SPEAKER_00: hey everybody hey everybody we have an awesome crypto roundtable for you today sunny and vinny are back molly's offer this one so it's just me and the boys first up we're going to take a break from crypto because breaking news metis q3 earnings dropped right as we were on the

SPEAKER_01: call and vinny and sunny are experts in web 2 and also vr and ar we break down what's happening at meta their stock is collapsing their uh earnings and their revenue is getting massive headwinds so

SPEAKER_02: we break that down and who's going to win ar vr versus apple meta google and facebook and that big fight that's going on over the next 10 years then we do a deep dive into the state of nfts apple speaking of apple and their app store rules are getting quite onerous uh reddit is also adding an nft program and royalties are not getting paid to some of these nft projects we're going to talk

SPEAKER_03: about that and much much more would take a listener question as well it's going to be a great show so

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SPEAKER_00: leader all right everybody it's time for our bi-weekly bi-monthly i'm not sure how you say that twice a month we have a crypto roundtable with two of the smartest uh folks we know in the web3 crypto space sandeep madra and vinnie lingam welcome back to the program molly's not here today she had other

SPEAKER_07: commitments but we got we got a full docket here huh a lot going on and some big earnings out right

SPEAKER_02: now as well so it's an exciting afternoon it's a very exciting afternoon i guess before we get into

SPEAKER_11: crypto uh facebook just dropped earnings and my lord uh just to recap it they're down to 110 bucks a share i think uh this is because in in uh after hours so there are 129 but then in after hours it's dropped down 110 right there 110 oh my lord what's your take on the brad gerstner letter and how facebook is being run uh sunny

SPEAKER_14: um yeah you know i didn't have a chance to listen to earnings i know jake how you were commenting on it in a chat thread earlier but um i i think you know he was a voice of recent um the other thing i'll say is you know facebook historically and we know this from say the earlier um times of facebook they've been a great platform company and what they're doing right now and they then they've acquired incredibly well like whatsapp instagram other oculus but what's happening right now is the investment they're making in terms of they're sort of trying to complete with the eco compete with the ecosystem which they should allow they should support and so i actually read brad's um note as something really positive and kind of focus the expensive and expenses and move those towards sort of the platform aspect so i i was really i thought it was a great note but it's always you know challenging when uh the company is is really heads down in the direction that they are uh and it seems like from

SPEAKER_19: what you said earlier they're doubling down they're not even you know uh kind of going uh

SPEAKER_02: going back on that at all and just for background brad gerstner from altimeter capital a long-time shareholder has been trying to get through to zuckerberg hey maybe some austerity measures here maybe control spending maybe spend five billion or burn five billion a year on the vr adventure not 10 or more billion dollars and maybe get focused on ai at facebook and making sure those

SPEAKER_00: platforms don't die the money printing machine what do you think vinnie look brad's a really smart guy

SPEAKER_23: i think um facebook's gone through a couple i mean facebook had a couple of good um tailwinds to help

SPEAKER_25: them out over the over the past you know nearly two decades um one which i think is ending is the the you know advertising the display advertising um and you know ad targeting business model that's been pervasive in web 2.0 for years uh where you could target people you can suck all the data you can analyze it etc and that's what's fueled their business i mean most of their revenue 99 percent is is uh is advertising driven and that's falling off a cliff i mean we're seeing we're seeing the global economy taking ahead people are advertising always gets cut but this is a lot bigger deeper issue with the you know the privacy you know things that apple has done to make it harder for them to target people and serve ads and whatever else so there's definitely um i think that the tide has shifted

SPEAKER_28: and changed and i think that facebook and brad's 100 right facebook has to say they have to accept

SPEAKER_25: that that era is over uh the era of web 2 personalized ads is dying it's on the way down we hit peak a while if you know maybe a year or two ago or whatever and now it's going down and so we either you know it's adapt or die and so they have to reinvent their business and you know zuck's trying to do that in terms of doing it through meta and rebranding as as um you know as meta and you see my tweet it was like the bottom's in when you rebrand um well that was a prophetic tweet i mean did

SPEAKER_00: you have inside information or no not at all so wait wait when you did this tweet the bottom is in when meta rebrands as facebook um is there any chance that you think he does that you did this

SPEAKER_01: in january of uh this year you think that's a possibility i don't think it's a possibility in

SPEAKER_25: the short term i think um i think i think you know the problem the problem really i mean he should

SPEAKER_28: okay let's be frank he should rebranded but you can imagine how long it's going to take for them to undo what they've just done i mean just you know they're probably like when they announced that they were still updating the products the logos the messaging i mean this is a you know the surface

SPEAKER_25: area of facebook as a as a network is like half the planet uses it basically so it's not that easy to do so i think they'll probably they'll probably stay the course and then so kind of it was more tongue-in-cheek when i said that they should rebrand um i mean i i guess what they're trying to

SPEAKER_28: do right now is trying to move you know move the playing field to the metaverse but you know they had the benefit of having a high level of engagement and ad views in the early days at the same time

SPEAKER_25: that google launched adwords so there was a lot of demand in the early days for direct advertising we had this transition from offline advertising and and media and print into digital platforms social

SPEAKER_28: networks search etc and they they benefited from that tailwind for 20 20 years nearly and so but tides have shifted so they try to do the whole thing with aptos and dm and and their own currency and getting into web3 that didn't go down well facebook may be one of those companies that's stuck in this like pigeonholed era that they you know it doesn't make sense though because when you think

SPEAKER_00: about it they did make the facebook marketplace work everybody's using that facebook marketplace which is like a ebay kind of competitor there are things they could plug in here uh that would work it does seem to me sunny that going for vr was just like that's like a hell mary well you have

