 00:09:06,040 currencies. And then we have, you know, sort 152 00:09:06,040 --> 00:09:09,240 of big ledgers. I think the world of Fiat 153 00:09:09,240 --> 00:09:13,200 currency goes back many, many thousands of years. 154 00:09:13,200 --> 00:09:18,080 But the notion of the corporate share, stock equity sort of 155 00:09:18,080 --> 00:09:23,120 asset, corporate asset goes back to I believe the Dutch East 156 00:09:23,120 --> 00:09:26,080 India Company, which is about 404 hundred years. 157 00:09:26,080 --> 00:09:27,480 Ago. Yeah, around the 1600s. 158 00:09:27,520 --> 00:09:30,360 Yeah, You had a proper notion of like, there's a business, you 159 00:09:30,360 --> 00:09:32,480 know, it could be owned by the government, it could be owned by 160 00:09:32,480 --> 00:09:34,640 citizens, it could be owned by normal people. 161 00:09:34,800 --> 00:09:37,040 It's typically people who started those businesses with 162 00:09:37,160 --> 00:09:40,680 owners, and everyone else was just sort of like subservient 163 00:09:40,680 --> 00:09:44,960 and working for the corporation. And So what bit Tensor does is 164 00:09:44,960 --> 00:09:49,360 it's sort of like completely upgrades the idea, the notion of 165 00:09:49,360 --> 00:09:51,880 corporate equity, of company equity. 166 00:09:52,040 --> 00:09:54,880 For me, that's the most compelling sort of way of 167 00:09:54,880 --> 00:09:59,520 understanding bit tensor. And I've actually gotten a lot 168 00:09:59,520 --> 00:10:04,560 of resistance to this sort of like focus on bit tensor as a 169 00:10:04,560 --> 00:10:07,160 replacement or like upgrading company equity because a lot of 170 00:10:07,160 --> 00:10:10,040 people really want to focus on this decentralized AI think 171 00:10:10,040 --> 00:10:12,480 because it's this big high B, you know, trend. 172 00:10:12,480 --> 00:10:15,080 And, you know, we're we're going crazy over NVIDIA and everyone's 173 00:10:15,080 --> 00:10:17,800 just like super, super focused on AI and like all this AI 174 00:10:17,800 --> 00:10:19,840 stuff. But the reality is AI is going 175 00:10:19,840 --> 00:10:22,360 to be a transitory thing. You know, like in the 50s and 176 00:10:22,360 --> 00:10:25,280 60s, people were obsessed with computers when they started the 177 00:10:25,280 --> 00:10:27,440 kind of emerge and then the Internet happened and everyone's 178 00:10:27,440 --> 00:10:28,680 obsessed with Internet companies. 179 00:10:28,920 --> 00:10:30,200 And we went through that kind of bubble. 180 00:10:30,280 --> 00:10:32,760 And now we're obsessed with AI because of these LLMS and these 181 00:10:32,760 --> 00:10:34,720 chat box. But in five or ten years, we're 182 00:10:34,720 --> 00:10:35,800 not going to be talking about AI. 183 00:10:35,800 --> 00:10:37,720 We're just going to be talking about, well, this is just the 184 00:10:37,720 --> 00:10:39,600 way technology is. That's just the way technology 185 00:10:39,600 --> 00:10:41,640 works. It's like AI like imagine kids 186 00:10:41,640 --> 00:10:45,680 being raised and growing up around using these models on a 187 00:10:45,680 --> 00:10:48,400 regular basis. They just, the computers can 188 00:10:48,400 --> 00:10:52,080 actually think and generate, you know, photorealistic images and 189 00:10:52,080 --> 00:10:53,920 video and text and, and all of this. 190 00:10:53,920 --> 00:10:55,760 They assume that's how computers work by default. 191 00:10:55,760 --> 00:10:59,400 They they don't have any notion of prior paradigms of technology 192 00:10:59,600 --> 00:11:02,240 development that got us here over decades and decades of 193 00:11:02,560 --> 00:11:05,960 scientific discovery. Yeah, You know, it's interesting 194 00:11:05,960 --> 00:11:08,040 that that you say this and I'm glad we're going down this 195 00:11:08,040 --> 00:11:12,680 route. I love the fact that so many AI, 196 00:11:13,200 --> 00:11:18,360 you know, products and ideas can be reimplemented in bit tensor 197 00:11:18,360 --> 00:11:20,480 even better than in centralized AI. 198 00:11:20,480 --> 00:11:22,600 And again, Ridges is a great example. 199 00:11:22,760 --> 00:11:29,240 They're up against the $183 billion valued Anthropic and 200 00:11:29,240 --> 00:11:32,280 they're going to crush them. They're already side by side 201 00:11:32,280 --> 00:11:33,920 with them on all the benchmark tests. 202 00:11:34,200 --> 00:11:39,680 And Ridges has spent a total of, you know, $100,000 and change 203 00:11:39,880 --> 00:11:44,280 and you know, in the lifespan of Ridge's existence and Anthropic 204 00:11:44,280 --> 00:11:45,960 again, has spent billions of dollars. 205 00:11:46,920 --> 00:11:50,720 And but what you're saying is very important that what bit 206 00:11:50,720 --> 00:11:55,320 Tensor really does is just like I said, how Bitcoin was an 207 00:11:55,320 --> 00:11:58,800 evolution of money. Money's been around forever and 208 00:11:58,800 --> 00:12:01,360 crypto is the latest evolution of money. 209 00:12:02,080 --> 00:12:05,840 Bit Tensor, these alpha tokens, these subnet tokens are an 210 00:12:05,840 --> 00:12:09,720 evolution of equity. And we touched upon this last 211 00:12:09,720 --> 00:12:12,920 time because last episode in the episode before I was really 212 00:12:12,920 --> 00:12:15,720 concerned, are people, whether it's subnet owners or investors, 213 00:12:15,720 --> 00:12:18,400 are people really taking these alpha tokens seriously? 214 00:12:18,400 --> 00:12:21,480 Like sometimes even subnet owners don't really understand 215 00:12:21,680 --> 00:12:25,400 that these alpha tokens are not equity in the traditional sense. 216 00:12:25,640 --> 00:12:29,720 But first, I will state even equity is not equity. 217 00:12:30,520 --> 00:12:33,400 You know what in the sense that investors say, oh, I'm going to 218 00:12:33,400 --> 00:12:35,760 own some stock and the stock's going to automatically go up if 219 00:12:35,760 --> 00:12:39,400 the companies go well, Nassim Celeb has this phrase you need 220 00:12:39,400 --> 00:12:41,920 skin in the game. And he points out that 221 00:12:41,920 --> 00:12:44,480 essentially that equity is essentially worthless in a 222 00:12:44,480 --> 00:12:49,360 company if the management of the company doesn't have skin in the 223 00:12:49,360 --> 00:12:51,440 game. Oh, so you have you have the 224 00:12:51,440 --> 00:12:51,920 book. Yeah. 225 00:12:52,040 --> 00:12:53,400 You have all of his books, which is great. 226 00:12:53,400 --> 00:12:54,880 And Nassim has been on my podcast. 227 00:12:54,880 --> 00:12:59,040 He's a very good guy. I love his books and but you 228 00:12:59,040 --> 00:13:02,000 know, he points out that if, if the CEO of McDonald's doesn't 229 00:13:02,000 --> 00:13:05,000 own any shares of McDonald's, then he might not care at all 230 00:13:05,000 --> 00:13:06,920 about the fact that you own shares of McDonald's. 231 00:13:06,920 --> 00:13:10,760 He's cared about his pay package and, and his incentives. 232 00:13:10,920 --> 00:13:12,440 He doesn't care about your incentives. 233 00:13:12,720 --> 00:13:16,760 And so that's why, you know, stock analysts, they don't just 234 00:13:16,760 --> 00:13:20,680 assume, oh, I'm going to buy equity because it's going to go 235 00:13:20,680 --> 00:13:22,440 up. If the company does well, it 236 00:13:22,440 --> 00:13:25,760 might not go up if the if the CEO is just issuing shares to 237 00:13:25,760 --> 00:13:29,680 himself and management team and other big investors, the equity 238 00:13:29,680 --> 00:13:31,560 might go down even if the company does well. 239 00:13:31,880 --> 00:13:36,240 So it all boils down to incentives and bit Tensor make 240 00:13:36,240 --> 00:13:40,920 sure that the alpha tokens and the incentives of everybody 241 00:13:41,280 --> 00:13:45,240 really align with the incentives of the subnet owners and the 242 00:13:45,240 --> 00:13:48,200 needs of the subnet owners, or else the alpha is going to go 243 00:13:48,200 --> 00:13:50,960 down South. Ridges again is a good example 244 00:13:50,960 --> 00:13:56,240 and I'll explain why because Ridges is already the best model 245 00:13:56,360 --> 00:14:00,960 for for let's call it text to code or AI coding out there, 246 00:14:01,160 --> 00:14:04,280 centralized AI. You can't throw more money at 247 00:14:04,280 --> 00:14:07,800 Anthropic and Anthropic is going to crush Ridges without any 248 00:14:07,800 --> 00:14:10,120 money. Ridges has already surpassed a 249 00:14:10,120 --> 00:14:12,360 company that has had billions of dollars thrown at it. 250 00:14:12,440 --> 00:14:16,480 So what that tells you is that Ridges cannot replace the 251 00:14:16,480 --> 00:14:19,440 decentralized element that bit tensor provides it. 252 00:14:19,600 --> 00:14:23,720 So the miners are critical to the growth of Ridges. 253 00:14:23,880 --> 00:14:27,720 If bridges going to even survive and continue to grow, the miners 254 00:14:27,800 --> 00:14:31,160 have to be incentivized or else they disappear. 255 00:14:31,520 --> 00:14:35,200 And the miners are incentivized with alpha tokens for the 256 00:14:35,200 --> 00:14:40,440 success of Ridges to continue. And Shaquille, the CEO of Ridges 257 00:14:40,440 --> 00:14:43,000 or the founder of Ridges, he is 100% aware of this. 258 00:14:43,440 --> 00:14:46,680 The alpha tokens have to be infused with as much value as 259 00:14:46,680 --> 00:14:50,120 possible, making it a good investment for investors, a good 260 00:14:50,120 --> 00:14:53,920 deal for minors, a good deal for Shaquille as the subnet owner, a 261 00:14:53,920 --> 00:14:57,560 good deal for validators. He has to continue with the 262 00:14:57,560 --> 00:14:59,840 decentralized model because there's no other choice. 