Disruptive Innovation & Unbundling The S&P 500 With Howard Lindzon | Where It Happens

0:00[Music]

0:13we made it here we are the room where it happens this is it we're here and you're here months of preparation we're so excited to have you here with us we want to tell you a little bit about why we're doing this the room where it happens it's a show a podcast more importantly it's a community we had this feeling that podcasts always stopped they left something they left you wanting something they left you wanting more because the conversation was always one-sided it was always one way and we're looking to do more with this we're looking to bring you all into this conversation open the door to the room so that you're really a

0:46part of this with us this is a two-way conversation you're in the room come join our discord ask us questions this is as much about us as it is for you so so excited that you're here so excited that we'll deconstruct frameworks grow together come up with startup ideas um this is this is the beginning yeah and we're gonna do a pretty cool take on on this whole show we're gonna have basically every episode is gonna be the two of us we like to deconstruct stuff over a drink so we're always gonna have a different bottle of something with us encourage you if you're open to

1:25it have a drink sit back relax and join us as we talk through these frameworks we're going to have guests joining us for about half the episodes to dive deeper on these concepts that we're getting into and then like we said we're going to get into the community afterwards when we roll things out we want to continue the conversation with you guys we want to dive deeper go further with all of these conversations and that's going to come from engaging with you and it's going to come from the guests being a part of that with us so we're so excited to get into it and here

1:52we are first episode greg question for you if banks want companies to open accounts why do they make it so difficult they like punishment maybe but not mercury it's banking built for startups and opening an account is so smooth you basically fall into it you can apply for an account from anywhere in the world in 10 minutes and you get access to everything you need to be able to do banking well the sign up flow is beautiful and intuitive all accounts are fdic insured they offer virtual and physical debit cards and you never have to visit a physical bank branch and the whole product has such an elegant design

2:29i'm a mercury investor and a mercury customer myself many times over if you're a founder or creator this is the banking product you need sounds like startups can just like start when they use mercury super low friction exactly mercury is where startups can just start check out mercury.com if you want to see it for yourself i wonder what founders will do with the time they say by starting with mercury you know build great products grow their businesses i'd guess that's a pretty good guess thanks greg you're welcome today's show is sponsored by appsumo the leading digital marketplace for entrepreneurs and a great way to get your product in front of one million

3:10plus entrepreneurs founders and small businesses they have the tools you need to automate all the busy work that comes with running a business so you can boost your productivity scale beyond your skill set and focus on building something you're deeply passionate about this black friday appsumo is bringing you 20 new deals on digital products at discounts of up to 90 percent off plus a limited amount of freebies this is their biggest sale of the year and they sell out quickly all you need to do to get first access is go to appsumo.com the room before november 21st enter your email address and they'll send you the

3:45exclusive deals again that's appsumo.com theroom check out the link in the description as well if you're on their email list like we are you know they have some of the best tools to run your business so go sign up at appsumo.com the room so you don't miss these special black friday deals before they sell out um should we get into it yeah let's dive right into it man i uh i think this is really funny because we're here for the first episode and i was telling you about this i was telling my parents about what we're doing the idea of this podcast the show the community and you know the whole

4:23thing your parents they don't really get it they're like not in the tech world my parents grew up in the 50s 60s 70s and so i'm talking to my dad this weekend and i was like dad you know it's uh it was his birthday we're hanging out we're having a couple drinks it's like dad i'm super excited we're filming the first episodes this week it's gonna be a blast it's gonna be so fun we've got some guests coming in it's gonna be a hell of a time and he kind of looked i mean he was like oh who you got for guests and so i was

4:47kind of laying out some of the people we have we've got some cool people coming in we've got gary vee coming in for the first season we've got howard lindsen with us today we've got a bunch of really cool people and he just looked at me kind of with this blank stare on his face and he was like well how about uh how about like elon musk or like jeff bezos because they would be good and i sort of just looked at him and he was dead serious dead serious saying this to me and uh i just sort of said you know dad i appreciate that you have this faith in

5:16me i think they're a little hard to get like maybe we'll loop them in when we get obama and jesus but uh man that was something else so my dad's got a lot of faith in me i mean i like that he he he like he's a dream big type of guy he is a dream big kind of guy and i appreciate it um so let's dive into it dude all right let's we're gonna get uh we're gonna get some drinks going for every episode we're going to have something we are so lucky to have what is in my opinion the best tequila in the world

5:44komos from our friends over hack homos yeah joe marchese shout out thank you so much bottle's really cool it is the best tequila i've ever had in my life and unfortunately or fortunately i've had a little bit too much tequila well this is my first time trying it so well you're going to enjoy it cheers all right cheers welcome in with us we're so excited and let's dive right into it man so good damn that's good so good all right so what are we talking about today so i don't know if i told you this but i went to the bank because i want to buy a condo in miami okay

6:27and as one does by the way as a tech guy as one does right now we buy condos in miami apparently well you know i moved to miami and you got you gotta live somewhere okay and i call up the bank and i said i found this great property i'm really excited about it um and my banker was like yeah but i can't give you a loan and my heart sank because i was so excited about this property and i i mean i was banking on the bank you know and i said why you know i've and he goes well uh you know you started a new company

7:06you work for yourself you know you don't have w2 income um i'm sorry but you you know chase cannot give you a loan and you know i like to consider myself like i've done some things i've sold some companies i've invested in stuff and i can't get a loan so i was just that's what's been on my mind recently this is crazy i've so i've been thinking about this exact thing in like a number of different contexts recently this whole idea that the traditional financial system is set up for really what is like the old way of working right it's this whole idea of you go get

