RAOUL PAL: What is so revolutionary about it outside of Bitcoin?
Bitcoin as a store of value, what is all of the excitement about Ethereum, the whole blockchain,
digital assets?
What world do you see looking forwards now that this has given birth and has become unproven?
BILL TAI: My framework is going to be based on things that I saw happen before.
To me, it's a little bit like, I would look at Bitcoin as DOS or Basic, meaning an older
programming language that is or actually not even that, there's something called Assembly
language, which is, when you have like a microprocessor in your computer, it's not looking at a bunch
of words, you're programming that in a series of ones and zeros.
It's very granular, and very precise, and you can see everything that's going wrong
if it goes wrong, and if it glitches, it's going to glitch and just stop.
Bitcoin is at that layer where the programming of Bitcoin is so granular that you can see
everything.
There's not a lot of people that like to do it because it's tedious.
There was a need after Bitcoin got started to make the concept of blockchain more applicable
to broader sets of things, you needed to make it easier to use.
Rather than programming this laptop that I'm using Zoom on in a bunch of ones and zeros,
a lot of applications on a Mac or an iPhone are built with higher level languages.
In the case of applications on iPhone, there's something called XCode.
You basically download it, you can drag and drop modules and user interfaces and bump,
bump, bump, bump, bump.
June 1st , 2020 - www.realvision.com 12 The Interview: The Electrodollar: Venture Capitalism,
Technology, and Silicon Valley Software development, to some degree today is no longer development.
It's permission plagiarism.
You basically go out to GitHub and you go to GitLab and you find different blocks, and
you paste them together and you hit run.
Then you change the variables and you just tweak it.
That level of programming, it's faster, it's easier.
You get to results sooner, but it's not secure.
What you see in the development of Bitcoin, Bitcoin's never been hacked because it's this
very granular, clunky, low level thing and you can see everything going on.
Ethereum's is abstracted language that took, or it's built on an abstracted language solidified.
It was designed in a way that attracted every kid that could design an iPhone app.
There was this flood of developers because it was easy to use, but it had these little
things underneath because it was based on other things where if you put these two little
gears together, maybe they don't quite match, the early days of Ethereum were filled with,
oh, the wallet hung, it was hackable, this was hackable, that was hackable.
There were all these gaps, because people would attack it at lower layers.
I think Bitcoin, in that context, to me is such a rock solid thing, it's like the gold
standard.
I think Ethereum and some of the other languages and tokens around different block chains may
be simpler to use, and therefore draw developers that want to apply blockchain principles to
managing things, whether it's a fleet of cars, or tracking assets or different things, tracking
transactions, and I did fund some things in that space, too.
I'm one of the early backers of CryptoKitties, for example.
RAOUL PAL: What did you see in that?
Was that just you seeing Second Life all over again, basically?
BILL TAI: It was one of the very, very first-- well, first of all, the team.
I always back people in teams first, and then they have to be in a space that I think is
a bit-- Philosophy for Venture Capital 101, you're not going to make money if you're in
a dead market.
You want to be in a big market going through transition that's starting to accelerate or
leading up to that.
You're not going to make money if you have a shitty team so you want A players.
Then you're not going to make money if you overpay or you get the capital structure wrong.
It's very simple.
I had a conversation with Don Valentine.
Don Valentine, the founder of Sequoia Capital, was a backer of that first startup that I
joined.
When I went into venture capital in the early '90s, I used to follow him around and we got
stuck in an airport one day after a board meeting at Microchip because there was a flight
delay or something, I had dinner with him, and I was like, Don, you're so good at this.
By the way, if you want to see a venture capitalist that is just amazing, think about only 10
investments he ever made or a subset, Oracle, Apple, Cisco, Electronic Arts, LSI Logic,
Network Appliance, just in that, there's like 1000 billion.
Then his firm went on to fund Google and really everything else.
Zoom, they came in late to Zoom.
Sequoia Capital, they just have that DNA of a great thinker that understood markets, understood
issues, and he was one of my early mentors that I followed around, and so I said, Don,
what do I do to be good at this business?
He said, it's very simple.
You only have to get three things right, markets, management, capital.
He said, if you think about those three things, if you have a great team and infinite capital
and you're in a shitty market, you'll lose money every time so just make sure you're
in a good market and then get the right people and if they're not working, change it out
until it works.
June 1st , 2020 - www.realvision.com 13 The Interview: The Electrodollar: Venture Capitalism,
Technology, and Silicon Valley That was the early Sequoia culture, they're not so much
like that now, but they were very hard on management at the time because they saw the
management as a commodity.
Anyway, I think we're in this world now where I think Bitcoin is this reference standard,
Ethereum and CryptoKitties-- CryptoKitties ran on Ethereum, and they broke out as the
highest volume application.
RAOUL PAL: Anybody else would have looked at this and said, why the hell do we care
about digital currencies on a blockchain?
That's what the world's narrative was, but you saw something entirely different.