263 00:15:00,200 --> 00:15:04,560 And so he will make the alpha tokens of value that that's a 264 00:15:04,560 --> 00:15:08,560 bet you can make, unless you think somehow he's like, nobody 265 00:15:08,560 --> 00:15:11,840 could buy Ridges and, and say you can, you don't need your 266 00:15:11,840 --> 00:15:13,920 miners anymore. We got you because that's the 267 00:15:13,920 --> 00:15:16,680 only way he can succeed. The flip side, and this is not a 268 00:15:16,680 --> 00:15:20,400 bad thing, looking at Targon or any of the subnets that provide 269 00:15:20,520 --> 00:15:23,720 compute, they provide NVIDIA GPUs for, for very low cost 270 00:15:23,720 --> 00:15:26,960 because miners contribute the NVIDIA GPUs in exchange for the 271 00:15:26,960 --> 00:15:29,480 alpha tokens. Potentially Google could go to 272 00:15:29,480 --> 00:15:31,800 Targon and say, Hey, we're going to acquire you. 273 00:15:32,120 --> 00:15:34,280 We like your brand, we like your customer list. 274 00:15:34,480 --> 00:15:36,720 We got NVIDIA GPUs. You don't need your miners 275 00:15:36,720 --> 00:15:39,000 anymore. That could potentially happen, 276 00:15:39,440 --> 00:15:44,200 but knowing that the Targon management team and I and JJI 277 00:15:44,200 --> 00:15:46,960 know you're an investor in Targon, the Targon management 278 00:15:46,960 --> 00:15:51,000 team, because they're not owned by Google right now, they're 279 00:15:51,000 --> 00:15:53,480 essentially building their business with the miners in a 280 00:15:53,480 --> 00:15:57,360 decentralized bit Tensor. They still have to infuse the 281 00:15:57,360 --> 00:16:00,760 tokens with, you know, the alpha tokens with a lot of value 282 00:16:00,920 --> 00:16:05,520 knowing that people could consider that they might get 283 00:16:05,520 --> 00:16:08,080 acquired at some point. So the miners need a lot of 284 00:16:08,080 --> 00:16:12,120 value to keep mining. So all of these things is going 285 00:16:12,120 --> 00:16:15,320 to happen on bit Tensor and I think it's still maturing and 286 00:16:15,320 --> 00:16:17,280 evolving. There are still many subnets out 287 00:16:17,280 --> 00:16:20,880 there that don't realize they need to give their alpha more 288 00:16:20,880 --> 00:16:23,920 value. But some Nets like Targon shoots 289 00:16:24,200 --> 00:16:28,440 ridges and many others are realizing this more and more 290 00:16:28,440 --> 00:16:30,400 every day based on my discussions with them. 291 00:16:31,440 --> 00:16:33,880 Yeah, it's really fascinating. And obviously this is an 292 00:16:33,880 --> 00:16:38,920 extremely rapidly evolving and speculative domain, but sort of 293 00:16:38,920 --> 00:16:42,720 the notion of how does value get represented in equity is also a 294 00:16:42,720 --> 00:16:44,800 highly evolving and changing, right? 295 00:16:44,800 --> 00:16:49,040 Like, you know, we saw Oracle stock go up, you know, 50% or 296 00:16:49,040 --> 00:16:52,200 something in the last week or so after the announcement of a 297 00:16:52,200 --> 00:16:57,040 contract pretty much everyone knows is not funded and neither 298 00:16:57,040 --> 00:16:59,560 party has the resources currently and it's just a 299 00:16:59,560 --> 00:17:01,680 contract. And what's crazy and I think I 300 00:17:01,680 --> 00:17:05,760 think this is actually somewhat like mean stocky of Oracle is 301 00:17:05,760 --> 00:17:08,839 they issued a forecast over five years of what the revenue would 302 00:17:08,839 --> 00:17:11,079 look like. And again, the contract is not 303 00:17:11,079 --> 00:17:13,200 actually funded and the resources are not there. 304 00:17:13,200 --> 00:17:18,400 I mean, no one has $300 billion of GPU compute available to 305 00:17:18,400 --> 00:17:21,280 basically provide any compute provider and. 306 00:17:21,560 --> 00:17:24,720 I don't even know if NVIDIA could make that many chips. 307 00:17:24,920 --> 00:17:26,880 I think they can, but it would be over many years. 308 00:17:26,880 --> 00:17:28,760 And it's on the assumption that they can actually get the 309 00:17:28,760 --> 00:17:31,800 allocation needed to do that. And obviously there's all these 310 00:17:31,800 --> 00:17:34,480 other variables and supply chain dependencies and stuff. 311 00:17:34,480 --> 00:17:37,760 But I just think it's kind of interesting that like there's 312 00:17:37,760 --> 00:17:40,800 real liquid equity value there in a stock, right, Which is 313 00:17:40,800 --> 00:17:43,960 Oracle's public company, been around for decades, run by Larry 314 00:17:43,960 --> 00:17:46,880 Allison. And all of a sudden, you know, 315 00:17:46,880 --> 00:17:50,400 the shareholders of Oracle are benefiting from this gigantic 316 00:17:50,400 --> 00:17:55,280 appreciation purely based on a speculation that many parties 317 00:17:55,280 --> 00:17:57,440 will actually be able to deliver on this contract. 318 00:17:57,440 --> 00:18:00,120 And if they don't deliver on the contract and something happens, 319 00:18:00,120 --> 00:18:03,000 then obviously the stock is going to massively collapse or 320 00:18:03,280 --> 00:18:05,560 at a minimum, come back down to where to where it was 321 00:18:05,560 --> 00:18:07,560 previously. And so, but the way things are 322 00:18:07,560 --> 00:18:11,440 priced is so fascinating. And I'm sort of just like 323 00:18:12,360 --> 00:18:15,960 reminded of how money, and I think this is, you know, like 324 00:18:15,960 --> 00:18:18,640 Elon's way of describing money. Money is just an information 325 00:18:18,640 --> 00:18:21,480 processing tool, right? It's just like a database of 326 00:18:21,600 --> 00:18:24,360 information, right? It just transmits information. 327 00:18:24,600 --> 00:18:26,000 That's really just the purpose of money. 328 00:18:26,000 --> 00:18:29,000 It's a kind of a communication mechanism for humans that we've 329 00:18:29,000 --> 00:18:32,360 like, invented to basically do trade and kind of cooperation 330 00:18:32,360 --> 00:18:33,960 more efficiently. Like if you're in a desert 331 00:18:33,960 --> 00:18:36,920 island in the middle of nowhere and you don't have any food or 332 00:18:36,920 --> 00:18:40,360 resources and you just like dropped their normal healthy 333 00:18:40,360 --> 00:18:42,600 person, but you drop there. And then all the sudden you've 334 00:18:42,600 --> 00:18:44,440 got to figure out how to like survive. 335 00:18:44,760 --> 00:18:46,800 You know, over a few days, you're going to start running 336 00:18:46,800 --> 00:18:49,200 out of food and water and money is not going to save you. 337 00:18:49,200 --> 00:18:52,120 You're going to have to start using your ingenuity to like 338 00:18:52,120 --> 00:18:55,200 actually survive. And so money itself, like the 339 00:18:55,200 --> 00:18:58,200 notion of money, it doesn't have intrinsic value. 340 00:18:58,200 --> 00:19:00,240 There is no intrinsic value in money. 341 00:19:00,400 --> 00:19:02,040 This is the thing a lot of people don't really realize. 342 00:19:02,040 --> 00:19:06,400 They work their whole lives for, you know, some company that's 343 00:19:06,400 --> 00:19:09,560 paying them, you know, tiny fraction of 1% of the value the 344 00:19:09,560 --> 00:19:12,200 company captures. And then the government's taxing 345 00:19:12,200 --> 00:19:14,400 you and printing more of the currency, of the purchasing 346 00:19:14,400 --> 00:19:15,680 power of your currency is going down. 347 00:19:15,680 --> 00:19:18,800 And so basically you're working for nothing but your whole life 348 00:19:19,080 --> 00:19:21,440 with the expectation that your money is actually going to be 349 00:19:21,440 --> 00:19:23,640 able to save you at the end of the day. 350 00:19:24,000 --> 00:19:27,760 And so, I mean, my way of understanding bit Tensor is very 351 00:19:27,760 --> 00:19:31,280 similar to the sort of purest way of understanding Bitcoin, 352 00:19:31,680 --> 00:19:34,520 which is, and this is something I was tweeting about earlier, a 353 00:19:34,520 --> 00:19:36,520 lot of people are saying this like the Trump family saying 354 00:19:36,520 --> 00:19:37,880 this. I totally disagree with it, 355 00:19:37,880 --> 00:19:41,040 which is crypto is a hedge against inflation at a 356 00:19:41,040 --> 00:19:43,200 speculative level, maybe some of that's true. 357 00:19:43,320 --> 00:19:45,560 But if you double click and triple click and you 358 00:19:45,560 --> 00:19:48,760 fundamentally understand the cryptocurrencies that are truly 359 00:19:48,760 --> 00:19:52,640 deflationary, there's two, there's not 20, there's two, 360 00:19:52,880 --> 00:19:54,840 There's Bitcoin and there's bit Tensor. 361 00:19:55,720 --> 00:19:59,040 Bitcoin has a supply cap. It's cryptographically proven 362 00:19:59,040 --> 00:20:03,720 and unhackable for 16 years now and it is deflationary, goes 363 00:20:03,720 --> 00:20:06,920 through these having schedules and the purchasing power goes up 364 00:20:07,280 --> 00:20:11,280 in dollar denominated terms because the US Fed is printing 365 00:20:11,280 --> 00:20:13,560 more dollars. There's no supply cap. 366 00:20:14,040 --> 00:20:17,320 There's this expansion of monetary supply, which means 367 00:20:17,320 --> 00:20:21,000 that the value the purchasing value of each dollar goes down 368 00:20:21,000 --> 00:20:23,800 and the purchasing value of each Bitcoin goes up. 369 00:20:24,080 --> 00:20:27,800 Over time and so Bitcoin is not a hedge against inflation. 370 00:20:28,040 --> 00:20:31,840 It is the solution to inflation in the context of Fiat. 371 00:20:32,240 --> 00:20:34,080 Now let's go and segue to bit Tensor. 372 00:20:34,360 --> 00:20:37,640 Bit Tensor has the identical properties, but it is the 373 00:20:37,640 --> 00:20:41,360 solution to inflation in the context of equity. 374 00:20:41,680 --> 00:20:46,520 Equity, again, company equity is highly inflationary in nature. 375 00:20:47,440 --> 00:20:48,640 The fun. This is not something we were 376 00:20:48,640 --> 00:20:50,840 discussing. We were, we were in Toronto and 377 00:20:50,840 --> 00:20:53,760 it has to be repeated 1000 times because it's somewhat complex. 