SPEAKER_43: billions of people no no it's not a hell mary it's it's the only option i think like you let's think

SPEAKER_28: about this okay let's see what like i mean zuck's a smart guy let's give him some credit here okay the only option is so they can't buy more companies because the regulator is just not going to let them happen they can't expand through acquisition we know this so they're kind of stuck from that front that the advertising business model is going down so they're not going to be able to monetize that the the commerce business model isn't as big as what they were making advertised in terms of margins it's a lot tighter margin business and there's a lot more you know it's a different business and they can grow the marketplace but they're never going to get to the same margins and growth rates and revenue it's just highly competitive and so what do they do and they basically went with blue ocean strategy let's go somewhere where we have we have enough capital to deploy where it's it's likely going to be a positive outcome in 10 or 20 years we already have oculus we have a leg in there and let's just move the playing field because we can't play in the current world i actually think

SPEAKER_14: it's slightly different i think it's no i think it's slightly different i think um i think it all starts and it stems from apple and their control on the ecosystem and the changes that they're making so i don't think advertising is dead i think advertising will continue it's like a fundamental

SPEAKER_51: you know business model of just humans it's been around print to tv to radio to television to internet i don't think it goes away i actually think this is a lot more about controlling the end-to-end platform so i think this is stemming from never doing a phone and a platform and vr ar was and was and still is an an attempt to own a platform start to end so you're not subject to the platform changes that apple is making and so a lot of you know my belief is it's coming from from that that's the motivation is hey that's where things seem to be going ar vr let's get ahead of that and let's own that platform by being there early and so i i i don't think it's like advertising is dead i think

SPEAKER_02: the changes are hurting them well let me just give you some data here um and then i'll let you go vinnie um the revenue i just reported uh down four percent year over year so they have 27.7 billion in revenue

SPEAKER_01: they went down year over year four percent and they're down three percent quarter over quarter and um last quarter meta reported negative revenue growth for the first time net income is about 4.4 billion this is down 52 percent year over year down 32 percent wow quarter over quarter

SPEAKER_11: total user growth um was uh around four percent year over year so the user base is is growing slowly

SPEAKER_02: but they have reached the natural audience so it's definitely like they're bouncing along the ceiling i would say of advertising revenue they need some product extensions but let's face it vr is is at least a decade out from having any meaningful user base so this is not coming soon is it vinnie

SPEAKER_23: so let's just talk about two things yeah and like i think sunny i agree with you advertising is not

SPEAKER_43: going anywhere except it's slowing down or it's declining which means that the industry doesn't disappear that does the the growth premium gets ripped out of them this is what brand

SPEAKER_14: basically can i just add one thing on the advertising thing i actually don't think so i think it's being picked up in other places i think if you go look at what amazon's doing i think if you look at what apple is taking away so i i think if you look at the overall pie i don't

SPEAKER_43: have the numbers if i'm going to fold them up i'm saying for for facebook i'm saying for facebook yeah

SPEAKER_28: okay yeah i think you're saying advertising in general but for facebook for facebook them they're going to be basically flattered down because of apple and all the other pressures that they have in the market they can't grow that base secondly the active user expansion is happening in markets with low um revenue per user okay because those you know it's emerging markets etc the ad revenues are lower so they're gonna they're gonna struggle on the margin side and they're gonna struggle to grow that because they've saturated most of the the western world and the high and the high um revenue per user markets and now that's declining so so this is my point like okay so so why is this why is this a problem a large portion of the compensation for facebook employees since the inception of the company has been based on stock options and stock options work great in an up market because hey you know here's a hundred thousand dollars of the stock next year will be worth 120 you have to be worth 150 you price it in you stay you get refreshes etc you can keep issuing stock options all day long when it goes up but when it goes down nobody wants options and

SPEAKER_66: people start looking at what they are these companies do rsus now any as well right uh options

SPEAKER_68: are a lot more limited in in public yeah but they have to believe to both of your points they have to believe that that rsu that they got for free so a restricted stock unit is a gift yeah you don't

SPEAKER_00: have a strike price on it so you don't have to worry exactly where it is but you are saying hey i'm getting this at a hundred and five dollars or ten dollars whatever it is today i'm here because i want it to double in the next three years and i'm going to come in on the weekends and work nights and give up my life to make it triple so that my million in rsu's or my 500k rsu's over the next three years turns into two million and it could be life-changing money that's not going to happen here's an interesting chart to take a look at this is a comparison of google's capex versus facebook's now the top line you see here we'll pull it up for the audience so this is up to q2 doesn't include q3 i'll give you q3s in a moment but as you can see the top green line and the top blue line

SPEAKER_02: those are the um the revenue for google and meta i'm not going to call them alphabet and

SPEAKER_00: mad i'm going to call it facebook google's green facebook's blue so you know you got more than two times the revenue with google and then you look at their capex oh my lord the capex for facebook slash meta is you know the the same essentially as google's with so much more revenue and then if you were to look at uh actually what happened this quarter google's capex in q3 was 7.2 billion it was less than facebook's um but its revenue is 2.5 times meta's capex is blowing out and this includes like finance leases hardware all the stuff they're investing in 9.5 billion oh my lord it's going up capex just keeps going up on this business so there's he's spending like a drunken seller are you sick and tired of huge

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SPEAKER_11: beats apple in terms of dominance in vr slash ar so if we're sitting here 10 years from now no no you

SPEAKER_83: got to split the two up they're two different things vr and ar are two different things okay but i'm

SPEAKER_84: gonna put apple apple is apple's gonna win vr uh ar apple hands down is gonna beat okay so you can get