7:41a job when you get out of college you work for 40 years they give you a gold watch and you retire that's like the way that our parents worked that's how the world has always worked as it were but that's changed a lot now there's a lot more people taking on entrepreneurial roles there's a lot more people doing 1099 stuff this whole idea of like the portfolio theory of jobs and people doing a bunch of different things the like hustle culture young people taking on a bunch of different um a bunch of different side hustles and building and so the idea that the mainstream financial ecosystem does not

8:13work for a huge and growing population of people like you by the way who you have i imagine you could buy the place outright in cash if you needed to so the fact that you cannot get a loan is like crazy to me but i keep seeing this type of thing popping up yeah i think it's gonna be it's gonna happen more and more and there's a ton of like startup opportunities there i think also about you know immigrants so when i first moved from canada to the us i had no credit and it was right after i sold my you know one of my first companies

8:44and i literally couldn't even like i went to a t i was like i want a phone and they're like sorry um i had to and you know and that's why a lot of immigrants uh you know use t-mobile which is what i used up until recently like i literally just got off of it because t-mobile i was loyal to t-mobile because t-mobile was the only phone company in america who had my back t-mobile if you're listening like sponsor us do something like i appreciate that you heard it here first for all the immigrants and you know i think like it's better than cricket wireless yeah i mean it's a step

9:17up for sure i mean i i was definitely in san francisco at you know in like the downtown area and like my t-mobile reception wasn't working yeah but it's crazy though the point is like so cool that um you know they had my back but crazy that like you know the financial yeah the financial system is kind of stuck in all the rails i mean the rails of the entire traditional financial ecosystem are broken for where the world is heading i just saw this with a close friend of mine this guy josh fabian founder of this business medify amazing company raising money at a huge valuation

9:50uh backed by some of the biggest vcs in the world and he is a founder who came from not a lot of means he grew up very poor he had tougher times when he was younger and has now risen to this amazing position he's building this incredible company he moved his company to new york creating jobs in new york city could not get anywhere to accept him to rent an apartment for himself he said i will pay for the entire year outright in cash they wouldn't let him do it because he had bad credit from what his past was and that's insane that we live in an

10:21ecosystem and in a world where the rails have not adapted enough to be able to underwrite someone differently than what their traditional system is so what's going to happen is it going to be like the chases of the world innovate or is it gonna be like there's startup opportunities you know creating chase but yeah entrepreneurs or chase for immigrants it's a good question so first off uh the mainstream financial world is not good at innovating i mean you see that big companies in general are just slow to innovate you see that across the board in most industries we both know that they're just not good at it it's

10:54not part of their culture it's not part of the dna to move quickly to pivot to innovate so i think of this like i'm a frameworks guy and so in every episode you're going to hear me talking about different frameworks i know you're going to get sick of it eventually but for this one i just keep coming back to what is one of my favorite frameworks which is the clay christensen have you like the so harvard business school professor very famous managerial um thinker and has this model of disruptive innovation and this is basically a framework that talks about how small upstarts can come into new markets and completely disrupt

11:29incumbents that are very large and so in the financial world i think this is a great model to think about because you have these massive incumbents like a chase or bank of america or whatever they're doing and what they have done is created this massive ecosystem but what what in reality has happened is that they are either over serving or underserving a ton of different customers and so christensen's model says that there's a huge opportunity that exists for people to come in and really just serve one particular customer or archetype extremely well provide like either the minimum viable product for that one customer or the best potential product for that one

12:04customer and use that as your launching pad and as your wedge to then go and expand outwards and so i think when you look at the financial world that's what you're going to see you're going to see people coming in and using this tiny wedge of going and providing the best service for that one archetype to go and expand out and completely take over this ecosystem i mean that's the whole unbundling right i mean this is this happens on the internet in general and that just it's coming to finance last just because finance is traditionally super slow and there's a lot of red tape so regulated so regulated

12:37um but yeah i mean totally makes sense yeah there was an interesting i've seen a few interesting ones recently that i want to talk through with you so one that i saw recently was i think it's called carrot um and they do haven't heard of it tell me about it okay so what they're trying to do is creating the financial rails for the creator economy so creator economy has become this big buzzword we'll definitely be having people on to talk about it and go into more depth and we can talk about it in the discord later and jam on it but the creator economy has a very distinct

13:07set of needs associated with their finances it's 1099 income yep typically the loan and credit market for those type of people that are earning 1099 is low so you could have a youtuber that's making a million dollars a year on youtube and has a 5 000 credit limit through bank of america and that clearly doesn't work like mr beast has to spend a ton of money on the videos he's making and there's an incredible opportunity for a company like carrot which is what they're doing to go and think differently about underwriting rather than just looking at all the traditional metrics and underwriting that way think a little bit differently and it exists

13:40for youtubers it might exist for knowledge creator economy people like sub stack writers the twitterratty you know like all these people that are creating in different ways but what carat is saying is that's where they're going to go create they're going to create the best product for the greater economy and use that as a wedge to take over more of the banking for them they've started with a credit card i believe and that's their first product but then the whole idea of like going to the market with just that very small make it the most amazing product for that customer and go and expand outwards from there yeah that's my

14:11whole thesis on how to build products for the internet like not just finance is start with the community and then build the software versus you know build software and then go find a community to attach it so i think like if you're listening and you know you want to come up with ideas that for startups that are going to work like pick a community that you like really connect with that you have like inroads with right so like if you're a creator you know you understand creators needs right so like what are other just off the top of your head um what are other kind of communities that you