378 00:20:53,920 --> 00:20:57,840 Everyone should understand it. Equity has this fundamental 379 00:20:57,840 --> 00:21:00,600 property in companies, public and private, which is called 380 00:21:00,600 --> 00:21:03,520 share issuance. When you print more of the share 381 00:21:03,520 --> 00:21:06,720 supply, it is perfectly equivalent to the Federal 382 00:21:06,720 --> 00:21:08,960 Reserve printing more monetary supply. 383 00:21:09,120 --> 00:21:12,480 You expand the supply of the asset, more of it basically, 384 00:21:12,520 --> 00:21:13,960 right. In short, there's more of the 385 00:21:13,960 --> 00:21:16,040 asset and you're printing it out of thin air. 386 00:21:16,560 --> 00:21:18,280 You can, you can do this arbitrarily. 387 00:21:18,560 --> 00:21:20,680 You can say, hey, look, I'm just going to double the number of 388 00:21:20,680 --> 00:21:22,120 shares of the company arbitrarily. 389 00:21:22,120 --> 00:21:24,240 You can just wake up one day and get board approval and do that. 390 00:21:24,640 --> 00:21:27,000 And what does that do? It dilutes the shareholders, 391 00:21:27,400 --> 00:21:30,640 reduces the purchasing power of each share or the value 392 00:21:30,640 --> 00:21:34,000 representation of each share. And obviously the shares have 393 00:21:34,000 --> 00:21:37,120 less value over time. Now the big question of why, 394 00:21:37,120 --> 00:21:40,080 why, why do companies do this? Well, they want to raise more 395 00:21:40,080 --> 00:21:42,480 capital. And so they have to represent 396 00:21:42,720 --> 00:21:45,400 the capital that they're taking into the company in some way 397 00:21:45,560 --> 00:21:48,280 without diluting everyone. Oh, wow, How does that happen? 398 00:21:48,280 --> 00:21:51,920 Well, they print more shares. Well, counter intuitively, when 399 00:21:51,920 --> 00:21:53,320 you print more shares, you dilute. 400 00:21:53,320 --> 00:21:55,920 Everyone that's crazy. It's so true. 401 00:21:55,920 --> 00:21:59,840 Like, you know, the stock market is essentially a big dumb 402 00:21:59,840 --> 00:22:02,040 contract as opposed to smart contracts. 403 00:22:02,280 --> 00:22:06,320 And the dumb contract is, oh, you have a share of McDonald's 404 00:22:06,320 --> 00:22:08,960 stock, you own a tiny piece of McDonald's stock. 405 00:22:09,200 --> 00:22:12,040 That's just the dumb contract. Because then McDonald's could, 406 00:22:12,040 --> 00:22:13,480 like you say, they could issue more shares. 407 00:22:13,920 --> 00:22:16,840 Startups can issue more shares. I've had I've been in and I'm 408 00:22:16,840 --> 00:22:19,160 sure you have to. I've been in many startups where 409 00:22:19,160 --> 00:22:21,440 I was a seed investor. You would think I would make the 410 00:22:21,440 --> 00:22:24,360 most amount of money, but then they raise more and more money. 411 00:22:24,520 --> 00:22:27,520 And whereas initially I owned 5% of the company, I end up owning 412 00:22:27,520 --> 00:22:31,320 110th of 1% of the company because I signed dumb contracts 413 00:22:31,320 --> 00:22:32,560 and there's nothing I can do about it. 414 00:22:32,880 --> 00:22:37,040 And This is why you need an SEC. The SEC is out there to 415 00:22:37,040 --> 00:22:40,200 basically you have hundreds of millions of dollars to fund this 416 00:22:40,200 --> 00:22:45,000 organization to basically try to make dumb contracts smarter so 417 00:22:45,000 --> 00:22:48,000 that people aren't screwed over and over again in the equity 418 00:22:48,000 --> 00:22:50,320 markets. I would challenge you this like 419 00:22:50,320 --> 00:22:53,040 I know you invest like the subnets are mostly run by 420 00:22:53,240 --> 00:22:57,320 companies that are like VC style companies and you're AVC and I 421 00:22:57,320 --> 00:23:00,600 would challenge you this. I would not invest in the equity 422 00:23:00,600 --> 00:23:04,720 of a single subnet owned company, you know, a company 423 00:23:04,720 --> 00:23:09,880 that owns the subnets unless I was willing to buy as much alpha 424 00:23:09,880 --> 00:23:12,960 as possible because I knew that the alpha was actually going to 425 00:23:12,960 --> 00:23:15,080 have the biggest value. And if I'm willing to buy the 426 00:23:15,080 --> 00:23:17,440 value, the alpha, I'm not going to buy the equity, which is a 427 00:23:17,440 --> 00:23:19,680 dumb contract. The alpha is a smart contract in 428 00:23:19,680 --> 00:23:24,120 the sense it's in the code. And if I, if I, I know 429 00:23:24,120 --> 00:23:26,240 everything that can happen with the alpha because it's in the 430 00:23:26,240 --> 00:23:31,520 code and if I can see the incentives of the management 431 00:23:31,520 --> 00:23:35,120 team are in line with the alpha, I don't need to invest in the 432 00:23:35,120 --> 00:23:37,360 equity, which is, I don't know what's going to happen with the 433 00:23:37,360 --> 00:23:38,880 equity. They could issue more. 434 00:23:38,880 --> 00:23:40,960 They can start another company on the side. 435 00:23:41,160 --> 00:23:44,040 You know, if I don't think their incentives are aligned with the 436 00:23:44,040 --> 00:23:47,040 alpha, there's no reason for me to invest in the company. 437 00:23:47,160 --> 00:23:50,000 And if that's so, I would should just invest in the alpha anyway. 438 00:23:51,240 --> 00:23:54,080 It's a great prompt and I'll offer some comments as to why I 439 00:23:54,080 --> 00:23:58,320 do this. Variety of reasons and caveat 440 00:23:58,480 --> 00:24:02,520 emptor IME. Very seasoned professional at 441 00:24:02,520 --> 00:24:08,800 doing this and I have certain ways of mitigating the risks of 442 00:24:08,800 --> 00:24:10,800 the things that you just pointed out. 443 00:24:12,560 --> 00:24:16,840 The predominant way I mitigate the risk of out of control, 444 00:24:17,320 --> 00:24:23,240 totally crazy and sloppy share issuance or equity share 445 00:24:23,240 --> 00:24:26,440 issuance. Expansion of companies I invest 446 00:24:26,440 --> 00:24:28,560 in at the earliest stages, which is mostly what I do. 447 00:24:28,920 --> 00:24:31,480 I lead seed rounds. We incorporate the company 448 00:24:31,840 --> 00:24:33,760 typically. Most of the time we incorporate 449 00:24:33,760 --> 00:24:35,000 the company. If we're not incorporating it, 450 00:24:35,000 --> 00:24:38,880 we're the first equity investor ever by 10 to 20% of the 451 00:24:38,880 --> 00:24:43,640 company. My set of principles that I've 452 00:24:43,640 --> 00:24:48,400 adopted over doing this for the better part of a decade close 453 00:24:48,400 --> 00:24:55,200 close to a decade now is that I try to instill the understanding 454 00:24:55,880 --> 00:24:59,520 of these things with the founders that I work with such 455 00:24:59,560 --> 00:25:02,440 that they run the companies as capital efficiently as possible. 456 00:25:02,840 --> 00:25:08,360 Where in the worst case, in the absolute worst case, they raise 457 00:25:08,840 --> 00:25:12,480 at most two additional financings after me. 458 00:25:13,640 --> 00:25:16,840 And where we have what's called pro rata rights. 459 00:25:17,040 --> 00:25:21,320 And pro rata is basically we get to invest proportional amount to 460 00:25:21,320 --> 00:25:23,360 preserve our ownership of the company. 461 00:25:23,880 --> 00:25:29,200 We have to typically invest like two or three or four, sometimes 462 00:25:29,200 --> 00:25:33,280 10 times more than our initial investment just to preserve our 463 00:25:33,280 --> 00:25:35,040 equity. And this is a pretty common 464 00:25:35,040 --> 00:25:36,880 thing in venture capital. I'm sure you're familiar with 465 00:25:36,880 --> 00:25:38,640 it, but so the audience understands because there's 466 00:25:38,680 --> 00:25:39,960 quite a lot of people that listen to us. 467 00:25:40,400 --> 00:25:45,160 This is basically where imagine you have a pie and you have a 468 00:25:45,160 --> 00:25:48,080 sort of like right to a certain slice of the pie. 469 00:25:48,240 --> 00:25:51,160 Like you have sort of like kind of like the the rights of our 470 00:25:51,160 --> 00:25:54,120 constitution, like a free speech, right to bear arms, like 471 00:25:54,120 --> 00:25:58,160 all these rights essentially OK for being AUS citizen, for 472 00:25:58,160 --> 00:26:01,360 people who are in the US, you know, Western world democracies, 473 00:26:01,400 --> 00:26:04,320 essentially a pseudo democracy, pseudo democracies. 474 00:26:04,680 --> 00:26:08,440 You know, you have a right to the slice of the pie that you're 475 00:26:08,440 --> 00:26:10,400 granted in the beginning. Now imagine it's this huge 476 00:26:10,400 --> 00:26:13,800 party, all these people show up to the house, they start going 477 00:26:13,840 --> 00:26:17,680 at it, they start eating this pie, maybe even grabbing some of 478 00:26:17,680 --> 00:26:20,600 your piece and the piece that you have the right, you know, 479 00:26:20,600 --> 00:26:23,080 the right, the right on and and so, but you still have this 480 00:26:23,080 --> 00:26:24,880 right. And so legally speaking, you can 481 00:26:24,880 --> 00:26:27,480 sue those people and you can do all this unless you are 482 00:26:27,480 --> 00:26:31,200 maintained that portion as the pie gets bigger and bigger 483 00:26:31,240 --> 00:26:33,800 because you've got a chef making more of the pie. 484 00:26:33,800 --> 00:26:37,160 So there's only one pie and the chef is just adding more and 485 00:26:37,160 --> 00:26:41,320 more sort of aggregate size of pie to satisfy all the hunger of 486 00:26:41,320 --> 00:26:42,560 all the people coming into the party. 487 00:26:43,280 --> 00:26:47,200 So you've got to go to the chef and say, look, I was granted a, 488 00:26:47,680 --> 00:26:52,160 a, a right of always 10% in perpetuity of that pie. 489 00:26:52,160 --> 00:26:55,400 Even if you're going to triple the size of the pie and make the 490 00:26:55,400 --> 00:26:58,240 pie 10 times bigger, because now there's like 50 people at the 491 00:26:58,240 --> 00:27:02,240 party instead of five people, My slice of the pie should now be 492 00:27:02,440 --> 00:27:04,960 10 times bigger than it was. And so you've then got to go to 493 00:27:04,960 --> 00:27:08,440 the chef and have them make more of that pie for you. 494 00:27:08,760 --> 00:27:11,040 The problem is the chef needs more ingredients. 