SPEAKER_85: 100 it's 99 they won on on on ar got it which is more important for you ar or vr i think ar is the

SPEAKER_11: bigger play of course okay so sunny chances if you were to give a percentage to win ar which is the day

SPEAKER_14: what are the chances facebook beats apple but kind of you know if we lay some odds i think it's like 75 apple 25 facebook right now yeah right okay so it's three and four that apple wins and then if we

SPEAKER_11: were to look at market share of headsets of revenue however we want to look at it who's gonna win on a

SPEAKER_15: percentage of user time percentage of headset sales i mean if we were to look at it uh vinnie facebook

SPEAKER_88: apple versus google versus microsoft they're not the same thing though of course they're not that's why

SPEAKER_25: i'm asking you it's apple apple's oranges apple's gonna sell 100 million ar headsets in the next five

SPEAKER_00: years wow 100 million do you think apple runs away with it so for people who don't uh understand why you're making this prediction because facebook is making all the noise why do you think apple wins

SPEAKER_01: why do you think apple wins so handily 99 chance they win in your mind vinnie because they control the

SPEAKER_28: compute device okay so the phone is in your pocket they've been so the biggest issue with vr is this heavy headset you're wearing on your head because the compute sits on the headset basically and you

SPEAKER_25: got to move around with this the what they've done with apple with the vr glasses and this is all rumors

SPEAKER_28: because it's not really released yet but they basically got a wireless connection to your phone which is in your pocket and they run all the compute locally and they're just streaming the visuals to

SPEAKER_25: your to your glasses and you can see you know inputs and so it's got a camera that's reading things like uh like the way that you know tesla does it and but the the the hud the heads-up display on your on your on your on your glasses they don't need to be the the battery life on that thing's very i mean it doesn't need a lot of battery power it's just displaying um you know ar uh images and but the compute is actually happening on your phone and people are walking around with a billion of these

SPEAKER_28: phones you know facebook can't even if facebook built the exact same glasses okay they don't have direct you know deep sdk and api access to the chipset that's sitting in the apple device they don't own the device they cannot optimize and improve it sunny you know sunny's a electrical engineer you can tell you that better than anyone like unless you actually have you know even from a security perspective the secure enclaves that's going to sit inside the iphone like apple can just say

SPEAKER_96: facebook sorry you can't have access to it and that's it yeah okay you feel the same way sunny i kind of i'm in agreement with vinnie i think apple's gonna run away i think they they have they

SPEAKER_13: have a shot and i you know the one thing i will say and maybe it's a good slight segue into the next

SPEAKER_14: topic um yes is the one thing that apple has working against them which could just change everything is this apple tax and they continue to double and triple down into all new areas and you know we want to talk about this but that's that's one thing that i'm you know i'm not convinced as long as they keep that they can keep winning and and the apple tax define that for the audience what the apple taxes is like the 30 that they take on a set of transactional in-app purchases or subscriptions or you know the game that you're selling and they they have arbitrary places that they do this they've said they're going to do it on nfts now um it's why you can't sign up two weeks ago yeah exactly and so that's the thing that you know they continue to double down on and it's your achilles it's a huge opening for anybody else because you know as a developer a single individual developer or large corporations the incentive to go to something else especially with the network effect like facebook is huge and so they're one of the only ones that can take it out because they

SPEAKER_106: have so many people on their platform it's harder for an individual company to come in and do it so all right that's why i still give them a shot in this let me let's pivot then to our first story

SPEAKER_108: here in crypto so thanks for uh your input on the meta corporation and by the way their head counts

SPEAKER_111: up to 87 000 people have meta well you're up 28 percent year over year i mean yesterday in google

SPEAKER_114: they added 37 000 people in one year in one year there's only what are they doing there's only 200

SPEAKER_116: working days a year right so it's like it's like 200 people a day i mean what are they doing i mean it's

David Friedberg: what are all these human beings doing at these companies it doesn't make any sense they're fixed

SPEAKER_00: cost businesses you know they should be milking these things but i guess they have so much profits and so much cash they're going to thumb their nose at wall street let their stocks tank maybe start

SPEAKER_02: buying their stock back and maybe that's the end game here they they're just like you know what wall street we don't care about your opinion we're going to buy our stock back with our cash reserves and um game over we're going to start taking these great talented people off the market during recession

SPEAKER_11: let's pivot now to reddit uh ready was supposed to ipo that never happened uh i don't know what the status of their ipo is um but uh reddit also uh in july launched nfts and they seem to be doing really great in terms of wallets and their audience is obviously very or there's a portion of

SPEAKER_15: their audience that is very pro crypto can you queue up this story for us uh sunny yeah so they um you know

SPEAKER_51: effectively what they did is they they created 2.8 million wallets for a bunch of their users

SPEAKER_14: and then they made available to those users uh like an nft associated to to their platform and why i think this is super interesting is kind of building a lot of stuff that we've been talking about where this is a push away from um things for the crypto community by the crypto community only and this is crossing into sort of a traditional web 2 brand that's making their way towards that community

SPEAKER_51: and i think that's really powerful is one of the themes that we've had over the last couple of these sessions is these traditional brands coming in bringing their user base now we're we're seeing it still in small numbers right we only saw you know a few thousand of the wallets that were created have ever transacted before but i think it's it's really really powerful you know at the end of the day this nft that got created for this ecosystem it ended up having like a hundred million dollars of

SPEAKER_14: value and it started transacting the eco ecosystem but this is how we're gonna you know there's a big knock on the web3 ecosystem on there's not a lot of users here and it's been overly financialized but i think the these type of activities are really exciting for the web3 spot and vinny and of what your thoughts on this uh thing were as well no i look at i think it's i think it's it is very