14:46can see there's opportunity in in financial services we talked about um creators maybe entrepreneurs gage economy is a huge one okay i know i mean a lot of people have jumped into this but like this is this whole idea you and i have talked about this it's like go talk to people just go ask questions figure out what pain points they have figure out what's stressing them out and so like creators if you went and talked to creators and i'm assuming this is what the founders of carrot did they talk to creators and they realize what the hell why the hell do i have a five

15:12thousand dollar credit limit when i'm making a million dollars this year it feels ludicrous and so they realize that and now you can create a product create a service create a community around fixing that um same thing for gig economy i mean one of the biggest issues that people perceived when they talked to uber drivers was that they weren't getting paid quickly enough they were getting paid every other week originally or once a month and that didn't work for the way they were having to pay bills pay their gas and so startups came in and said okay we can actually front that it's just an arbitrage product and go in

15:40and do that and so like i think a lot of this from just from a kind of way of living standpoint is just opening your eyes and talking to people as you go about your daily life because you end up learning and having all these ideas come up on a daily basis from just going out and doing that and i think when you're to so completely agreed and to add to that i think you know one mistake especially a lot of silicon valley companies do is they don't the product needs to speak to for example the uber drivers and that means has to give them that warm and fuzzy

16:11feeling that aesthetic that artwork that copy that combined they're gonna use that over existing financial products or whatever because they're like these people are speaking to me these are my people right yeah i think that's the goal and we do that a lot at late checkout like we help all these companies do that um but i think your point on immersing in the community you know i wanna like i wanna really harp on that because i haven't thought about it that way and it's so important like if you just went and immersed yourself within a creator community right and just talked to people you didn't even have to talk

16:44listen be present for it that that is how you garner all of these insights you end up realizing that a bunch of creators don't know how to manage their invoicing they don't know how to manage their taxes they don't know they're not optimizing around um what's a what's deductible expense i mean that's the most simple thing in the world and if you're a creator and you are paying for different things as you go about your daily life most of that is deductible if you're doing it the right way and it'll save you a lot of money at the end of the year most people don't know that

17:11because they don't know how to set up different entities they don't have an expensive tax guy because they're just on their own and so in this whole world of like businesses of one that are being built now and the way we are working is fundamentally changing how do you go and create products for these people it's by listening understanding what those pain points are and where they're missing out and being there and immersing yourself yeah did i ever tell you this like what i did 2017 2018 when i went back to college there's like articles i think you know written about this um but basically i

17:42was running a a company called islands and it was like slack but for college yeah and i was living in san francisco um and you know and the people around me were just like tech people yeah and i had never like uh you know my i never i dropped out of school grew up in canada where and you know the u.s system's a lot different you know my exposure to like college was like watching like van wilder you know so i we end up hiring a team in alabama which is like the most college area of all time college area and we the team and i

18:21immersed ourselves in tuscaloosa alabama and we did a whole college road show where we spent six eight nine months immersing ourselves with you know the students to come up with a product that would work and we landed in tuscaloosa with a product that we thought worked and we left tuscaloosa with a product that worked and it was all through this like date you know daily kind of interaction with college students and i think that's the missing like there's so many great products out there and the only missing ingredient is the immersion so what's the lightest touch like make this tactical if i'm a person listening to this

19:02what is the lightest touch way for me to start immersing myself within different communities is it discord is it red like what how would you do it if i if i decided i wanted to go do something like this not everyone wants to hang out in tuscaloosa at a frat party yeah that's pretty heavy that's like a heavy touch approach to community immersion exactly the more lighter that's the platinum give me the bronze like i like the bronzer i guess i could do this at home at night so i think the beauty about facebook groups reddit discord is it's it's these communities right and you can

19:35just teleport yourself into these groups and communities so i think it's about making a list of like the the most interesting for example like creator communities um teleporting yourself there and dissecting the conversations and also like creating posts speak their language comment um and then try to get them into like smaller group conversations so if you're in a discord with you know 10 000 people it's hard to actually build intimacy how do you get them into like you know a group chat a whatsapp group whatever of 20 people that's when a lot of the key insights come yeah i think it's so interesting because it applies so broadly it goes

20:16beyond like you can talk about it with tech nft is web3 this is huge this is how i learned was i just went and dropped into a bunch of these discords that were happening around the different nft projects and lots of money along the way and did some stupid stuff but i learned a lot by being immersed into the community so it applies to tech i also think there's just really interesting more blue collar like meat and potatoes type stuff with this i was driving the other day and this like biker gang in connecticut drove by me on all their harleys with all of their gear and the

20:46first thing that came to my mind was just like holy [ __ ] this is an amazing fervent uh enthusiastic community of people bikers they love it they live in it every weekend they do it and they spend tons of money on this hobby there has to be a ton of businesses that can be built around that community providing them what they need one one of the smartest marketers i ever met i was i was on a flight from vilnius lithuania to new york city don't ask maybe for another episode and the guy next to me was the cmo of harley-davidson yeah and i noticed because he was where he he

21:25looked like he looked like the leader of the hell's angels yeah you know he was wearing all leather patches everywhere skulls everywhere and i started talking you know we started talking and he he basically told me that they they do immersion yeah and they you know like that's the difference between harley like harley's an incredible case study around like start with the community and then build with the product yeah and not every business has to be some like massive venture scale business there's something really interesting around creating these micro businesses for those urban communities and you can bounce around and especially with how easy it is to