495 00:27:11,360 --> 00:27:13,480 He needs more eggs, he needs more milk. 496 00:27:13,640 --> 00:27:17,000 He needs more, you know, more of these things to actually satisfy 497 00:27:17,240 --> 00:27:20,880 producing your proportionally larger increased slice of the 498 00:27:20,880 --> 00:27:23,280 pie. Now he doesn't have the money. 499 00:27:24,320 --> 00:27:26,680 We don't have it in the house. He's got to go and pay someone 500 00:27:26,680 --> 00:27:29,040 to go and get the eggs and the milk and the baking powder and 501 00:27:29,040 --> 00:27:32,240 all the stuff to make your five times bigger or 10 times bigger 502 00:27:32,240 --> 00:27:34,280 slice of pie. So you've got to pay him some 503 00:27:34,280 --> 00:27:37,200 money. And the cost of paying the money 504 00:27:37,200 --> 00:27:40,640 is this notion of per rata in venture capital, you've got to 505 00:27:40,640 --> 00:27:43,520 pay more to basically get maintain the slice of the pot. 506 00:27:43,800 --> 00:27:47,120 Personally, and this is kind of a stupid example I'm giving, I 507 00:27:47,120 --> 00:27:48,640 think this is a no, no broken system. 508 00:27:48,920 --> 00:27:50,560 I think it's a completely broken system. 509 00:27:50,840 --> 00:27:53,520 The way venture capital and private equity works with this 510 00:27:53,520 --> 00:27:57,520 notion of pro rata to prevent dilution of earlier shareholders 511 00:27:57,520 --> 00:28:00,600 is totally done because typically per rata is only good 512 00:28:00,600 --> 00:28:04,440 for the next round, only one round after that additional 513 00:28:04,440 --> 00:28:07,360 financings occur. You do not have any more parata. 514 00:28:07,360 --> 00:28:10,080 You have to basically beg for your right to get parata because 515 00:28:10,080 --> 00:28:12,640 what what happens is the founders when they're like, 516 00:28:12,640 --> 00:28:15,080 well, look, actually it's going to cost us a lot of capital to 517 00:28:15,080 --> 00:28:16,480 build this company. We're going to have to go 518 00:28:16,480 --> 00:28:21,920 through the alphabet, have to go through a BCDEFG to get all this 519 00:28:21,920 --> 00:28:24,680 capital in, in order to reach our milestones and build the 520 00:28:24,680 --> 00:28:27,480 great company that we want. The problem is most technology 521 00:28:27,480 --> 00:28:30,280 companies do this. And so you're only granted the 522 00:28:30,280 --> 00:28:33,600 pro rata, right, for maybe the Series A or if you're lucky, the 523 00:28:33,600 --> 00:28:35,760 Series B. But as they keep raising money, 524 00:28:35,760 --> 00:28:37,520 you're going to get diluted down massively. 525 00:28:37,800 --> 00:28:41,920 And so this is a very big problem in the world of equity 526 00:28:41,920 --> 00:28:43,680 markets. And So what I do is I just 527 00:28:43,720 --> 00:28:48,920 advise all of our founders very carefully and say you will 528 00:28:48,920 --> 00:28:53,280 likely be given help from me to help like raise one more 529 00:28:53,280 --> 00:28:55,800 financing round or another one after that. 530 00:28:55,800 --> 00:28:58,720 I've helped companies raise billions of dollars from a lot 531 00:28:58,720 --> 00:29:02,400 of the world's best investors. My funds are very small, but I 532 00:29:02,520 --> 00:29:04,840 can help. And I have helped systematically 533 00:29:05,280 --> 00:29:07,560 our companies raise, raise, you know, in aggregate billions of 534 00:29:07,560 --> 00:29:09,360 dollars across, you know, dozens of companies. 535 00:29:09,920 --> 00:29:11,480 The problem is this is a bad idea. 536 00:29:11,800 --> 00:29:14,880 This is not a good thing because when you raise so much more 537 00:29:14,880 --> 00:29:19,080 capital than you really need, it causes sloppy execution. 538 00:29:19,320 --> 00:29:22,640 It causes this sort of delusion that you can do anything. 539 00:29:23,720 --> 00:29:25,360 Necessity is the mother of invention. 540 00:29:25,480 --> 00:29:30,080 Constraints, Dr. Creativity. When you have an absence of 541 00:29:30,080 --> 00:29:33,440 necessity and an absence of constraints, guess what happens? 542 00:29:33,640 --> 00:29:36,000 Things fall off the rails. The companies start going and 543 00:29:36,000 --> 00:29:39,240 say we want to build 9 products instead of the one great product 544 00:29:39,240 --> 00:29:40,440 that we should really be focused on. 545 00:29:40,840 --> 00:29:42,360 OK, so they start building 9 products. 546 00:29:42,480 --> 00:29:45,040 The 9 products are shit. They can't actually go and 547 00:29:45,040 --> 00:29:48,120 dominate the market that they set out to go and dominate and 548 00:29:48,120 --> 00:29:51,720 achieve leadership in because they have such a glut of capital 549 00:29:51,960 --> 00:29:55,880 that it doesn't allow them to actually maintain focused degree 550 00:29:55,880 --> 00:29:57,960 of building the company. They hire too many people. 551 00:29:58,080 --> 00:30:00,400 All of a sudden there's 100 or 200 people that they don't need. 552 00:30:00,640 --> 00:30:02,960 That's very bad as well. Most of the best companies in 553 00:30:02,960 --> 00:30:05,720 the world are run by very small focused teams. 554 00:30:05,960 --> 00:30:12,600 And so again, the tools that I have are not perfect and like 555 00:30:12,680 --> 00:30:15,720 guaranteed to solve these problems tools. 556 00:30:16,080 --> 00:30:19,560 But what I basically do with my founders is I say don't raise 557 00:30:19,560 --> 00:30:21,720 more capital. What you should actually 558 00:30:21,720 --> 00:30:23,800 understand is I'm going to give you a few $1,000,000. 559 00:30:23,840 --> 00:30:26,280 My funds are really small. I typically invest 1 to 560 00:30:26,280 --> 00:30:28,800 $5,000,000. I'm a large asset manager. 561 00:30:29,080 --> 00:30:32,080 We invest seed capital. Largest investment I've ever 562 00:30:32,080 --> 00:30:35,280 done is like $10 million. At the stage at which we invest 563 00:30:35,280 --> 00:30:37,320 in lead around that was actually another company manifold. 564 00:30:37,720 --> 00:30:39,600 And I say don't ever raise more money after us. 565 00:30:39,720 --> 00:30:42,440 If you do, it's like one more round, but it better be at a 566 00:30:42,440 --> 00:30:45,320 very high valuation where you're not going to be diluting too 567 00:30:45,320 --> 00:30:48,400 much because otherwise my equity incentive actually goes down. 568 00:30:48,400 --> 00:30:51,320 I get kind of pushed down the cap table and I'll share 569 00:30:51,320 --> 00:30:53,920 something with you just to kind of end this rant. 570 00:30:54,240 --> 00:30:56,240 I was sitting down with a couple people in the Bitenser 571 00:30:56,240 --> 00:30:57,640 community. I won't mention who they are, 572 00:30:57,640 --> 00:31:00,400 but they're very seasoned and experienced people. 573 00:31:00,520 --> 00:31:02,080 They may or may not be one of the founders. 574 00:31:02,520 --> 00:31:05,000 And I explained this. I explained all these things, 575 00:31:05,000 --> 00:31:07,960 this notion of dilution of shares and pro rata. 576 00:31:08,360 --> 00:31:10,720 And you know, so venture capital sort of like if you just like 577 00:31:10,720 --> 00:31:12,680 you said, you know, you let the seed round, but the company 578 00:31:12,680 --> 00:31:15,120 sells for a billion dollars, you made like $100 billion, right? 579 00:31:15,320 --> 00:31:17,880 You may have only made 5 million 'cause you got diluted down by 580 00:31:17,880 --> 00:31:20,280 70%. Like I explained this notion and 581 00:31:20,280 --> 00:31:22,920 they were like, wait a minute, that that's a scam. 582 00:31:23,800 --> 00:31:25,160 That must, that has to be illegal. 583 00:31:25,400 --> 00:31:29,000 How, how is that the case? Because when you buy 1% of the 584 00:31:29,000 --> 00:31:33,160 total potential supply of an alpha token, which would be 585 00:31:33,400 --> 00:31:37,600 210,000 alpha tokens, because the total supply is 21 million, 586 00:31:38,760 --> 00:31:43,040 you will always own at least 1%. In fact, if they do a burn of 587 00:31:43,040 --> 00:31:45,360 the alpha token, because they can't create more, they can burn 588 00:31:45,360 --> 00:31:47,280 some. You will actually own more than 589 00:31:47,280 --> 00:31:49,880 1%. Your ownership will go up, not 590 00:31:49,880 --> 00:31:52,360 go down. So, so it is the opposite with 591 00:31:52,360 --> 00:31:54,520 alpha tokens on, on the 10s of the opposite. 592 00:31:54,680 --> 00:32:01,560 The final thing I'll say is the reason we try to optimize for 593 00:32:02,240 --> 00:32:06,840 the right equity terms when making investments in subnet 594 00:32:06,840 --> 00:32:10,320 teams that happen to have companies basically is that it 595 00:32:10,320 --> 00:32:14,360 creates a symmetry of representation alignment. 596 00:32:14,680 --> 00:32:16,520 There's multiple value representations. 597 00:32:16,720 --> 00:32:20,560 Company equity is just for better or worse, a more durable, 598 00:32:20,560 --> 00:32:24,080 a more mature way of creating incentives between people who 599 00:32:24,080 --> 00:32:27,560 are creating entrepreneurial activities and businesses and so 600 00:32:27,560 --> 00:32:30,680 on and so forth, right? As we mentioned earlier, we're 601 00:32:30,680 --> 00:32:34,760 400 years into this experiment of companies now bit Tensor, we 602 00:32:34,760 --> 00:32:37,240 are nine months into the experiment of alpha tokens, 603 00:32:37,280 --> 00:32:39,160 right? So, so we just need more time. 604 00:32:39,280 --> 00:32:42,040 But I think at a fundamental level, I agree with you. 605 00:32:42,240 --> 00:32:45,640 I think you would want to optimize for the ownership of an 606 00:32:45,640 --> 00:32:47,840 alpha token. The challenge is, and again, 607 00:32:47,840 --> 00:32:50,160 this is what we're seeing as well in the market, and this was 608 00:32:50,160 --> 00:32:52,640 the case as well when the United States stock market was created. 