SPEAKER_25: exciting um you know it's the whole web 2.5 argument right you gotta get move users from two to 2.5 into three and and people like i think three wins when everyone thinks they're using 2.5 but it's

SPEAKER_00: actually three oh so in other words you're a web 2.0 user you don't want to deal with a wallet you're not buying some hardware wallet but your account your gmail account your facebook account your twitter account suddenly is a wallet and i didn't do anything i didn't have to you know do any work right

SPEAKER_14: they didn't even call them nfts they called them like collectible avatars or something right so they're the technology and that you know we've said that as well that we'll see this really win when the technology is not even understood by the like the names don't come up of the technology but it's

SPEAKER_10: just the use cases that are emerging which is which is really exciting here amazing and uh

SPEAKER_130: you know they there's so many ways for them to incentivize people to get into this like you know just

SPEAKER_02: dropping stuff into their wallets and they were of course doing reddit cash for a long time they had their own sort of coins before yep and this is something facebook was working on and they kind of

SPEAKER_00: gave up on why did facebook give up on cryptocurrency was it because they felt like the regulators

SPEAKER_02: would hold them to a higher standard and the regulators are kind of pissed off and government officials are pissed off at zuckerberg for you know election interference like this sort of high level thing or did zuck just say like i just don't think this is the next thing i think we can only

SPEAKER_01: focus on one big thing so let's just focus on vrar what do you think i'll give you i i don't know for

SPEAKER_137: certain but i'll give you my my two cents on this um i think that the regulatory like backlash that they

SPEAKER_25: saw put a lot of pressure on the organization and people were a little bit more hesitant to keep pushing forward because they had a core business that was solid and growing and strong and they

SPEAKER_139: were like there's no reason to put any of this at risk and and and the regulators are going to you know scrutinize us more and everything we do and this is just not worth it it's the rest of the business

SPEAKER_28: now that's in good times why would you want to risk anything because everything looks great and you have a core business that's just churning out cash every quarter of two quarter like you know put yourself in their shoes i would be like guys it's not worth it i mean yeah okay let's say this thing takes off who cares we'll see it coming we can we can get into it later let's just pull out now and that was the easy way out right because it just wasn't worth it now with declining revenues or flat revenues big burn in in the in the meta stable with the horizon and you know and every oculus everything else now the argument is like maybe you got to double down and go into crypto or yet you know i i personally think that that like because it's such a big organization because it's not it's not 2010 when zuckerberg had to pivot to mobile and the company was five years old this is like 20 22 23 oh i don't know 70 000 employees whatever the number is like it's not that simple just to pivot the entire business and move in a different direction when you're managing 20 something billion dollars of revenue every year so it's it's it's clay christensen all over again innovators dilemma what do they do how do they how do they turn the boat i actually think it's related what we said

SPEAKER_14: before i think when you look at the blockchain space uh which is you know what aptos so the project got spun out we have a section in it in our notes as well but like uh the the project got spun out turned into aptos i think when you look at it again from platform ownership you cannot own blockchain right it's a it's a technology there's it's going to be you know all over the place can be different instances of it we already see it today we ethereum solana bitcoin doge and so my my guess is and you know probably a person to have on at some point in any of the shows jay cal is david marcus right

SPEAKER_51: because he was leading these efforts um would be i think you look at and say we can't own this right but and you look at again vr ar and you can you can you can see a lens in which through you can own the whole thing so um that would have been that would be my guess is why you you move away from it if

SPEAKER_14: you're making large bets where you want to spend tens of billions of dollars they are one fact about

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SPEAKER_00: understanding nfts and creating a rule set around them this seems incredibly suspect to me that apple has such granular rules i didn't think that they even understood the space and so i'm looking at this saying if apple is getting this granular into nfts and the a rule set around them for their app store

SPEAKER_02: they are i don't know um going to do something in this space what do you walk us through this sunny what are the new rules in uh apple's ios 16.1 update for nfts because this is a level of granularity

SPEAKER_147: that is suspicious to me is it suspicious to you too sunny well i i don't think it's suspicious i think

SPEAKER_51: it's it's really good because they've kind of looked at it and and maybe nick you can pull up something to follow because uh i'll pull up but effectively you know at the highest level of what they said is nfts are allowed um but a couple of things one if you're going to be buying or selling it has to be

SPEAKER_14: through the iap the in-app purchase process hence that you know the 30 tax has to be paid two they've said nfts cannot unlock or lock or you know make features available so they've sort of maybe listening

SPEAKER_51: to our podcasts and we've talked about um some of these and there you go right apps may not use mechanism to lock content license keys and all these kind of things and so they've really talked about it they've talked about uh the exchange and transmission of cryptocurrencies this is going to be really interesting as well because you know jay cal there's a lot of talk about what happens to the twitter app going forward as it becomes a super app and it uses maybe some underlying cryptocurrency you know maybe could be doge and what happens with those type of things and so i think what's

SPEAKER_14: interesting here is they've tried to and i i again view this as an opportunity they've tried to kind of

SPEAKER_51: do the hard shell defense here which is like let's see if we can grab get all the openings and block it off i i'll just go back to the point we talked about before which is it's impossible to do this the minute you allow nfts blockchain smart contracts into the ecosystem they are programmable they're composable they're permissionless people will find a way around them one of them will take off and then apple will be stuck at this you know at this place where they're going to have to make a very hard decision on cutting it all off or basically allowing it and i and i i still stick with the point of view that allowing these in and because of the composable nature the programmable nature of these things people are going to find innovation just can't be stopped and they've allowed