22:02create products now i mean you could go spin up an e-commerce brand for a specific niche community that you found on reddit immersed yourself in on discord wherever it is very very quickly and that's especially true in financial services and fintech right because you don't need that many customers to create a huge outcome and like it's also really easy with the infrastructure that exists mercury this company i have a small investment in it's a bank for startups and their whole thing was the same christensen model of disruption they were like we're going to create the best banking product for startups and this is what we're going to

22:35do we're going to make all the things that suck much easier and nowadays they just had to create the customer facing ecosystem they didn't need a banking license actually you could go get a partner bank on the back end so all they focused on was beautiful intuitive design an amazing product and it just works and it works when you do something like that and so i think it's really interesting there's a real opportunity for it um i do think we're at a point where we should bring someone to jam with us on this and we have someone amazing coming in for this specific topic because howard lindsen has a

23:05background in all of this he was one of the first investors in robin hood so like when you talk about disrupting financial services what better business exists than that stock twits i know he's an investor in rally road which is a really cool business that's fractionalizing investing in everything opening up this huge opportunity for this investing class the rise of um investable assets so i say we bring him in and let's continue to jam with him here he also invested in islands so smart man so he understands you know niche communities and not going big so let's bring him in i'd love to hear his point of view awesome let's do it all

23:40right where do you want me to look we're just having a conversation yeah yeah all right say i get bored

23:50i mean that's a lot of pressure all right super excited to welcome you howard sure you're kind of like i've known you for how long 10 15 years since you were 11. pretty much so like two years he's kind of like my like canadian i mean i'm canadian he's like my uncle we both have like skinny legs biking legs and skinny jeans you have skinny legs and skinny jeans but i don't know i kind of feel like we've got like similar vibes you're into community i'm into community yeah i've done finance stuff you've done finance stuff do you feel that way or is this a one-sided thing in community and i

24:27believe in community i don't think it's a good business i don't you know it's it's a good it's great to build communities yeah it's not a vc as i've learned over the years you know i is reddit a community for they stalked with the community yes israelite community you know defined community there's different communities within it but it's very hard to build a community so i so so it's it's a term that's thrown around a lot that people should use more carefully you know i think it became a term because of real estate like build a community right and that's very hard to do it just

25:04became this sexy buzz word just like everything else in the vc world you capture one word and you're like oh community is the word of the day so we're just going to talk about community and we're going to do mass evaluations at every it's a creator economy everyone's like oh creator economy if you put that in your pitch deck it's a hundred million dollar post money valuation it doesn't matter what it is yeah well i think we're entering the first time where community has the chance to be worth something from the start because it doesn't have to be vc funded right like i said i don't think community is a

25:32vc fundable idea much like need has been in general a terrible these state we need community we need media is it does that mean it should be vc funded no i think in this web 3.0 world which yeah of course i wish i was born yesterday uh even though i've had a good life but like you always say oh fired only the technology had been around we finally theoretically maybe closest to the potential like like we talked earlier of having community start in a way that's that should scale without having to sell your soul for vc money because once you take money that's a different type of community so

26:15go deep on that for a second what do you mean by that that's all i have yeah yeah where you stand there all right guys so now talk to me about that a little bit what do you mean so when you say you don't need the vc money you can scale community in the web 3 world without having to go raise a bunch of cash at the outset what does that mean like make that tactical for people that are listening well that's a good question i mean make it tactical i mean of course you can rape everybody there's a lot of money out there so let's just it's 2021 it's october and

26:44then the one this will air it's real time so let's say this air is in 2023 uh with editing but no it's it's october 2021. you have uh all the pieces together right you have incredible liquidities so people will fund a lot of different ideas you have incredible platforms both in the old school platforms like twitter facebook uh discord telegram signal whatsapp um you know the risk of of being building on someone else's platform you're their [ __ ] you know as these have said like if you build on someone's platform or if you build on someone's roads or if you build inside you know in someone's

27:25backyard be prepared to be sued or screwed um but now we have this whole new super freeway or super highway being built or many of them being built and scaled and they're and they're wired in a way that you can build on top of them because theoretically they're not fully decentralized i'm not quite sure how to label all this stuff yet because i'm not a super technical person i don't think they're fully decentralized but you have a lot of choices and then you can build stuff on top of them and they're open in a sense that like the rules are a little more set like here's

28:04what you pay there's fees and in that world these are like open highways where people theoretically can build something and then really think through who they the rules or what community means and then figure out how much money it really needs to build a community and then make a thoughtful decision about how much money i need or what's my real goal of this community and what are the like who do i want in this community um and you know in web 2.0 it really was exciting right like twitter came out and they were open and facebook was open and the vcs all piled in and they were

28:45like everybody's open but guess what we learned to make money you have to kind of close things off and you raise enough money the vc starts saying we need to at least show that we intend to be revenue focused or profit focused and that's the beginning of the end and with twitter they were an open api and so at the beginning when we built stock twits it was like a no-brainer i don't know tech um twitter was this amazing real-time product and at the beginning i was like you know when we went to the dollar sign i was like i just want to talk about stocks on

29:21twitter but i don't hashtag doesn't really make sense and if you searched hashtag apple or hashtag google there was no context like it could have been i'm going to the market to buy an apple app or or you know i hate google you know like there was no context so when we came up with the dollar sign and said people talk in a certain language there was finally a way to use twitter for like-minded people right just like the hashtag would help you organ so we had a decision to make and at the time i'm not a technical person so we went to twitter and we were like you