609 00:32:52,840 --> 00:32:57,160 We went through decades, many decades of pure speculation in 610 00:32:57,160 --> 00:33:00,880 terms of trading activity right when Alexander Hamilton created 611 00:33:00,880 --> 00:33:04,160 the stock market from the from the Bank of the United States to 612 00:33:04,160 --> 00:33:07,640 the initial bond market and treasury market that emerged 613 00:33:07,640 --> 00:33:10,840 after the incorporation of the Bank of the United States in in 614 00:33:10,840 --> 00:33:15,600 late 1770s into the 1780s. For the 1st 100 years of our 615 00:33:15,600 --> 00:33:18,400 nation of the United States of America, the 1780s to the 616 00:33:18,640 --> 00:33:23,720 1880's, the trading flows and activities of those assets and 617 00:33:23,720 --> 00:33:27,560 instruments which were US bonds were extraordinarily 618 00:33:27,560 --> 00:33:29,720 speculative. The reason is the age of our 619 00:33:29,720 --> 00:33:31,880 nation was also extraordinarily speculative. 620 00:33:31,880 --> 00:33:34,880 We weren't a proven world dominating entity. 621 00:33:35,000 --> 00:33:37,560 We were far from the most dominant, most powerful nation 622 00:33:37,560 --> 00:33:38,880 in the world. We didn't have the most powerful 623 00:33:38,880 --> 00:33:41,120 military, we didn't have the most powerful technology, we 624 00:33:41,200 --> 00:33:43,280 didn't have the most powerful industry, all of these things. 625 00:33:43,720 --> 00:33:46,360 And so these cycles just repeat over and over and over again. 626 00:33:46,560 --> 00:33:49,040 That's why Ray Dalio is very correct when he says we need to 627 00:33:49,040 --> 00:33:52,280 study history and look at the age of companies in the same way 628 00:33:52,280 --> 00:33:54,840 that we look at the age of nations because they go through 629 00:33:54,840 --> 00:33:58,560 these cycles of maturation, highly speculative, initially 630 00:33:58,880 --> 00:34:01,880 price discovery where you start to see more value oriented 631 00:34:01,880 --> 00:34:03,920 trading. And then ultimately you end up 632 00:34:03,920 --> 00:34:07,840 with a very mature established institution that is either 633 00:34:07,840 --> 00:34:12,040 adaptable and can survive these kind of like trying testing 634 00:34:12,239 --> 00:34:16,320 evolutionary periods or becomes corrupt and completely implodes. 635 00:34:16,560 --> 00:34:18,960 And then you have a regime change, a complete change of 636 00:34:18,960 --> 00:34:21,920 control, both in terms of the, you know, sort of like 637 00:34:21,920 --> 00:34:26,199 ideological and political structures and or stasis and 638 00:34:26,199 --> 00:34:28,560 success. But I mean, as we know with the 639 00:34:28,560 --> 00:34:32,080 economic situation and the debt to GDP issues of many of the top 640 00:34:32,239 --> 00:34:35,159 Fiat currency based nations, it's not one nation that is 641 00:34:35,159 --> 00:34:37,719 having these issues. It is essentially all nations 642 00:34:38,159 --> 00:34:40,320 that are having these issues in terms of their Fiat currencies. 643 00:34:41,080 --> 00:34:43,120 Right. And that's why like, look, what 644 00:34:43,120 --> 00:34:46,400 you said makes a lot of sense. The notion of a corporation with 645 00:34:46,400 --> 00:34:49,040 equity has been around for 400 or so years. 646 00:34:49,320 --> 00:34:53,280 And so when you're thinking of investing in something that 647 00:34:53,280 --> 00:34:56,239 makes money, a company, you look to buy the equity. 648 00:34:56,480 --> 00:34:58,640 But this is evolving. So we're in this transitory 649 00:34:58,640 --> 00:35:02,360 period. I think even though 99.999% of 650 00:35:02,360 --> 00:35:04,560 the world is not aware of bit tensor, we're in this 651 00:35:04,680 --> 00:35:09,000 evolutionary phase where I think it's going to settle on the bit 652 00:35:09,000 --> 00:35:11,680 tensor or the Tau model. And I'll, I'll take your 653 00:35:11,680 --> 00:35:13,800 example. So when you invest in a company, 654 00:35:14,360 --> 00:35:18,280 you described 2 things that I think. 655 00:35:18,800 --> 00:35:21,440 Are. I don't want to say scams, but I 656 00:35:21,440 --> 00:35:25,000 think are less evolved than what bit Tensor does. 657 00:35:25,000 --> 00:35:26,520 And this is a new way of thinking for me. 658 00:35:26,680 --> 00:35:28,880 But you described your pro rata rights. 659 00:35:29,160 --> 00:35:32,960 Now those rights are written down in a dumb contract. 660 00:35:33,120 --> 00:35:37,080 It's written down, you know, and printed up on a piece of paper. 661 00:35:37,280 --> 00:35:39,960 And a lawyer says, yeah, I think this is good. 662 00:35:40,120 --> 00:35:42,600 And the lawyer on the other side is, I think this is good, too, 663 00:35:42,760 --> 00:35:45,360 but one side to the other could break the contract. 664 00:35:45,360 --> 00:35:48,960 And then you've got to go to the SEC or you got to go to a judge. 665 00:35:49,200 --> 00:35:52,360 And the lawyers argue. That's which no one does because 666 00:35:52,360 --> 00:35:55,280 it's not worth the time, right? It's cost prohibitive and you 667 00:35:55,280 --> 00:35:57,160 just violated trust. And so you just write the 668 00:35:57,160 --> 00:35:59,200 company off or you write the founder off and never invest in 669 00:35:59,200 --> 00:36:00,880 them again. But no one enforces these 670 00:36:00,880 --> 00:36:01,640 things. Right. 671 00:36:01,640 --> 00:36:04,480 And so that's the nature of a dumb contract is that it can be 672 00:36:04,480 --> 00:36:06,520 broken and there are consequences. 673 00:36:06,800 --> 00:36:09,840 Or the other thing is like you say, you work with the founders 674 00:36:09,840 --> 00:36:12,080 and you obviously know and trust the founders, else you wouldn't 675 00:36:12,080 --> 00:36:14,440 invest. And so you're dependent on the 676 00:36:14,440 --> 00:36:18,080 founders goodwill that they're going to in the long run agree 677 00:36:18,080 --> 00:36:21,400 with the discussions that you're having with them now and all is 678 00:36:21,400 --> 00:36:25,280 going to be good. I would argue that again, if 679 00:36:25,440 --> 00:36:29,320 let's say an owner needs to raise money, that means the 680 00:36:29,320 --> 00:36:35,160 owner thinks for every dollar of equity they give up that their 681 00:36:35,160 --> 00:36:37,600 equity is going to be worth more money in the future. 682 00:36:37,600 --> 00:36:41,000 That's called being a creative. So I'm only going to raise $10 683 00:36:41,000 --> 00:36:43,160 from you. If I'm a company, I'm only going 684 00:36:43,160 --> 00:36:46,200 to say, JJ, give me $10 and I'll give you $10.00 of equity if I 685 00:36:46,200 --> 00:36:48,840 think of the equity is going to be worth more than $10 to me. 686 00:36:49,240 --> 00:36:53,880 So in that sense, you know, the owners of every subnet have 18% 687 00:36:53,880 --> 00:36:57,440 of the emissions they should if they really want money and they 688 00:36:57,440 --> 00:37:00,200 think the money they raise is going to be a creative, meaning 689 00:37:00,200 --> 00:37:02,880 it's going to drive more value than if they don't raise the 690 00:37:02,880 --> 00:37:05,840 money, they should sell part of their alpha tokens that they're 691 00:37:05,840 --> 00:37:08,840 getting as owner of a subnet. And because hey, there are there 692 00:37:08,840 --> 00:37:11,520 alpha, Let's say they don't have 18% of the alpha anymore. 693 00:37:11,600 --> 00:37:14,640 They have 16% of the alpha. And I just sold 2% to you, JJ 694 00:37:14,800 --> 00:37:17,960 Well, I think my 16% is going to be worth 10 million instead of 695 00:37:17,960 --> 00:37:20,640 8, instead of the 8 million it would have been worth if I had 696 00:37:20,640 --> 00:37:23,200 18%. I'm better was the 16%. 697 00:37:23,480 --> 00:37:28,120 So the alpha ultimately is going to replace equity because you 698 00:37:28,120 --> 00:37:32,280 have, if the incentives are all aligned, you don't need all the 699 00:37:32,280 --> 00:37:35,440 dumb contracts. So it's your obligation as an 700 00:37:35,440 --> 00:37:38,640 investor to and this is by the way, not just for VCs, This is 701 00:37:38,640 --> 00:37:40,440 the benefit of this. This is for all the people 702 00:37:40,440 --> 00:37:43,200 arguing on all the Telegram boards and discords. 703 00:37:43,600 --> 00:37:48,520 You, your job as an investor is to make sure the alpha token 704 00:37:48,520 --> 00:37:51,920 holders, their incentives are aligned with these subnet 705 00:37:51,920 --> 00:37:54,640 owners, incentives are aligned with the minors, incentives are 706 00:37:54,640 --> 00:37:56,080 aligned with the validators incentives. 707 00:37:56,280 --> 00:37:59,560 That is the due diligence that has to happen when you invest in 708 00:37:59,560 --> 00:38:02,040 a subnet company. And then I would say we will 709 00:38:02,040 --> 00:38:03,800 move. By the way, then you're not 710 00:38:03,800 --> 00:38:06,880 dependent on the goodwill because the incentive mechanisms 711 00:38:06,880 --> 00:38:09,880 could all be coded up like whether I buy back alpha tokens 712 00:38:09,880 --> 00:38:13,560 out of my revenues that could be encoded into the incentive 713 00:38:13,560 --> 00:38:16,080 mechanisms. So I as an investor of Alpha 714 00:38:16,080 --> 00:38:18,400 will see that I'm not dependent on the goodwill. 