SPEAKER_00: innovation in the ecosystem if i was to interpret this uh vinnie if i have an nft and my board api club nft if i loaded into this app unlocked a bunch of features and let me into a secret chat room and gave me premium access to some videos that would not be allowed under this terms of service correct

SPEAKER_151: i yeah i'm not sure the interpretation of this is is like i mean let's say for example i did it on the

SPEAKER_28: website so you went to the website yeah okay and then you then you downloaded the app for that website and now because you've loaded up the nft in the website the app features are unlocked for

SPEAKER_95: you because your user account is upgraded is that legal yeah i you know this is what happens to me

SPEAKER_00: with all this is what happened to me in the audible days and we talked about this two weeks ago nfts would be the perfect wrapper for your you know collection of albums you know paid for ebooks whatever so this would kill the ebook store or the audio bookstore when i buy when i used to have to buy from audible i would open up amazon's or audible's website find the book i wanted purchase it there then go to the app unload the app from memory reload it from memory pull down to refresh and you know maybe 60 seconds later yeah yeah and it's like okay well just let me buy it through the audible app why am i having to switch and i i don't mind exactly i'm technically savvy but perhaps my mom or cousin

SPEAKER_01: and now they've allowed it finally but this seems to me sunny like they're trying to control it the way they tried to control the audiobook space it's just gonna fail eventually yeah it will and i think

SPEAKER_51: this area is a lot more um composable right you you can basically do a lot more than in the audible examples very limited things you could do here i just don't even know how they can enforce it all because you could put an app through the app approval process they could never see that that was there and then without ever going back to the approval process you could start unlocking these features within the app and both the app and the you know this your offline mechanisms out of apps for mechanism could work hand in hand they would have to literally enforce all apps that are already in

SPEAKER_13: the store and try to take them down and they can't do that i i mean it's going to be the wild wild west

SPEAKER_00: i think it's very exciting yeah so the way it's going to be amazing to watch apple try to contend with this because crypto people are known to be you know effers they're going to want to f with apple and they're they're pirates let's face it and i'm here for it i can't wait to see the crypto monkeys you know come in and try to you know ape tim cook and they're they're gonna they're gonna poke the bear and in a way that may be like epic games the creators of fortnite you know they've been very outspoken danielak and spotify like hey listen we we can't make this business work if we're giving you 30 because we got to give the music industry some 70 or whatever it is like you're crushing us here it's not going to economically work and so the way apple typically has done this is said you know what we'll just do enforcement so it's like taxes right like the irs doesn't need to enforce you know tax evasion they just need to get martha stewart the sec has just got to get martha

SPEAKER_02: stewart to get people to stop insider training they're going to find people to make examples of uh and this is going to be complete utter chaos can i can i put an example or just throw something out

SPEAKER_13: there which i i think would be really powerful now matt you know a lot of this comes in and around

SPEAKER_14: antitrust but imagine a keen crypto developer does something like this they say you know what we will abide by apple's 30 but we're going to collect it outside and apple you now um we have it we're holding

SPEAKER_51: it for you in the smart contract but we just don't want to use your mechanism that those those type of

SPEAKER_14: innovations will really you know push hard on this anti-trust thing if apple is saying fine there's this tax and now you can only you know you have to pay the tax through our payment mechanism those

SPEAKER_130: type of things are definitely anti-competitive because i think lena khan is completely i don't want to say incompetent but i think she's off the mark i don't think she's incompetent she's obviously

SPEAKER_00: a very smart individual but i think she's missing the real target she's going after zuckerberg for giphy or the eu i'm sorry the eu went after uh who cares going after like some vr app who cares if you really want to fight the real enemy the real enemy is amazon basics you know and the app stores and all lena khan has to do it's not popular because tim cook's very popular and apple's very popular you just go to apple and say if you want we want you to have alternate app stores allowed and once you do that and google play can be on apple uh or a new company called you know uh zero percent and if you pay a hundred bucks a year for this app store as a subscription you pay zero percent in fees that would be like my version of it i'd say hey listen we're going to launch an app store that's platform independent you can use it on android ios and any other future one including headsets but this app store is a membership app store you pay 100 bucks a year and you don't pay the 30 can you imagine what would happen for people who want to you know it would be like a costco version of app stores instead of paying a markup on every item you just pay for a membership once a year things like that would be really good use of lena khan's time this

SPEAKER_51: is what the ecosystem has been waiting for uh people have worked around it through the mobile web exceptions that apple has allowed you know i just really hope folks that listen to us here and listen to you know all the things around technology look at this as an opening don't be discouraged by this and work around it i think the more they're trying to clamp down on it things are going to squeak through and they won't be able to pull it back in that it's a technology that

SPEAKER_14: is just not as enforceable in those type of ways without fully cutting it off and i think

SPEAKER_182: it's very hard for them to take that line right now one of the things you want to know before you invest in a company which is what i do is how good is their seo their search engine optimization why

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SPEAKER_00: it's free go to smashdigital.com twist all right let's move on to nft royalties uh tee this one up for me sunny i i i don't exactly understand how royalties work in nfts myself i understand the concept of royalties to the original artists but i don't know how this was executed in things like

SPEAKER_111: opensea and yugo labs which owns bay with the bay the this is a very similar yeah it's a very similar

SPEAKER_14: example in terms of how the technology is you know sort of almost infinitely uh configurable

SPEAKER_51: so the idea that when an nft is minted the contract behind it can include parameters to say you know if this um nft is involved in a transaction that the certain portion of that transaction should be

SPEAKER_14: collected as a fee and go back to the creator it's very simplistic example now um and you know if if

Chamath Palihapitiya: that nft in the music industry so i wrote the song you did a cover of it yeah as the person who wrote