29:57should just do twitter finance like yahoo finance like all the old companies before but but they were like no we're open you guys just go run with it and you know so we like i don't think i believe we went and raised more money to build our own platform assuming they were going to screw us like you know as bc say you know be careful of being someone's [ __ ] so we had a decision to make like just let it be what it was knowing it would never be a real business or try and create like a fork in twitter system and we went to fork

30:30road and that's a hard road to build because now you gotta go build your own roads and you gotta go do your own curation and you got your own garbage and your own like infrastructure to keep up right so you gotta really think through community now in this new world where there's everybody's been on board to the internet now there's hundreds of millions of users and there's more than just one platform that more than just twitter and facebook it's pretty exciting and there's communities everywhere so now you have to decide how big i want my community like for you guys what who is part of that community what format do we want

31:07that community to be and maybe everybody owns a piece of the community that wasn't possible before yeah how do you like i'm curious from for your perspective on this great because you're doing a lot i mean you're a community guy by trade but you're doing a lot within web3 now and at the intersection of all this stuff that howard's talking about it's really interesting so like what do you perceive as the opportunities there that exist and like bring that back to to investing and like investable assets everything is investable all of a sudden so we're in this world where you can invest in anything like how do you think

31:38this all kind of comes together and what are the opportunities around it well i would i'd actually bring it back to howard yeah and and kind of be like if stock twitch were to be invented today yeah would it be web three enabled would you allow yeah it would have to have shocked that it hasn't been but i think and it will be like it's just in a matter of time um because if i i'm 56 i'm not building anything new i'm like in i'm in uh harvest mode i'm in harvest i don't know what that thing is you're not in the third grade i'm inspired by

32:10other people but like my goal is when i have a really good ideas to get drunk and hopefully it goes away the idea it's like the old mesopotamian rules like get trunk and see if it was a good idea the next day but my idea my ideas now are like i'm 56 you know we've been building stock twits for 12 years it's a big company it's profit big company in terms of revenue and profits and um you know we haven't raised a ton of money and but it took a real long time we had to make so many hard decisions along the way in 12 years a long time well i think

32:42a lot of founders don't really ask and a lot of venture capitalists don't really talk that talk with the founders at the beginning which is like this could take 10 years like how much do you love what you're doing yeah and those are honest conversations that you know especially when you're building community or a media company these things are grueling like what what uh henry blodgett did at ali insider there's not many people that can do that stuff and there's an investor in henry at the time and ally insider or whatever

33:10business whatever you called it in 2007. he was that guy like when i met henry i was like man that guy can take take a blow right like he just keeps coming and so media and community are like very different as it comes to like web 3.0 if i were to build stocks with today for sure but i'd have to pick the right blockchain is it solana is it on polka dot or is it on i mean these names are silly but like is polygon is it flow so there are like complicated decisions and um or do i just build it on discord and just not make it a huge business and

33:48charge 20 bucks a month and find like-minded people or just start my own sub-stack or beehive or whatever it is that i'm going to do so there's all those decisions but they're at least their choices right and this goes back to investing you know until robin hood and coinbase and etoro which is etoro's that was an ambassador even before robin hood you had basically you had the 1999 bubble which gave us you know super bowl commercials and nitrate baby and daytech and td ameritrade and schwab and like there's hundreds of of options in 99 and and and even and so you have this big boom in stock

34:27trading and uh it's you know people like to make fun of robin hood and coinbase but 1999 these guys were pretty irresponsible these super bowl community where people were like datrin they were glamorizing day trading at your office and there was a you know the e-trade baby day trading from their crib yeah and now we're so mad at robin hood for like with like i'm not saying robin with the writer rawr i'm just saying we're so mad at robin hood for free trading yeah or or you know not telling us the whole truth nothing better before the payment i know exactly

35:08the brokers were getting away with but it was a new revolution so now this web 3.0 revolution is an unintended consequence of centralization you had centralization everybody's like so worried about facebook how do we regulate facebook guess what didn't need regular i mean obviously you can regulate them all you want but they're not in web3 they're stuck in web too they can't get libra off the ground they're not in polkadot they're not in solana they're not in bitcoin maybe they're hoarding bitcoin and driving the price up we don't know um but even if they're hoarding bitcoin what are you gonna do with it it's just gold at this point and if they're

35:44hoarding ethereum good like what does that mean to them so and they're not in the in the compute business theoretically so they've been disrupted by just technology not the regulators they're disrupted by printing money so good that they just forgot like there's other technology that's going to come along so that's why our investing is exciting so you know full circle because we like talking about investing you know you had the internet bubble and then you had basically two choices you know stocks and bonds and the government has slowly made bonds there is no bonds it's the government yeah so basically you know it's stupid it's rigged or whatever you're going to

36:26call it and and 100 of the us population owns bonds they may not know it or their financial advisor is recommending it and the only decision is do they own 20 of bonds or 30 or 40. and while all this is happening everybody's been allocated by their financial advisors some kind of portfolio web 3 comes along which is basically just a new stock market right and which is why the argument about whether the securities or not it's silly they're just stock like they're securities for sure uh people are buying and selling them and everybody's arguing about semantics they're just securities so eventually they got to be regulated or called the

37:05same thing as what stocks are but really they're a response to like 40 of the country's assets they're in bonds which are just a government regulate i don't even know what they are they're just terrible and or they're a bad investment at zero percent or two percent interest rate so you know not to get too in the weeds but when someone who has 40 of their bonds can theoretically take five percent of that money put it into a crypto and stake it at an earn eight percent or six percent a year they basically got the exact same return using one fifth of what they were using in bonds