715 00:38:18,680 --> 00:38:21,320 Oh, they might buy back tokens, they might not. 716 00:38:21,760 --> 00:38:24,960 But here, oh, it's, it's in the code and they can't go back on 717 00:38:24,960 --> 00:38:27,240 the code, you know, depending on how it's coded up. 718 00:38:27,280 --> 00:38:32,320 There's more and more guarantees that are possible with incentive 719 00:38:32,320 --> 00:38:35,760 mechanisms on bit Tensor, which I would agree are a type of 720 00:38:35,760 --> 00:38:38,640 smart contract. And Ethereum sort of like 721 00:38:38,760 --> 00:38:40,800 pioneered this notion of smart contract. 722 00:38:41,160 --> 00:38:44,400 I think Bit Tensor is extending on it, basically saying at the 723 00:38:44,400 --> 00:38:52,440 level of the competition and the game that the token encourages 724 00:38:52,440 --> 00:38:56,440 or sort of elicits from some community of participants and 725 00:38:56,440 --> 00:39:01,040 contributors, AKA the minors. You can codify many of these 726 00:39:01,040 --> 00:39:04,000 rules. And this reduces the level of 727 00:39:04,000 --> 00:39:08,920 trust that you need to concentrate on management, on 728 00:39:08,960 --> 00:39:11,280 founders, on the people running the competition. 729 00:39:11,600 --> 00:39:13,080 And this is a very healthy thing. 730 00:39:13,240 --> 00:39:16,960 But to your point, which is again, the fundamental sort of 731 00:39:16,960 --> 00:39:22,800 lossy and very messy flaw of equity markets, the trusted 732 00:39:22,800 --> 00:39:26,760 nature of how management behaves, how they make 733 00:39:26,760 --> 00:39:30,600 decisions, how they build the product, how they ship, how they 734 00:39:30,600 --> 00:39:35,200 make and and set expectations and deliver against those 735 00:39:35,200 --> 00:39:38,200 expectations over very specific timeframes. 736 00:39:38,360 --> 00:39:41,120 Quarterly earnings, right? Like we've got, you know, 737 00:39:41,120 --> 00:39:44,760 quarterly updates that the markets see, you know, if 738 00:39:44,760 --> 00:39:47,440 there's some malicious behaviour, markets will sell 739 00:39:47,440 --> 00:39:49,800 off. Like liquid stocks have some 740 00:39:49,800 --> 00:39:53,640 good properties in terms of creating less asymmetry of 741 00:39:53,640 --> 00:39:58,000 information where there's more symmetry, there's more universal 742 00:39:58,000 --> 00:40:00,200 understanding of how management behaves. 743 00:40:00,600 --> 00:40:02,520 Alpha tokens have similar properties. 744 00:40:02,800 --> 00:40:07,600 The challenge is when something is being invented and created as 745 00:40:07,640 --> 00:40:10,840 a digital commodity or as a startup, if you will, to use 746 00:40:10,840 --> 00:40:14,680 that analogy from inception. And the representation of the 747 00:40:14,680 --> 00:40:17,440 value of that is liquid from the very beginning. 748 00:40:17,880 --> 00:40:20,640 Which is what these alpha tokens are basically providing. 749 00:40:21,000 --> 00:40:24,800 Your level of volatility is off the charts. 750 00:40:25,960 --> 00:40:30,880 People will go crazy just based on some hype narrative and your 751 00:40:30,880 --> 00:40:33,160 alpha tokens going to trade up like nothing you've ever seen. 752 00:40:33,160 --> 00:40:37,440 And then when you fail to meet those expectations or the 753 00:40:37,440 --> 00:40:40,280 product doesn't actually, or the commodity doesn't actually meet 754 00:40:40,280 --> 00:40:44,720 the expectations, people will sell off, take profits, and 755 00:40:44,720 --> 00:40:46,960 you're going to have to rebuild trust over and over and over 756 00:40:46,960 --> 00:40:48,440 again. And I think this is kind of a 757 00:40:48,440 --> 00:40:51,120 normal phenomenon in any highly speculative asset. 758 00:40:51,280 --> 00:40:53,400 And by the way, something you mentioned around M&A made me 759 00:40:53,400 --> 00:40:55,400 think, which I think is very true as well. 760 00:40:55,760 --> 00:41:00,520 In the first couple years of Bitcoin, JP Morgan Chase or, you 761 00:41:00,520 --> 00:41:02,920 know, one of these big institutions, Goldman Sachs, 762 00:41:03,000 --> 00:41:04,320 they could have bought all the Bitcoin. 763 00:41:04,560 --> 00:41:07,080 It was worth what, 10 mil or five mil or something. 764 00:41:07,240 --> 00:41:09,080 You know, they could have been like, all right, interesting. 765 00:41:09,280 --> 00:41:11,920 We're just going to buy all of them and we're going to just 766 00:41:11,920 --> 00:41:15,080 like, you know, OTC and buy all the supply. 767 00:41:15,280 --> 00:41:18,120 Well, the kind of crazy thing is they wouldn't have been able to 768 00:41:18,120 --> 00:41:21,840 actually buy all of them because the Bitcoin in circulation in 769 00:41:21,840 --> 00:41:24,160 the first couple years was only like 1,000,000 or 2 million 770 00:41:24,160 --> 00:41:25,480 Bitcoin. But they could have actually 771 00:41:25,480 --> 00:41:28,280 bought a million or 2 million Bitcoin from people for probably 772 00:41:28,280 --> 00:41:31,520 less than a few $1,000,000 or maybe 5 or $10 million, right? 773 00:41:31,520 --> 00:41:35,440 Because in 2012 there were 10 million Bitcoin in circulation. 774 00:41:35,440 --> 00:41:36,560 Remember the first having, right? 775 00:41:36,560 --> 00:41:38,120 This is the same thing happening with Tao now. 776 00:41:38,520 --> 00:41:42,600 Tau in circulation is right now is almost 10 million Tau and no 777 00:41:42,600 --> 00:41:45,080 one has 10 million Tau. The largest Tau holder has like 778 00:41:45,080 --> 00:41:49,000 a couple 100,000 Tau, so no one has 10 million Tau. 779 00:41:49,000 --> 00:41:51,680 So if you wanted to buy all 10 million Tau, you have to do a 780 00:41:51,680 --> 00:41:54,760 pretty big transaction. You have to put $3 billion 781 00:41:54,760 --> 00:41:59,120 together and get hundreds of thousands of unique individuals 782 00:41:59,120 --> 00:42:02,520 to agree to sell you their Tau. No one can buy Bit Tensor. 783 00:42:02,880 --> 00:42:06,720 Bit Tensor is a federation of hundreds of thousands of Tau 784 00:42:06,720 --> 00:42:11,280 holders that no company can buy. There is no single AI company 785 00:42:11,800 --> 00:42:14,120 that has hundreds of thousands of equity holders. 786 00:42:14,480 --> 00:42:19,600 Not Anthropic, not Open AI, not Mistral, not Grac, not Cerebrus. 787 00:42:19,680 --> 00:42:21,240 None of these come. Not even NVIDIA. 788 00:42:21,520 --> 00:42:23,920 You can't even buy NVIDIA because, well, NVIDIA has four 789 00:42:23,920 --> 00:42:25,800 trillion. No one has $4 trillion to buy 790 00:42:25,800 --> 00:42:28,240 all of the NVIDIA shifts, right? Unless you have the sovereign 791 00:42:28,240 --> 00:42:30,240 wealth fund of Norway or something and you work with 792 00:42:30,240 --> 00:42:32,360 Saudi Arabia and you combine your capital. 793 00:42:32,360 --> 00:42:34,440 When you go to Jensen and say look, we're going to buy the 794 00:42:34,440 --> 00:42:37,640 whole thing for 10 trillion or give you a 2X multiple, like it 795 00:42:37,640 --> 00:42:39,880 just, it just wouldn't happen. Yeah. 796 00:42:39,880 --> 00:42:44,000 And you know, I think with Tao tokens there's very authentic 797 00:42:44,000 --> 00:42:46,120 demand. So I look at that company 798 00:42:46,120 --> 00:42:48,880 Ridges, they spent almost no money and they built a multi 799 00:42:48,880 --> 00:42:52,920 billion dollar company. OK, Now there's demand to create 800 00:42:52,920 --> 00:42:55,640 a subnet because everyone sees subnets create value. 801 00:42:55,880 --> 00:42:59,720 You need 1000 or so Tau, maybe more to to register a subnet. 802 00:42:59,880 --> 00:43:03,080 Then to be a minor. You need to get a hot key, 803 00:43:03,080 --> 00:43:04,840 right? You need to to spend some Tau to 804 00:43:04,840 --> 00:43:06,520 be a validator, you need to stake some Tau. 805 00:43:06,600 --> 00:43:10,040 So there's authentic demand as people are aware of Tau, there's 806 00:43:10,040 --> 00:43:12,280 authentic demand for Tau. And then of course there's 807 00:43:12,280 --> 00:43:15,360 speculation and investing, which always drives some price. 808 00:43:15,640 --> 00:43:16,960 And it's the same thing with the subnets. 809 00:43:17,280 --> 00:43:19,080 I agree there's a lot of volatility in some of the 810 00:43:19,080 --> 00:43:22,040 prices, but that's mostly because again, like any maturing 811 00:43:22,040 --> 00:43:25,240 industry, many subnet investors, I would argue 80 to 90% of 812 00:43:25,240 --> 00:43:27,720 subnet investors don't really know what they're doing. 813 00:43:28,080 --> 00:43:30,480 And this is not a criticism. This is the same percentage 814 00:43:30,480 --> 00:43:32,720 probably in the stock market, but people are more familiar 815 00:43:32,720 --> 00:43:33,960 with the stock market as it's older. 816 00:43:34,240 --> 00:43:38,320 But I would encourage, it's when you're investing in the subnet, 817 00:43:38,840 --> 00:43:42,560 do what JJ just said is this, is this subnet creating a product 818 00:43:42,720 --> 00:43:46,080 that has a big market or is the team good at executing, do they 819 00:43:46,080 --> 00:43:49,800 have the right ideas and so on. So that's the basic first level 820 00:43:49,960 --> 00:43:53,320 of subnet analysis. But then the second thing, which 821 00:43:53,480 --> 00:43:56,280 you do in a different way when you're investing in equity of 822 00:43:56,280 --> 00:44:01,120 startups, but you have to look at is does the CEO does have 823 00:44:01,120 --> 00:44:03,320 skin in the game because they get alpha tokens just like I 824 00:44:03,320 --> 00:44:05,080 would get alpha tokens when I invest in a subnet. 825 00:44:05,080 --> 00:44:09,040 We have the same skin in the game, but is the CEO or the 826 00:44:09,040 --> 00:44:12,320 founder really aware that that the miners have to be 827 00:44:12,320 --> 00:44:14,440 incentivized? Is that the alpha token holders 828 00:44:14,560 --> 00:44:16,880 have to be incentivized? Is there a need? 829 00:44:16,880 --> 00:44:21,080 Does he really need his miners or can a Google replaces miners 830 00:44:21,200 --> 00:44:24,120 in which case the incentives have to be structured a little 831 00:44:24,120 --> 00:44:26,640 differently. So, so you have to do the style 832 00:44:26,640 --> 00:44:30,600 analysis and I find that 80 to 90% of subnet investors don't do 833 00:44:30,600 --> 00:44:34,120 it, hence the volatility. And even with the ridges, some 834 00:44:34,120 --> 00:44:37,400 of the investors see, oh, they, they just broke the benchmarks. 