SPEAKER_13: the song i get some royalties i got it and that that enforcement generally has been by the platform because the platform is the place that is collecting the the you know let's say between the buyer and

SPEAKER_51: seller and the platform is looking at the the fee associated with that and making the you know

SPEAKER_14: pulling that fee holding it making available to the creator now it would other what's happening platform that would do that open sea open sea open season example there now what's happened is other

SPEAKER_51: platforms have launched now marketplaces let's call it marketplaces better term is they've emerged that they claim to be zero percent fees and what they effectively do is allow a price to be negotiated between vinnie and jcal for a board ape uh and what subsequently happens is they make the transfer between you to a zero dollar transfer and then a money transfer a separate transaction and by doing that um you know they basically can work around these mechanisms and so and there's different ways that this can happen this is not the way and what uproar that this has created and it's kind of sort of tied into the apple thing we're talking about is people that really believe in this and these

SPEAKER_14: projects that have put this together and the creators are behind it saying this is really bad for the ecosystem because you know we really finally thought we got to a place where we could be rewarded and we could participate in the growth of these things and these new marketplaces dydx and a couple other ones have been created pseudoswap are doing this and are just working around sort of the core principle that was created and so that's that's been the real uproar in the ecosystem around royalties

SPEAKER_130: today this is fascinating um in terms of the permissionlessness of this vinnie if i could hand you a

SPEAKER_00: bag of cash and i just give you a 10k brick for your nft and you send it from your wallet to my wallet that's the power of crypto is this permissionless but that is recorded somewhere correct and that's always recorded so that's recorded somewhere and if it's recorded then the person who was supposed to get that six percent on that ten thousand dollars that six hundred dollars what could they do they saw they would see this i guess occur on some blockchain somewhere they see this transaction occur what is their recourse and then why would people build a marketplace

SPEAKER_41: to skirt this why would you want to skirt this it seems like this is the ethos

SPEAKER_137: of the platform what i've learned about humanity is a lot of people just don't have any ethos like they don't care there are people out there who just there's people out there who like will take to steal people's tips like you know there are a lot of like you know people humans in the world who just don't care about any other one they care about themselves right they're very like

SPEAKER_25: they're very um selfish and you know i think unethical so yes while i agree that that the royalty should be enforced and i'm very pro royalties for artists in particular i think that

SPEAKER_28: the problem comes in when you move an item from yourself to another wallet if i want to move from one wallet to another yeah there's no royalty but it looks like a transaction on chain like i can move it from metamask to a ledger and that like i shouldn't be paying a fee and there was no price so i guess the real quick so so if if i you and i do do a transaction like that over the counter i say hey jay uh you want this uh moon bird you say yeah vinnie i'll give you 10 eth it's like great

SPEAKER_25: she sent me 10 e to this address i send you the address there's no there's no record of that transaction taking place and and that and therefore there's no royalty due because like how do you do it

SPEAKER_28: it's the same as in the offline world if like you and i trade on a pair of sneakers and you know i like you know the we have friends who trade sneakers that you know you'll give you one you'll you'll pay for it and then there's no transaction fee to the original sneaker or you know developer owner designer whatever so i guess in the real world what we're trying to do in the on in the web 3 world we're trying to like create this this notion that it's it's all or nothing um because you know even though we we don't accept it in the real in the real world that physical objects change hands all the time and there's no royalty being paid we think that we automatically have to have a royalty because you can now track everything it's not that simple now let me let me let me give you the counter argument here like i think that um the royalty fee should be lower than eight percent ten percent i think it should be at a point where it's almost de minimis so let's call it you know sub five percent to the artist or three percent say one let's say one look no one's going to care at that point to do you know we're not going to go around the corner trying to do a deal to save a hundred bucks even on a 10 grand thing it's just not worth it but the artist gets paid so so the eight percent is in in this world is just as bad as 30 in the apple world it's like it's a big it's a big enough number that people are willing to work around and and get work around so so let's argue that the the market is saying we don't like seven and a half ten percent maybe even five percent let's move to a three percent royalty which people you know the same as credit card fees people will pay

SPEAKER_25: that um that probably would mean that less people would work around the system because the cost to

SPEAKER_139: work around the system is and then the effort is more than the the fee that you're going to pay i also think that you can't take a view that you have to have this thing universally enforced and

SPEAKER_28: so what what you should do is say look the ethos the spirit of what we're trying to do is that we collect the three percent royalty if you want to work around it that's fine but you're just depriving the artist of his revenues his incomes whatever else and then the platforms magic eden open c should just honestly by default the same as ebay everyone else say look we're going to just honor

SPEAKER_139: the artist request based on the smart contract and if you transact through our platform we're going to we're going to do that the platforms do that look here's open c's royalty just for people

SPEAKER_02: who are watching on youtube.com this weekend or using spotify to watch it you know it's very elegant

SPEAKER_00: um well here's a yeah so this image shows you know uh an nft buyer and nft seller have a transaction

SPEAKER_02: the nft seller and open c you know obviously they clear this transaction open c then holds

SPEAKER_00: for some period of time the royalty and then ships it to the creator so it comes out of the seller's uh you know sale price and no big deal they should be happy to do that and i guess if the artists um

SPEAKER_02: you know in go after the platforms the platforms then are where the majority majority of these transactions will occur and i guess that's where you can get enforcement and this is the thing i love

SPEAKER_96: most about this is the thing i love most about nfts i love the fact that smart contracts and nfts and crypto give the artist some ability to do this i this is kind of the best part of crypto but so magic

SPEAKER_211: eden's made a change uh they're allowing you to make the royalty payment optional yep really exactly

SPEAKER_02: well see this is the thing then i think what should happen is the artist should then