37:41and now they have all this free money to go take extra risk so we live in this world where the government printed money technology's doing its thing covered added a new twist and i have three massive things happening at a time when um you know people have all this extra free time and boom you know as i like to say speculation has become entertainment and so gladiators when the romans had all this time and they were fighting wars and moving people in rome just said you know what we got a lot of [ __ ] time let's have people kill each other and we'll watch kill some lions whatever

38:20and you know that's what people did this time they're trading and if they get killed here's what getting killed is in 2021. you lose 30 grand on this stupid ass trade right you put it on reddit guess what yeah you got killed on your face and you didn't die you just blew up your account so gladiators in 2021 is showing reddit that you blew up your your your 30k account guess what you dust yourself off yeah this is what the media doesn't get yeah you're an idiot maybe but you just you just learned something that you were never going to learn it's the man in the

38:53arena it's the man in the arena exactly you have a second life yeah and you'll get two gigs and you come back strong with 10k yeah and maybe you approach it the different way this time yeah that's investment yeah it's also the ultimate the gladiator analogy is really good because it's like the whole thing that happened in january with melvin capital and the gamestop they're just acting like god they're just and it's but it's literally like the reason those people became heroes like boring kitty and i don't know who they were if they were heroes they were just in the media i mean like in but again

39:27investing is the purest form yeah you are on the ground lines are coming at you people are yelling in the stands but at least you're not risking your life that's the digital version of gladiators what we all now get to be melbourne capital for a day for a lifetime and whatever but our our account is the true truth yeah if it's 10 grand today what's my goal it's not to go to zero it's to go to 100 okay so how there's a million ways to go from 10 grand to 100 it is a game everybody's arguing no one wants to admit it that investing is a game

40:03call who cares what you call it the goal is to go upward to the right and some people want to do it overnight which is hard and it carries extreme risk and some people are willing to get there over 10 years but you don't know until you start and so now people all have a chance to stake themselves 100 grand or whatever and everybody's arguing about what we're going to call this which is silly in the meantime young people are just doing it the other thing that's interesting about it to me and you brought it up is we're in this new environment where it's not the establishment people within

40:38the financial ecosystem that have access to these like arbitrage plays of generating outsize returns anyone anyone in this room anyone here can go and do these unique staking mechanisms within the web through ecosystem and generate outsized returns right now right in this environment and that is a fundamental shift it used to be that it was only like the insiders that were able to do this and so the insiders are pissed because suddenly anyone joe schmo on the street is able to go and do these things generate those returns and so then they start calling it and cnbc comes on the air and they start talking about how

41:10it's bad for the ecosystem and how these people are going to get wrecked and it's going to be this terrible thing i think it's just oh there's been a generational shift in the ability to go and generate returns suddenly anyone can do it yeah i mean it's a really good point again we got to choose our wording carefully because not everyone has access sure like we like to think this is what got robinhood in trouble this will get anyone in trouble we're democratizing this no one's doing anything these are all on-ramps to what we love which is the internet it's the same thing with people bragging whether it's chamoth or

41:42me or anybody brad jason calcan it's a bull market it's hard not to make money that's true so everybody's bra it's the internet before the internet a lot 90 of businesses fail the last 20 years you got to be really making really bad decisions to fail doesn't mean it's no shame in it but you've got to make more bad decisions to fail in an internet era than in a retail fixed world era the cloud expanded the playing field okay so and then you throw the money printing in it's very hard to lose money okay people need to like just stop thinking they're that smart now within that car

42:20everyone's a genius in a bull market this has been on a never-ending boom which is fabulous call it what it is but the point is now the table stakes have been lowered you can fractionalize your body right we wouldn't be here where we were vanguard had said 10 12 years ago they were already figured out fractionalization when you bought the s p 500 they knew that you could buy 0.5 shares of apple like they had figured this out all they had to do vanguard is say we're opening our api like we're going to allow people to buy the s p vanguard 4.99 like i would like

42:53to buy 500 stocks and i would like to take out wells fargo and goldman sachs and tell them that i took them out text them for me and say [ __ ] you goldman sachs and wells fargo what what vanguard decided to do is not offer that technology to everyone else you had to buy the s p 500. that pissed entrepreneurs off they didn't know what was pissed about it sure pissed me off it's like wait a minute betty lou wakes up she hates wells fargo she hates lehman she hates bear stern she hates goldman sachs 2008 but she wants to participate in the s p 500 she just she wakes up and every

43:30month she's [ __ ] contributing money to wells fargo goldman sachs whatever like that was infuriating people even though no one was talking about it so basically all that's happened in the last 12 years and beyond is the unbundling of vanguard right i want to own the s p 400 less v6 destructive car along the s p 294 yeah and people just it took a while for people to and we're still not even explaining what it really is vanguard had this yeah there should be no robin hood there should be no any of this stuff it should all still be cnbc and vanguard and goldman sachs they just didn't give

44:09their technology they hoarded the technology they stayed closed they stayed closed i love that the unbundling of the s p 500 that's all it really is and it's mind-blowing in the sense that it took so long yeah right we went yeah and this is why we have an explosion finally people have more than 31 different flavors like basket of ramen this is like um dorn bush's law it's like these things take much longer to happen than you think especially when there's much especially in finance yeah because of the regulation right yeah and that was very hard for me as a financial believing in fintech before fintech was the thing it was like i was