835 00:44:37,480 --> 00:44:41,280 So they run it up 1000% and then oh, it's not continuing to go 836 00:44:41,280 --> 00:44:43,240 up. So they sell it off 900%. 837 00:44:43,400 --> 00:44:45,440 Like it's still, we get that kind of volatility because 838 00:44:45,800 --> 00:44:48,000 people don't really know how to analyze yet. 839 00:44:48,200 --> 00:44:51,400 And they, even the southern owners don't really, you know, 840 00:44:51,400 --> 00:44:52,760 some of them do, some of them don't. 841 00:44:53,080 --> 00:44:56,440 I'm seeing it more and more even in the just past few weeks, but 842 00:44:56,680 --> 00:44:59,240 out of the dozen or so subnet owners I've spoken to in the 843 00:44:59,240 --> 00:45:02,120 past week and a half, I would say it's 5050. 844 00:45:02,120 --> 00:45:04,680 Whereas the subnet owners even understand how important it is 845 00:45:04,680 --> 00:45:07,760 to to incentivize their alpha holders. 846 00:45:07,960 --> 00:45:10,520 Their alpha is going to go to 0 in the long run if they don't. 847 00:45:10,800 --> 00:45:13,800 But on Bittens, you can't just have a research project be 848 00:45:13,800 --> 00:45:16,680 funded by alpha holders because they don't have any benefit in 849 00:45:16,680 --> 00:45:18,560 the long run. People need benefits. 850 00:45:18,560 --> 00:45:22,080 Which sounds selfish, but actually, you know, the western 851 00:45:22,080 --> 00:45:24,840 economy has shown selfish is not the right word. 852 00:45:24,840 --> 00:45:28,440 But having everybody's incentives aligned and everybody 853 00:45:28,440 --> 00:45:31,840 benefiting is the right way to build a society and economy. 854 00:45:32,080 --> 00:45:34,960 That's why the United States doesn't starve. 855 00:45:35,320 --> 00:45:38,040 But China, which had a centralized economy in the 856 00:45:38,040 --> 00:45:42,560 1960s, Forty million people starve because the incentives of 857 00:45:42,560 --> 00:45:44,480 the government were different than the incentives of the 858 00:45:44,480 --> 00:45:47,280 masses of people. Whereas if you let things sort 859 00:45:47,280 --> 00:45:50,480 of be priced in a free market, then nobody starves. 860 00:45:50,800 --> 00:45:52,920 It's assuming the resources are on the planet. 861 00:45:53,200 --> 00:45:57,480 But anyway, I think this is sort of like an evolution of our 862 00:45:57,480 --> 00:46:01,400 discussion about alpha tokens versus equity versus, you know, 863 00:46:01,560 --> 00:46:03,680 what is the ultimate value of alpha tokens. 864 00:46:03,680 --> 00:46:07,560 And you've convinced me, JJ, that that these alpha tokens are 865 00:46:07,560 --> 00:46:11,960 not only valuable as well. If the subnet owner realizes 866 00:46:11,960 --> 00:46:14,120 that he needs to make value there, they're not only 867 00:46:14,120 --> 00:46:16,760 valuable, they're more valuable than equity. 868 00:46:16,760 --> 00:46:18,960 And I'm at the point now as a complete reversal where I was 869 00:46:18,960 --> 00:46:21,320 just three weeks ago. I'm at the point now that if 870 00:46:21,320 --> 00:46:24,600 there is a good subnet, I'm only investing in the alpha. 871 00:46:24,600 --> 00:46:27,280 I don't want the equity because I don't want that headache of 872 00:46:27,520 --> 00:46:30,920 goodwill and dumb contracts timing. 873 00:46:30,920 --> 00:46:34,440 Is everything and there's something that I have not 874 00:46:34,880 --> 00:46:37,880 figured out the answer to because I feel like we're on the 875 00:46:37,880 --> 00:46:41,000 precipice of really deeply questioning these assumptions 876 00:46:41,000 --> 00:46:43,560 and variables and I'd love your perspective on it. 877 00:46:43,840 --> 00:46:45,280 It's something I've been thinking a lot about. 878 00:46:45,720 --> 00:46:50,760 So what traditional markets tend to look at is the ultimate way 879 00:46:50,800 --> 00:46:53,720 of valuing companies is this thing called the DCF model 880 00:46:53,720 --> 00:46:57,000 discounted cash flows. I didn't see put a discount on a 881 00:46:57,000 --> 00:47:01,080 future long term ultimate potential of all cash flows the 882 00:47:01,080 --> 00:47:03,000 company can, the company can generate. 883 00:47:03,960 --> 00:47:06,320 And this is this is a common conventional model. 884 00:47:06,560 --> 00:47:09,840 You sort of like ask any investor of the sort of like the 885 00:47:09,840 --> 00:47:13,680 poker tell if they really know what they're doing to the answer 886 00:47:13,680 --> 00:47:18,000 to this question is if they give any other answer other than DCF, 887 00:47:18,440 --> 00:47:20,800 they have no idea what they're doing, which is like, how do you 888 00:47:20,800 --> 00:47:23,400 ultimately value a company? What's the ultimate, you know, 889 00:47:23,400 --> 00:47:26,520 measure of value? The the challenge with this DCF 890 00:47:26,520 --> 00:47:30,520 model is that the US dollars potentially collapsing. 891 00:47:30,520 --> 00:47:34,280 I mean the data shows like hardcore data is purchasing 892 00:47:34,280 --> 00:47:38,640 power of the dollar has been decreasing massively every year 893 00:47:38,640 --> 00:47:40,760 for the last, I don't know, 60-70 years. 894 00:47:40,760 --> 00:47:44,960 So this is a problem. So when you then sort of ask the 895 00:47:44,960 --> 00:47:48,240 question, how do you value all future companies? 896 00:47:48,760 --> 00:47:52,120 Is it the DCFI? Don't know what the answer is. 897 00:47:52,280 --> 00:47:55,240 And I think you also have to look out the tokens and subnets 898 00:47:55,640 --> 00:48:00,200 if objective function and the sort of fundamental driver of 899 00:48:00,200 --> 00:48:02,720 these subnets is and Ridges is a good example, right? 900 00:48:02,960 --> 00:48:05,520 What Shaquille's been doing has been just mind blowingly 901 00:48:05,520 --> 00:48:07,520 impressive. And I think this should just be 902 00:48:07,520 --> 00:48:11,040 on Bloomberg and TechCrunch and all the news outlets, just 903 00:48:11,040 --> 00:48:13,680 people just don't take Bitenser seriously enough, which is why 904 00:48:13,680 --> 00:48:17,920 we do the show. But it's truly insane how much 905 00:48:17,920 --> 00:48:23,000 progress Ridges Subnet 62 has accomplished in in just a couple 906 00:48:23,000 --> 00:48:25,960 short months spending, you know, on the order of around 907 00:48:25,960 --> 00:48:30,800 $1,000,000 to produce the same model performance results as top 908 00:48:30,800 --> 00:48:32,800 labs that have spent billions of dollars. 909 00:48:33,040 --> 00:48:37,000 By the way, in the top AI domain with the fastest growing revenue 910 00:48:37,000 --> 00:48:39,080 generating companies, which is code generation and software 911 00:48:39,080 --> 00:48:41,880 engineering, right? When you build a product, let's 912 00:48:41,880 --> 00:48:45,000 say you build Ridges commercial product, right, and it's cursor 913 00:48:45,000 --> 00:48:48,160 competitor or it's a Anthropic quad code competitor, one of 914 00:48:48,160 --> 00:48:51,360 these coding agents and you price it more competitively, 915 00:48:51,720 --> 00:48:54,400 right? Undercut it's a better product 916 00:48:54,560 --> 00:48:56,680 has all these additional features, it's more 917 00:48:56,680 --> 00:48:59,040 differentiated and you have a way of like, you know, there's 918 00:48:59,040 --> 00:49:01,280 some IP, there's like a Moat there, whatever it is. 919 00:49:01,720 --> 00:49:03,920 But you're fundamentally going and saying we want to get to 100 920 00:49:03,920 --> 00:49:07,240 million in revenue right in, you know a year. 921 00:49:07,240 --> 00:49:09,680 OK, great. That's these sound like really 922 00:49:09,680 --> 00:49:12,520 big assumptions, but look great, get to 100 million in revenue, 923 00:49:13,520 --> 00:49:16,720 say over the same time frame, the dollar continues to drop in 924 00:49:16,720 --> 00:49:19,200 purchasing power. You got you got the 100 million 925 00:49:19,280 --> 00:49:21,880 in revenue. Are you going to be valued in 926 00:49:21,880 --> 00:49:24,920 the multiple of that revenue based on the current market 927 00:49:25,160 --> 00:49:28,360 rationale of pricing companies based on the multiple and the 928 00:49:28,360 --> 00:49:32,760 growth rates of their revenue in a regime where potentially we 929 00:49:32,760 --> 00:49:37,280 see a slower GDP print and growth than we've seen in the 930 00:49:37,280 --> 00:49:39,120 last decade? I was watching an interview with 931 00:49:39,120 --> 00:49:42,080 Larry Fink, and this is a really sober gentleman, right? 932 00:49:42,160 --> 00:49:45,520 Like runs BlackRock, cofounded BlackRock. 933 00:49:45,560 --> 00:49:49,600 I believe that they manage about $13 trillion on behalf of their 934 00:49:49,600 --> 00:49:51,640 clients, the very large institution. 935 00:49:52,040 --> 00:49:56,840 And he was like, he essentially said this just trying to be more 936 00:49:56,840 --> 00:49:59,800 concise here, but he was like, we have a clusterfuck situation 937 00:49:59,800 --> 00:50:01,760 in America, right? He essentially said that he was 938 00:50:01,760 --> 00:50:04,960 like, it's a complete mess. And he's like the only way out 939 00:50:05,640 --> 00:50:07,640 with the debt situation. He's like, you know, we're huge 940 00:50:07,640 --> 00:50:10,720 fans of Bitcoin and we have 100 plus billion in these Bitcoin 941 00:50:10,720 --> 00:50:13,600 ETFs. The only way out is growth. 942 00:50:14,400 --> 00:50:17,320 If the United States does not grow 3% a year for the next 943 00:50:17,320 --> 00:50:20,560 decade at a minimum, I do not see a solution. 