SPEAKER_11: um as a block uh sue uh eden that's a very simple thing to do you just get 10 of the artists to then sue them and say you're you're uh and basically if they uh create enough pressure magic eden's gonna say you know what we don't want to be the scumbags in this ecosystem it's not worth the bad press these artists deserve their payments and don't you think they would crumble sunny with the bad press so let me

SPEAKER_137: let me just let me just add this okay so here's the issue um i think that magic eden and openc and

SPEAKER_139: the bigger players at scale they're concerned with losing market share to like hades swap and salon art and

SPEAKER_84: upcomers to make it optional now the the the the the i i believe that the downside to this for them is

SPEAKER_139: that artists will no longer support them they'll they'll have less like they're not pricing in the

SPEAKER_28: goodwill from the ecosystem and i and i don't think that i think that that it's a bad you know the desire look we live in an open capitalistic world if you want to make a decision let's see what the consequences are so they're going to make it optional then let's see what the consequence there will be consequences and if they don't if they don't um if they don't want to counter the the free play if they want to count on the free players i think it's a threat then you know then that's their decision i i personally think that the loyalty that the goodwill and loyalty that they get from even the buyers i i'm i'm happy to always pay the royalty fees i have no issue with it right um the the goodwill they lose from guys like me going elsewhere and saying fine you know then i think it's bad and i think it's not so bad for the ecosystem because what happens is people start going you know there's a lot of crypto arbitrage traders like so the long-term investors myself sunny whoever else nfts we don't give a paying five percent seven percent royalties because we're gonna just hold this thing for like 10 years it's the guys who are buying and flipping every single day they go buy a moonbird now they sell it two hours later they make five percent they're the ones upset because they're well they're paying eight percent on either on the transaction on least on one side of the transaction so so it's the the people that this policy impacts are the people who are trying to arbitrage and trade these things on a regular basis and these exchanges are so busy chasing the volume metric of trades and how many how many exactly how much volume they do in terms of trades that they are catering to these traders these day traders and it's kind of like robin hood free

SPEAKER_139: trades but you know even in robin hood and everything else there's always a catch someone's

SPEAKER_02: going to pay the price at some point right all right we got one more story we can do here sbf

SPEAKER_00: i just interviewed him at the altimeter summit unfortunately it was private event shatham house rules can't talk too much about it although he did i did ask him a little bit about the um stable coins and i won't tell you his answer but it seemed like he was super enthusiastic about stable coins i'll leave it at that but i've been seeing on twitter that he and and he's been quite vocal about this is pushing for more regulation and i saw a lot of backlash so uh here's his tweet at a high level a we need regulatory oversight and customer protection b we need to ensure an open free economy where peer-to-peer transfers code validators etc are presumptively free c we should establish regulation

SPEAKER_02: until then standards to ensure a and b sunny what is the backlash to spf about because i saw a lot of people saying like you know like really gnarly stuff about spf i don't get it it seems to me like regulation is what would cure a lot of the problems and the uncertainty in the crypto space so what what's

SPEAKER_13: what's behind the backlash here yeah i think the primary the primary backlash and vinnie should

SPEAKER_51: chime in here too because he's talked a lot more about this than i have is that the notion that he's even putting out there that there should be regulation is against the ethos of the decentralized nature of this and so the vocal voices around not wanting any of that really spoke up and i think if we think about this ecosystem the way we want it to exist at much more scale we know that can exist right it can't

SPEAKER_14: be the kind of a deregulated decentralized environment and so that is that was the core of what led to it it's like oh you know you started in in our world and now you're kind of going in this other world that

SPEAKER_00: was the the main main focus of the backlash concept here is well he has all the wallets he's done incredibly well now he's pulling the the ladder up behind him i i guess in some way is that the

SPEAKER_148: sort of accusation here or the implied accusation it is but you know he's also backing it up like

SPEAKER_13: they had an issue this week and i don't know the exact number where um a bunch of their customers got fished and um some money was stolen from their wallets and you know they went and paid that back

SPEAKER_14: and so with a good regulatory framework there could be much more punishment for the folks that are doing those things insurance other things can be created around insurance products can be created and so i think as the entire ecosystem grows he sees that he is backing it up because he's having to deal with these problems which you know the maybe the loud folks that are speaking up are not dealing with

SPEAKER_106: that today but vinnie you know your your take because you've talked a lot about this too i think

SPEAKER_223: that the the exchanges have got a different agenda um to the the spirit of defy um their agenda is to

SPEAKER_224: control the flows of funds through them and the defy because you know and this is i mean coinbase by

SPEAKER_139: the way like they tried launching this deposit product defy which they didn't do and you know offering

SPEAKER_25: high interest rates and i think it was the acc or someone shut them down remember that last year uh bro yeah so so imagine that had gone live and the d5 fallout happened and they were exposed in some way to some of the the crashes and drains like that would have been disastrous especially

SPEAKER_137: given the scale they were at and coinbase is pretty responsible so it's probably would have been they probably would have been safer about it i i think that that you know when you look at the exchanges and whether it's spf or cz or any of the big exchanges um they want to vest the interest and maintain the status quo and having regulations be you know a little obscured where they can operate with their offshore structures and whatever else they don't really want like if regulations look

SPEAKER_139: if you really want regulations to come in you should be willing to submit to a full audit of everything you've done for the past five years as an exchange to like i think how many exchanges are

SPEAKER_230: gonna how are they gonna fare with that i mean how's tether gonna do with a five-year audit