44:45way early and it's very intimidating when you can't re i don't i'm not a tech person so i didn't know how to express it because s p made sense because i couldn't beat the s p 500 you can't beat them join them but there's something just so maddening about it that wells fargo could act badly and if you put a hundred dollars a month in your uh 401k they were getting it doesn't matter how badly they behave the game was rigged yeah they wake up and they're getting started they're stockbot that's corrupt as corrupt could be even though john bogle had great intentions yeah and this is why i believe first of all

45:22passive investment was a lie there's no such thing as passive investing with vanguard is a very active portfolio every month or quarter they kick out poorly performing companies so it's a quant fund um so people are really buying an active portfolio it's just packaged as passive and so we've never been passive um because passive is a dumb idea you should you should garden if you let your lawn just grow yeah it's gonna look like she had same thing with manscaping if you let your you know your balls hair grow you're not gonna get laid according to young people and i say that as an investor in landscape but like

46:00great company by the way it's an amazing company and it's so much like investing when we looked at manscaped at the beginning and the kit and paul is a really great entrepreneur and i just thought it was a genius idea yeah because i'm disgusted like once you hit 50. it's not about landscape it's about i can't even look at myself in the mirror i'm disgusting and so you're grooming whatever you're going to call it you're just shaving all day because you just are repulsed by your own image and um something to look forward to oh it's terrible it's terrible i told you which is why you get married which is

46:33why you get married the uh especially i mean if you're single and 50 you're screwed you're shaving all day constantly yeah this is why i got it and then once you shave they don't tell you this you're shaving forever like the the stakes go up just hair grows and crazy it's just like terrible i think i know my big idea from the day no but so anyways when he when he was pitching us manscape i went to my nephews and and i was like they're all 20 i'm like the same genius but guess what they all told me they were embarrassed to admit that they manscape

47:06because it's none of my business so we got bad information from our the actual user of the product it's no different than trading like if you ask people if they did trade or trade they're going to say no i'm a passive investor so again this is just people sometimes the the you can't get the information even if you ask the right people and so manscape work so well is because they offered a product that people wanted and no one was admitting to and that's just when you get outlier wins and they created the same way robinhood people go i don't believe people are training no it's what people

47:38wanted they didn't know that they wanted it yeah until it was presented in a design in a package that made it just incredibly appealing free training had been around for a while uh zappos echo you i remember you talking about and i passed it on because it was it but it was desktop and it just didn't it was before the iphone in many ways and it took the iphone and it took robin hood and who knew it would take to 2014 was when robin has launched that's like not that long ago it should have happened in 2007 or when the app store launched so it took a long time

48:15and no one can predict the wind and the why but indiana was a great packaging it was it was a latent or there was a demand that no one was admitting that they had and then you obviously had the money printing in covet and then you had crypto and you had all these extra choices and you had fractionalization and you had all this unbundling and it's like bam and now people are like it's bad i'm like back good luck trying to put that back in the box there's no [ __ ] all at once that's the same like people are saying what just [ __ ] figure out a

48:42tax yeah and figure out something fair and let the people and you can't put the genie back in the bottle no and and when you say education because i agree education but what does that mean here's what it means give people a list of people who's like i don't even know how you educate people they have all these tools at home they're not going to learn it in school the parents are going to they're on discord they're on stock twits they're on twitter they're on telegram they're hearing rumors they're hearing things they're playing with things before other people they're using roblox let them i think they're

49:13shaded by getting punched in the face and like you're better to get punched to face when you're 20 and you're going to have five grand yeah exactly when your parents hand you 30 million that they were hiding like they did you know they like you do estate planning give your kids 30 million then you're going to teach them how to yes yeah but we'll have that doesn't make sense we'll get punched in the face it'll we'll learn there'll be a cycle it's how it works but i do think that like you you're learning through playing the game it's not what do you think of the whole

49:41like nft space right now i'm curious i'm just so fascinated forgetting the terms and everything i'm just first of all i'm happy but it's scary because i'm old and it's just i wish i could you know stay in the discord rooms like discord wasn't built you know stock codes was built for what it is ticker based search it's genius twitter could have been there and still can't theoretically do it or buy their way to do it discord and slack are communities like they're not based on like real time right looking at an object you know so you know something new will come along or we'll keep innovating at stock like

50:22you know it's up to us to to think how people like searching for things but what's amazing about nfts is no one knew even the best crypto people like they were just bitcoin ethereum and you know then nft is just what yep you know it's taken still people are arguing if it's a thing of course it's a thing people are doing it yeah you can't deny something that people are doing and having an endless amount of fun yeah and it's 24 7 365. yeah it's [ __ ] it's for thoroughbred you have to be you can't just be some fat bond trader you have to understand community you

51:00have to understand technology you have to understand how to behave you have to have social skills you don't have to be on a high-rise you don't have to be in new york or san francisco this is matt this is where the democratization doesn't mean it's open for everyone you still got to like engage yeah and you got to show up at the stadium what's your effort you can make it's not serious money yeah of course it helps to have a stake yeah and okay i love that that's never going to be fair some people are born on third base i'm bored on third base we're lucky

51:32okay i don't know i can't put it back in the box i'm not going to apologize forever i'm just going to pass on the information that i think i can get but everybody should be building a stake somehow it could be through your one domain exercise as steve martin called it your special purpose back in the movie the jerk you know everybody has a special purpose they sent him out onto the street he didn't know what he was doing he was just hanging he spent three days in front of his house because he didn't know what to do in the movie the jerk but everything comes back to some

52:00movie that we saw 30 years ago eventually he figured this [ __ ] out you know and he got his first woman and went to the circus and people should go watch the jerk it's much it's a little it's a lifestyle oh my god i got to see it yes you should so um these are just things that are rights of passage and i have two you know i'm an empty nester with two kids out in the world they're learning you know get your first apartment in new york you know like these things have to happen covets slowed down that that process and jiren coveted kids had time