944 00:50:21,000 --> 00:50:23,160 And the dollar will lose its reserve status. 945 00:50:23,880 --> 00:50:28,240 And it is not a right. It is a privilege to have the 946 00:50:28,240 --> 00:50:30,720 world reserve currency be the dollar. 947 00:50:31,120 --> 00:50:33,800 It is not a right. It is a privilege of ours. 948 00:50:33,800 --> 00:50:37,840 And we are going to lose that privilege if we don't grow our 949 00:50:37,840 --> 00:50:40,560 economy 3% a year for the next decade. 950 00:50:40,720 --> 00:50:43,480 And guess what? I ran some of the math 3% a year 951 00:50:43,480 --> 00:50:46,880 over the next decade means we need to come up with $8 trillion 952 00:50:47,040 --> 00:50:51,920 in net new GDP or roughly every year, around 100 billion in net 953 00:50:51,920 --> 00:50:55,920 new in net new economic activity for every, every roughly every 954 00:50:55,920 --> 00:50:59,120 year of the next decade. And unless financial services 955 00:50:59,120 --> 00:51:02,600 grows by 30% compounding every year, which is roughly the 956 00:51:02,600 --> 00:51:05,160 largest industry in America, we will not get there. 957 00:51:05,840 --> 00:51:07,520 And there's a lot of assumptions in here. 958 00:51:07,520 --> 00:51:11,400 We'll have two administrations. We're going to have potential 959 00:51:11,400 --> 00:51:13,280 geopolitical issues that are unpredictable. 960 00:51:13,640 --> 00:51:16,000 What what, you know what we'll actually have to see whether or 961 00:51:16,000 --> 00:51:19,600 not the market continues to value these AI companies at the 962 00:51:19,600 --> 00:51:21,880 level they're they're valued at, where they're almost all 963 00:51:21,880 --> 00:51:24,720 negative gross margin businesses that are not profitable, that 964 00:51:24,720 --> 00:51:28,000 are not generating free cash flows, except for a couple like 965 00:51:28,000 --> 00:51:31,320 in video, which is reliant on the gigantic premium people are 966 00:51:31,320 --> 00:51:34,120 paying on these processors, which by the way, is almost 967 00:51:34,120 --> 00:51:36,360 insane, right? Like the margins are software, 968 00:51:36,440 --> 00:51:40,400 NVIDIA as software margins and they produce designs for 969 00:51:40,400 --> 00:51:43,080 hardware chips that are ultimately sold at hardware 970 00:51:43,080 --> 00:51:47,160 level margins. And so I think it's, it's kind 971 00:51:47,160 --> 00:51:49,400 of an interesting question. I don't know what the answer is. 972 00:51:49,680 --> 00:51:52,360 Do all businesses, including betents or subnets find 973 00:51:52,360 --> 00:51:55,720 themselves optimizing for revenue in the form of dollars 974 00:51:55,920 --> 00:51:58,360 that is then represented back or is it something else? 975 00:51:58,360 --> 00:52:00,000 I, I just don't know what the answer is. 976 00:52:00,080 --> 00:52:02,200 And it's not an immediate term. It's not an immediate term 977 00:52:02,480 --> 00:52:05,240 question. It's more of a 5 to 10 year kind 978 00:52:05,240 --> 00:52:06,960 of question or 15 year kind of question. 979 00:52:07,240 --> 00:52:09,840 But it's not, it's not 20 years, 50 years. 980 00:52:10,400 --> 00:52:11,920 Right. I think it's an interesting 981 00:52:11,920 --> 00:52:15,800 challenge like is the DCF model, which basically says a company's 982 00:52:15,800 --> 00:52:19,520 worth all of the cash it's going to generate discounted back by 983 00:52:19,880 --> 00:52:22,520 other safer investments that I could do. 984 00:52:22,520 --> 00:52:26,720 So it's related to, hey, I could make 4% a year just owning 985 00:52:26,720 --> 00:52:29,440 treasury bills, which are pretty quote UN quote safe. 986 00:52:29,440 --> 00:52:31,680 Forget about set aside inflation for a second. 987 00:52:32,080 --> 00:52:34,680 You better give me more than 4% a year because a corporation is 988 00:52:34,680 --> 00:52:37,960 not as safe as the US of America, USA. 989 00:52:38,320 --> 00:52:40,480 But you make breaking interesting. 990 00:52:40,920 --> 00:52:44,240 It's always worth doing the thought experiment of taking 991 00:52:44,240 --> 00:52:47,760 this concept that's 100 years old, DCF and questioning it. 992 00:52:48,000 --> 00:52:49,400 And it's great that you're questioning it. 993 00:52:49,440 --> 00:52:53,360 And you're right, like I would say maybe better than DCF is to 994 00:52:54,280 --> 00:52:59,000 analyze not the discounted cash flows of a subnet, but the 995 00:52:59,000 --> 00:53:02,280 incentive mechanism. And we'll have a better return 996 00:53:02,280 --> 00:53:05,440 on my money because of this company's incentive mechanism 997 00:53:05,680 --> 00:53:08,920 then I would have elsewhere. So rather than being paid a 998 00:53:08,920 --> 00:53:13,640 dividend out of the cash flows, will I generate more alpha 999 00:53:13,640 --> 00:53:15,400 tokens? And their alpha tokens will be 1000 00:53:15,400 --> 00:53:18,840 worth more because I'm investing in this company versus investing 1001 00:53:18,840 --> 00:53:21,120 in T-bills. So the company doesn't have to 1002 00:53:21,120 --> 00:53:24,720 have any cash flows at all. They could just have a way of 1003 00:53:24,720 --> 00:53:28,600 burning alpha tokens and that will make my investment better. 1004 00:53:28,960 --> 00:53:32,440 So that and that kind of again is this evolution of a company, 1005 00:53:32,560 --> 00:53:34,800 which is what subnets are turning into. 1006 00:53:35,240 --> 00:53:39,040 This is why bit tensor is so incredibly valuable that and I, 1007 00:53:39,080 --> 00:53:40,760 we always say people don't realize it yet. 1008 00:53:41,600 --> 00:53:43,400 I don't know why that is eventually. 1009 00:53:43,560 --> 00:53:46,240 I think part of the reason is is because people don't understand 1010 00:53:46,240 --> 00:53:49,760 that these alpha tokens are not meme coins when in the hands of 1011 00:53:49,760 --> 00:53:52,200 the right subnet owners I think. Tulsa, very complex. 1012 00:53:52,600 --> 00:53:55,400 Yeah, We're making immense contributions to make it less 1013 00:53:55,400 --> 00:53:57,280 complex. I think we've reached many 1014 00:53:57,280 --> 00:53:59,960 hundreds of thousands of people that have listened to our show. 1015 00:54:00,160 --> 00:54:02,640 But going back to your initial comments when we started this 1016 00:54:02,640 --> 00:54:05,240 episode, it's a complex technology. 1017 00:54:05,240 --> 00:54:09,440 It's more complex than Bitcoin. And Bitcoin is only now really 1018 00:54:09,440 --> 00:54:12,560 starting to penetrate mainstream after 15 years. 1019 00:54:12,840 --> 00:54:17,400 So bit tensor we, we need catalytic way of connecting all 1020 00:54:17,400 --> 00:54:19,000 of these concepts. I, I think we're going to get 1021 00:54:19,000 --> 00:54:20,440 there. I'm very optimistic about this, 1022 00:54:20,560 --> 00:54:22,840 but I think the reality is it's just like way more complex than 1023 00:54:22,840 --> 00:54:23,760 Bitcoin. Right. 1024 00:54:23,760 --> 00:54:26,080 Like This is why like you take hyper liquid, which I think is, 1025 00:54:26,240 --> 00:54:27,760 you know, that's a Defy exchange. 1026 00:54:28,000 --> 00:54:30,960 It's I think it's like a $12 billion market cap or something 1027 00:54:30,960 --> 00:54:33,080 like that. And I get it. 1028 00:54:33,520 --> 00:54:35,800 Wall Street understands what an exchange is. 1029 00:54:36,000 --> 00:54:39,200 That's what they do. And there's customers paying 1030 00:54:39,200 --> 00:54:41,680 fees to trade financial instruments. 1031 00:54:41,680 --> 00:54:42,840 This is Wall Street understands it. 1032 00:54:42,840 --> 00:54:45,560 So it's worth $12 billion. The leaders in almost every 1033 00:54:45,560 --> 00:54:49,000 other category of crypto are worth in the 10 or 10s of 1034 00:54:49,000 --> 00:54:52,040 billions of dollars. Bit Tensor is the leader in the 1035 00:54:52,200 --> 00:54:55,560 AI category is worth $3 billion and arguably more valuable than 1036 00:54:55,560 --> 00:54:57,480 these other things because there's no competition. 1037 00:54:57,480 --> 00:55:01,200 By the way, Hyper Liquid, there's a new competitor being 1038 00:55:01,200 --> 00:55:03,600 made every single day. Actually, in fact. 1039 00:55:03,680 --> 00:55:07,600 In fact, there is a hyper liquid on bit tensor subnet. 1040 00:55:07,760 --> 00:55:10,960 Yeah, just launched this week, Subnet 35, Kartha. 1041 00:55:11,160 --> 00:55:12,960 So I spoke to those founders too. 1042 00:55:12,960 --> 00:55:16,560 Extremely smart guys, brilliant. And it's going to be exciting to 1043 00:55:16,560 --> 00:55:20,240 see what they do now. JJ, this was a short episode. 1044 00:55:20,240 --> 00:55:23,800 I, I have to kind of jump to another podcast, but I think we 1045 00:55:23,800 --> 00:55:27,760 very much covered kind of this idea of an evolution of equity 1046 00:55:27,920 --> 00:55:29,680 and how it's playing out in this pure way. 1047 00:55:29,680 --> 00:55:34,440 And I will say this, if any subnet owner wanted investment, 1048 00:55:34,440 --> 00:55:37,960 I'm still only buying the alpha and I'm not doing that out of 1049 00:55:37,960 --> 00:55:41,000 charity if she was that I don't think a subnet is valuable 1050 00:55:41,000 --> 00:55:43,960 unless the alpha is incredibly valuable. 1051 00:55:44,120 --> 00:55:46,480 I know you have your reasons for investing in equity, and I agree 1052 00:55:46,480 --> 00:55:49,280 with those reasons that right now the market still values dumb 1053 00:55:49,280 --> 00:55:52,640 contracts and goodwill and that's how the economy 1054 00:55:52,640 --> 00:55:55,320 understands companies, but it's evolving. 1055 00:55:55,400 --> 00:55:58,080 I always enjoy the show and thank you again for the great 1056 00:55:58,080 --> 00:55:59,480 conversation. James, it's great to see you. 1057 00:55:59,480 --> 00:56:01,440 Shortest episode ever. Good to see you.