BILL TAI: Well, it was, yeah.
I tend to be drawn like I was to the peer-to-peer thing.
When I feel like there's a new and useful technology that gets a foothold around the
use case, I'm just generally interested and then whether or not I find it's a different
case, but in this particular case, it represented to me the first high volume transaction machine.
Because to me, I didn't care if it was a cat.
It was interesting that it was a cat or set of cats, but you could put anything in there.
It was representative to me of what am I going to learn about driving super high volume transactions
on a blockchain here?
RAOUL PAL: Is this tokenization essentially, you're seeing within the kitties?
BILL TAI: Yeah, it is.
Yes, that's it.
RAOUL PAL: You're seeing, okay, they tokenize these kittens, but therefore, I could tokenize
anything.
BILL TAI: That's right.
RAOUL PAL: Therefore, tokens become securities, securities have value and now, we've got this
whole digital platform to exchange all of these things anyway.
BILL TAI: That's it.
Basically, to me, it represented one of the first steps towards digital value exchange
in a universal way of anything, and like Second Life, it was its own economy.
It was its own little closed world with its own currency, and back to your question about
where does Bitcoin fit in the world's currency system and other value exchange?
I have another weird ethereal thought on this whole-- and ethereal doesn't mean Ethereum,
but I think if you think about the history of currencies, generally speaking, and let's
take this recent history that we're just in.
The US dollar, as we know it, has not been around that long.
If you think about-- yeah, so 1944, Bretton Woods, reference to a piece of gold to give
it trust so how do you impute trust?
In that time, it was like there's physical gold.
Now, it's blockchain if you understand blockchain.
Then it ran out of gas in 1971 or 1972.
Then they had it abstracted from the dollar and it became this floating thing, a reserve
currency with its special advantages, but that's only been in place for 28, 29 years.
Is it breaking now?
Don't know, it might be.
'44 to '72, I don't know-- it wasn't that long.
It's like 20- or 30-year periods, and we're having these hit the wall moments within a
few decades at a time.
June 1st , 2020 - www.realvision.com 14 The Interview: The Electrodollar: Venture Capitalism,
Technology, and Silicon Valley That doesn't give me a lot of confidence that this currency
is going to be around 100 years from now.
I don't know when it totally breaks, but it's going to break at some point.
Now, let's go back beyond this couple of generation period to societal structure now, people exchange
money.
Let's go back to the revolutionary period, when a bunch of people got off boats from
continental Europe and stepped on sandy beaches or wooded beaches in America, they set up
colonies.
Let's draw a line here.
This is Connecticut.
This is New York, this is Virginia.
Every single one of them created their own currency.
Every single one.
If you think about currencies and value of exchange, anytime you have a societal group,
whatever that grouping is, religious, political, cultish.
You're going to have little exchanges of things.
We're in a world that increasingly is able to have a gazillion micro communities exchanging
value however they want.
The world that we knew after World War II was temporary, because you go back before,
let's say, humans have been around for 400,000 or 500,000 years in the form we are now, longer
than that if we were lucky.
If you think about what was society like when you were a caveman?
How did you do value exchange?
In the morning, you might wake up and say, hey, I'm going to go fish with Raoul and three
friends.
Then in the afternoon, I might pick five other people and in the middle of the day or later
in the evening, I might do something else with another set.
I didn't work for a company.
You had a flexible fabric of need that you serviced with free molecules that could disperse,
reform, apply themselves whenever you needed productivity of a certain kind and a certain
thing, so work was fluid.
It wasn't until the physical Industrial Revolution, just like we talked about music, that societal
structure and work changed.
It's only like 1% of human history, we've been locked in these big companies.
After industrialization and capital intensity, we had this notion of giant companies that
promised their employees that they would have pensions forever.
I know you're big on this pension thing.
That's all fake.
It was like, come work for me.
I'll take care of you for the rest of your life.
That's not true.
RAOUL PAL: Bullshit.
That was a lie.
BILL TAI: It was never sustainable.
We know a certain limited history of our parents and grandparents that worked for these big
companies in the aftermath of World War II, but before that, they never existed for hundreds
of thousands of years.
Why should this structure be what it will be in the future?
I think we're going back to-- or the future is going back to what we were for all of human
history.
Think about every young person you know.
They work on five jobs.
None of them work for a big company.
Think about every big company you know.
They're mostly in trouble.
The industrial ones.
The ones that move bits around, freeform, they're not in trouble but the General Electrics,
the old industrial things, no young kid's going to go work there are hardly any.
We are now, we had this like societal line of this continuous society, capital intensive
big companies and nations.
Nope, that didn't really work.
What will that do?
That's going to dissolve national borders in a way and if national border's-- RAOUL
PAL: [?] doing that, already.
June 1st , 2020 - www.realvision.com 15 The Interview: The Electrodollar: Venture Capitalism,
Technology, and Silicon Valley BILL TAI: It is.