52:30so they learned how to trade they were just bored i know we're running up here at the end of time so want to wrap up maybe just each one of us like your one big idea like what was your what was your big takeaway i feel like i learned a ton just from the 20-25 minutes that we had with howard so what was it for you i mean my aha moment like i've never thought of the s p 500 as fractionalization you stole mine you know they figured it out right like they had to make this for like unbundling the s p 500 that like i've never thought of

52:59it that way seriously that was amazing i was like this is a new thing yeah you know rally road etc like this is new yeah but it's kind of all that's new is old yeah yeah i think raleigh is too new what took so long for riley and i'm an investor in riley rhodes talking my book what i loved about raleigh i'm not a car collector but i love the idea of fractionalization rally was so far ahead of its time because people really hadn't yet um hadn't been honest about what we were really doing which first you had to unbundle the s p robin hood needed to

53:28exist and nfts needed to exist actually before rally world became cool because nfts are purely digital rally roads like training wheels for a digital world right so rally was too far ahead and now the time is there but it took nfts for rally road to be cool because for people that can't go full digital and but let's just say that's 99.5 of the population still like let's be honest mfts are really early still because even i'm not doing it at any kind of interest level i want to but i'd rather go buy a crypto punk a piece of a crypto punch on rally or at least i

54:03feel i own it and the sec approved it like there's different levels of the game and you have s p 500 it's great that guard and there's a million ways to do it then you have blow your brains out like take your chance spin the wheel learn how to play the game build your own portfolio then there's that at scale which is nfts and make your own portfolio and then there's it's just too hot to lose too tight too you know there's something for everybody yeah so we covered a ton we're going to get into a lot more in the community i know we're going to be

54:35in there after this releases jamming with all of you super excited to do it this was a blast i learned a ton the unbundling of the s p500 blew my mind a little bit so i'm excited to dig into that more appreciate your time howard this is your blast thanks for coming on the first episode of the room where it happens cheers cheers good to see you good to see you were the cameras were the cameras going i hope so [ __ ] okay one more time all right howard what a legend that was fun having him in here that guy is a legend yeah he's fun man he's a fun guy to be around

55:14i never spent time with him in person so it's really fun um so we got to get takeaways what was your one big takeaway from that conversation i think a lot about unbundling you know i've written about the unbundling of reddit i think that's huge when he mentioned the unbundling of the s p 500 for me like that blew my mind and i think there's a bunch of areas that you can unbundle that like people are not thinking about a lot of people think about you know now especially on bundling of reddit unbundling of facebook unbundling of instagram but what are some lesser-known areas which you can unbundle

55:54again bundling a spotify you know the unbundling of airbnb etc etc so i'm like tonight i'm gonna go make like a map of like a bunch of areas which i could go and bundle and i'm pretty excited about that yeah it sounds like a fun conversation to have in the community as well so we should pop in after this episode releases and we will get in there and talk about all this because that sounds like a really interesting one yeah what do you think should be unbundled next so for me my big takeaway from today goes back to early in our conversation we talked about what i brought up that framework

56:32the clay christensen model of disruptive innovation and this whole idea that you can just provide the best product or service for a very niche customer and use that as your wedge to take down an entire industry you can go in and it goes to that same point of unbundling but in financial services in particular which was where we talked about it there's an amazing opportunity to do that these incumbent players in a lot of industries but financial services in particular are playing this game where they are so wide reaching that they're not actually providing a really good service to anybody anymore and if you want to come in and find a market where

57:05you can be the best provider for x customer it's a pretty cool opportunity that exists out there so that was it for me that's a big light bulb there's a big light bulb and i think it applies broadly and so i'd be excited to get in there get in the community we'll talk about it after the episode and we're excited to engage with you all on this so look forward to it and until next time from the room where it happens cheers

57:37today's show is sponsored by appsumo the leading digital marketplace for entrepreneurs and a great way to get your product in front of one million plus entrepreneurs founders and small businesses they have the tools you need to automate all the busy work that comes with running a business so you can boost your productivity scale beyond your skill set and focus on building something you're deeply passionate about this black friday appsumo is bringing you 20 new deals on digital products at discounts of up to 90 percent off plus a limited amount of freebies this is their biggest sale of the year and they sell out quickly all you need to do to get first access

58:13is go to appsumo.com the room before november 21st enter your email address and they'll send you the exclusive deals again that's appsumo.com the room check out the link in the description as well if you're on their email list like we are you know they have some of the best tools to run your business so go sign up at appsumo.com the room so you don't miss these special black friday deals before they sell out greg question for you if banks want companies to open accounts why do they make it so difficult they like punishment maybe but not mercury it's banking built for startups and opening an account is

58:54so smooth you basically fall into it you can apply for an account from anywhere in the world in 10 minutes and you get access to everything you need to be able to do banking well the sign up flow is beautiful and intuitive all accounts are fdic insured they offer virtual and physical debit cards and you never have to visit a physical bank branch and the whole product has such an elegant design i'm a mercury investor and a mercury customer myself many times over if you're a founder or creator this is the banking product you need sounds like startups can just like start when they use mercury

59:29super low friction exactly mercury is where startups can just start check out mercury.com if you want to see it for yourself i wonder what founders will do with the time they say by starting with mercury you know build great products grow their businesses i'd guess that's a pretty good guess thanks greg you're welcome join our free community at trwih.com