SPEAKER_28: well they won't want to get regulated but if if if ftx wants to be regulated and financial spirit and all the other exchange won't be regulated um and they feel that they've done nothing wrong over the past five years since 2017 they should submit for a full audit and that like you know that's the young deloitte's come in and then that's part of the that's part of what you do to get a u.s license

SPEAKER_14: yeah i don't know jake i have this tweet from a long time i'll try to finance it but you know humans are humans worst enemy the humans kill more humans than anyone on the planet we can't trust each other like we can't trust humans to make baby food we have to regulate that right you know there's formula or whatever and so i just think it's really insane to think about any at-scale environment without some level of control because we can't even do the most pure and innocent of things by

SPEAKER_00: ourselves without some oversight around those things would this be analogous to the sort of pirate days of the internet with napster bit torrent nutella all of that right you had these people who were like you know what information wants to be free anybody in the world should be able to get any file and then we said you know what in the western world at least we're going to respect copyright spotify will come out we'll have netflix you'll be able to get this information you can still buy cds but you know bit torrent and nutella and all these other things kazaa they're going to be kind of an underground that goes from being you know 90 of the market when the music industry didn't let you do stuff online to point 90 basis points of the market one percent of the market that's what's happening in crypto is it not that's the analogy here perfect one i think i completely agree where

SPEAKER_14: we thought all files should exchange for free and all movies should be for free and all music should be for free and all tv shows should be for free to you know we had to create a sustainable ecosystem and look it's better for everyone like i you know look back to those times when it was all these download because of napster and all those things to what it is now it's much easier

SPEAKER_121: to pay and watch a free movie and and you get great content out of it because the studios are willing

SPEAKER_00: to invest into it so i think it's just a natural downloading a virus or something i mean what percentage of these exchanges are going to be able to transact with the western world the you know the canadas the germanies the uk's the united states i mean all these offshores are going to just be banned and if you want to use them as an individual who lives in the united states you're going to be able

David Friedberg: to use them just like a person in the united states could use kazaa whatever still out there but you may get dinged right you could get dinged yeah i think so and then the majority of people

SPEAKER_13: like you know we've talked about this as well crypto is a worldwide phenomenon the technology is

SPEAKER_14: related to our worldwide and so there may be places that people will operate like that but for the us you know what the services we use and the netflix of the world the apple music of the world the spotify's of the world you can still go and download music for free and movies for free but it's the wild wild west and there's a risk associated with it and i think we'll just see the exact same thing

SPEAKER_02: play out here in this ecosystem all right this has been another amazing episode of our crypto round table um we got to get moving here i know you guys got a lot of work to do today uh we covered so much so many topics let's get the plugs in here uh vinnie how can people engage with your

SPEAKER_00: different companies and what you've invested in and built in the world and you got civic and i know you got weight room weight room.com is easy go download weight room.com for one-on-one video

SPEAKER_02: conferencing that's easy and then civic uh who what do you need in civic you're looking for partners

SPEAKER_83: you're looking for employees what are you looking for actually so we're launching thanks jaco we're launching civic.me it's kind of it's live right now we're doing a whole bunch of new features next

SPEAKER_139: week for the solana conference um go and check it out civic.me connect your solana wallet to it you can view your wallet you can it's a very great it's a great visual explorer of your nfts uh and we we're bringing in identity there and a whole bunch of other things it's a it's a really it's it's a

SPEAKER_214: culmination of efforts of years and years of development and creating decentralized web3

SPEAKER_00: identity management of course everybody wants to get all four besties on their cap table some people have gotten two i think there's a person who got three but only one company in the world definitive intelligence got all four besties on the cap table and that's sunny madras company yeah like i said like i said all four besties um and and vinnie okay fine 4.1 um so sunny tell

SPEAKER_02: everybody what is definitive intelligence and um maybe uh yeah no thanks for that yeah definitive

SPEAKER_14: intelligence we focus on web3 growth and so understanding what your users are doing on chain and then using that information to help grow your product product analytics growth analytics and so um you know we're working with companies ranging from nft projects to utility projects to you know folks royalties and or loyalty on chain and so if you are doing anything interesting uh in and around web3 we're there to help you uh both from our platform perspective or even just our growth teams that can interact with your um your company to help you figure out how best to take advantage of

SPEAKER_106: all the great data that's available in the ecosystem and you're hiring right now uh and what

SPEAKER_02: we're always we're always hiring great folks yeah all right so you know how to find sunny uh i'm guessing

SPEAKER_250: you're sunny at definitive intelligence that's it exactly that definitive.io definitive.io yeah sunny

SPEAKER_253: now no xyz is that xyz over is that over the xyz uh domain name i think it's i think it's still there

SPEAKER_02: i think you know it's still there but all right one question i forgot i was gonna take a couple

SPEAKER_00: questions from the audience how this is from uh drink gaming how does yield nodes and all the staking companies stopping withdrawals affect crypto adoption i have no idea what that means explain to

SPEAKER_02: a neophyte what that means and uh if you can and maybe the answer to this well let's

SPEAKER_14: maybe make it generic because i don't know about the specific question but like if the question is how are withdrawals being stopped and how does that affect uh and whether those withdrawals are you know through wallets or exchanges whatever it happens to be uh or contracts that someone has deposited something in it's really bad for the crypto ecosystem it removes a lot of trust and it ties back to a regular regulation um section that we had today if you have put your money into something that's promised you yield and promised you the flexibility to get your money in or out on your own and someone has then changed the parameters of that and such that you can't get your money out or your money is

SPEAKER_258: gone or has been stolen that is really really bad and that's why we need regulation all right everybody

SPEAKER_150: for vinnie and sunny i'm jcal and we'll see you next time on this week in startups crypto

SPEAKER_261: roundtable bye bye all right bye guys thank you great job everybody