This premise of what is currency in a world that looks like caveman days with computers?
It's a totally different thing.
You get micro economies and all kinds of assets and I think humans like to have a reference
standard.
I think back to your original question, I think Bitcoin is one of those things that's
very secure and if you think about the human behavioral economics around gold and the need
to hold gold, and you may know the answer to this better than me, but I think all the
gold in the world's worth 8 trillion?
RAOUL PAL: 10 trillion and silver.
BILL TAI: Okay, so if Bitcoin becomes worth a 10th of that over a decade, or less or more,
whatever it is, or even 20 or 30% of it in two or three decades or 50 years, whenever
this dollar regime starts to have big stress, what's it worth then, is that 100,000 or is
it 200 or 500 a coin, but it's somewhere in that neighborhood.
I think it's one of those things that you buy a little, you hang on.
RAOUL PAL: Yeah.
See, I'm really interested in this because I've been looking at the fragmentation of
society and the change of the tribalism brought by the internet because we exist in two societies
now.
We live in a sovereign state, you live in the United States, I live in the Cayman Islands.
We have our citizenships, you're originally Taiwanese by heritage, I was originally British,
parents from different countries but now, I live online.
I'm now part of the macro community.
This is a whole community of people, of which most of the people I've never met before,
but I talk all day on Twitter to, or via video, or whatever.
We can have mediums of exchange.
We have our own terminologies.
We have, in jokes, own society as it is, but I may be part of another society as well.
Maybe I'm part of whatever, my other interests may be, music, a different society, different
groups.
As you said, what becomes really interesting is once you start thinking of this new tokenization,
CryptoKitties being I thought was really fascinating.
Once you understand that everything can be tokenized, that has value, and particularly
digital assets as well and we have this multi-tribal world, we've now just built a brand new securities
market with millions of new instruments, we can trade.
I'm looking at the pretty shitty fucking world that we've got now with rigged central bank
buying and narrowing base of ownership of equities and all of this mess that we're all
finding ourselves in, well, we're about to be given an entirely new playing field.
Everyone still thinks of tokens from the first wave of tokens in 2017, that was just the
start of we're going.
BILL TAI: I agree.
The first set of web pages suck, too.
A lot of porno and a lot scammy sites, but they evolved into something cool.
RAOUL PAL: Yeah.
I very much think that if we were to go forward 20 years, if you're in the financial industry,
you're actually trading value between tokens.
I've always said the point being, let's say you take a great firm like Exxon, huge, big
monolithic entity.
Right now, I can buy their bonds or their equity.
They employ, I don't know, 500,000 people or something crazy and maybe you want the
upstream and I want the green energy component, that person wants the buildings and that we
can do all of that.
We don't have corporate entities any longer, which is your point, about corporate entities
don't exist, they became a legal thing to turn a company into a human, a corporation.
For legal entities, that all goes.
June 1st , 2020 - www.realvision.com 16 The Interview: The Electrodollar: Venture Capitalism,
Technology, and Silicon Valley BILL TAI: Very similar to the media business.
If you think about production and distribution, if you could control the production and distribution,
you could control the media, the content, the currency, and I think digitization, you
eroded it all of that and put it in the hands of everyone else.
Because you could, you literally could get on a computer and create your own token right
now.
You could easily do that, you could have a Real Vision currency if you wanted and it's
a question do you or do you not have a little nation?
A little cult, a little following and you could have people trading it, just like Second
Life?
It's in every asset, whether it's a community or as you described, the buildings or what
have you.
I also funded something called Fluidity, they just merged into consensus, which had released
a peer-to-peer exchange, AirSwap.
AirSwap's like instant exchange of tokens.
They did a an experiment with the securitization or the tokenization of a Goldman Sachs led
real estate project financing.
Instead of getting a stack of papers around a LP stack of papers representing a chunk
of a building, they securitized, or they tokenized Real Estate funding of a project and like
you were referring to, it doesn't have to be a big thing.
You could do one thing at a time.
It's whatever has a following.
Whatever you have a belief in.
RAOUL PAL: Sportstars, we're seeing that and that's a no brainer.
BILL TAI: You're going to have to see, take a look at CryptoKitties again, because one
of the great learnings at CryptoKitties was that for their purposes in their spiky high
volume transaction periods, the Ethereum blockchain wasn't designed to handle that kind of traffic,
so they created their own blockchain called Flow.
They are now working with major sports leagues to create-- because you had unique cats, trading
cards.
RAOUL PAL: The same thing.
Not only that, but it can be the future income stream of Sportscars, doesn't even have to
be the cards.
BILL TAI: Yes, because it's their identity.
They're taking little movie clips, or little clips from games like special moments, you
could own the authentic one.
There are micro economies around different things.
There's all kinds of new assets.
You talked about all the old assets, there's a new generation of different assets that
have value that people may not understand today, but they will just like in Instagram--
Instagram and YouTube have created micro economies for influencers that you've never predicted.