¿A este multimillonario propietario de un equipo deportivo le ENCANTA Bitcoin?

[0:00] It is a hedge against inflation. I think that people are rightfully thinking of it that way. And then I think it's also a global store of value and it's sort of easily accessible from anywhere to anywhere and that it is just incredibly powerful in that way. And so, you know, once it became, you know, accepted as a standard, once enough people said, "Okay, this is going to work." and the validator network works and everything else, it it became, you know, the the standard store of value. >> What's going on, guys? Today we have a great conversation with Chris Kelly.
[0:31] He's a co-owner of the Sacramento Kings. He's the founder of Kelly Investments and he's a former Facebook executive. In this conversation, we talk about why he owns Bitcoin, why he likes artificial intelligence, why he owns sports teams, and a brand new idea that he's bringing to the market to go and take minority sports ownership stakes and bring them to the public market. There's a lot packed into this conversation. Chris is someone who's been around the technology industry for a very long time. He understands a lot of what's happening both in terms of the trends but the underlying technology itself. And he has made investments in a whole multitude of
[1:02] different areas and industries and I think that you're going to learn a lot from him. Here's my conversation with Chris Kelly. All right, Chris. You are the co-owner of the Sacramento Kings and you also like Bitcoin, which is going to get everyone very excited. So, explain a little bit of your maybe your journey with Bitcoin and why you like this asset so much. >> Yeah, so I mean I think that it is a hedge against inflation. I think that people are rightfully thinking of it that way. And then I think it's also a global store of value and it's sort of easily accessible from anywhere to anywhere and that it is just incredibly
[1:33] powerful in that way. And so, you know, once it became, you know, accepted as a standard, once enough people said, "Okay, this is going to work." and the validator network works and everything else, it it became, you know, the the standard store of value. way that, you know, Ethereum turned out to be a you know, when Vitalik, you know, went deep on Bitcoin, decided that there were some extra features that it might need. That's where Ethereum comes from. And then, you know, I think people have been kind of riffing on themes in those areas
[2:04] ever since with other coins. But Bit- But Bitcoin and Ethereum are are kind of well-established throughout the world at this point. >> What I find interesting is like you almost have this barbell strategy. I don't even know if you thought about it this way, but like Bitcoin is uh something that benefits from inflation. And so, it is scarce. It is digital. It is decentralized. It is non-sovereign. All those asset uh aspects. And it's done very well over the years. The Sacramento Kings or any professional sports team of the at least four major uh leagues, it's not decentralized. It's
[2:34] actually highly centralized. It's not digital. Like there's real estate and teams and humans and, you know, uh merchandise, etc. But it is super scarce. And so, it's almost like you're bar-belling and like you have a digital store of value. You've got an analog store of value. You've got a centralized and decentralized. Like did you think through that or you just like that's why I own the team cuz it's cool. >> So, I mean, again, the the scarcity and the availability, although I think that there's unbelievable mind share that teams have in people's lives. And that
[3:04] is a powerful, powerful thing. And it's also an area where people come together at a time that our politics can be very divisive and and and there are all these challenges that we have in terms of the way that we get along. People figure out how to have uh useful and uh sometimes heated, but but but also decent rivalries around sports. And so, you know, for growing up with Giants-Dodgers and and uh and and and all that and seeing, you know, growing up in in the Bay Area and never really become a Warriors fan
[3:34] because they just weren't very good when I was when I was young. >> [laughter] >> It's like being a Brooklyn Nets fan in New York. >> exactly right. >> Don't kill me. Don't kill me. >> It was It was pretty easy to do the Kings deal. And for us, also, it was keeping it in Sacramento. Um there was a Seattle-based group that included Steve Ballmer that was going to buy the team and move to Seattle. And we said, "Look, we think Seattle should be have an NBA team. They just can't have ours, right?" >> [laughter] >> It's pretty good. >> Ballmer went and bought the Clippers and drove the enterprise value of teams up markedly, which we thought was good,
[4:05] too. >> Yeah, that's that's a great great great thing. Now, when you're thinking about these types of investments, you know, I think most people look at Bitcoin as a long-term investment in their portfolio, but it has a day-to-day price to it. It's liquid. You could go hit the sell button today. Um there's a lot of discipline that it takes in holding. Sports teams are very different, right? You know, we literally are seeing someone right now in the professional sports ownership world who needs cash and you know, he's going through a whole process and he's like, "Hey, speed this up." And it's taking months. >> He said, "Well, they got the Chelsea
[4:35] thing done." >> Yeah, yeah, yeah. >> That's on top on top of the Lakers, right? >> But then like illiquidity almost feels like that is a feature here because people are forced to hold for long periods of time and we've seen those teams do really, really well over time. >> Yeah, I I think it's definitely been you know, it's part because of the scarcity, because it's a trophy asset. All these different things contribute to the increase in value. Um and and it's it's a hard process to go through to actually become an owner, whether majority or control, um in these teams, both the teams
[5:05] themselves and the leagues and you know, all of the it's it's it's never clear when these things are going to come up and how. And so, you have to act quickly when they do. And luckily, in our Kings case, we you know, we had a set of dynamics that were very favorable to our group being put together and we had a mayor at the time who was a former NBA player and very much wanted to keep the team in Sacramento. And we had to the the league held our feet to the fire quite aggressively and said we had to
[5:35] commit to getting a new arena done in 3 years and otherwise, we had to sell the the team back to the NBA >> Oh, really? >> Yeah, that was one of the demands at the end. And we met it. We got the arena done in two years. Um and it's still rated the number one arena in the NBA by uh by ESPN, which we're very proud of. >> So, I went to a game. This is probably 2019 or so. Um your partner Vivek, who uh is also a co-owner. >> He's the He's the controlling owner. We
[6:05] should be clear. He's He's He's I'm I'm a smaller partner, but he he and he is effectively my boss. But he's a good friend and >> I think he would say you guys are partners. Um but I I went and I I had the opportunity to go out and see the stadium and I was blown away. I've been in a lot of sports stadiums and I think that my takeaway was basically the technology that was integrated into the stadium. The um sustainability, but not like uh kind of like the woke sustainability stuff that's kind of like all uh appearance and no substance. Right. This was almost like no appearance and you
[6:36] know, all substance. >> We were the first LEED Platinum arena. Um so, we wanted the certification and we and we jumped through the hoops that you have to do to get that. We put a Tier 4 data center in the arena cuz we also knew we needed to run the hotel condo tower that we were building next door and the mall that we were refurbishing. Um and we we started mining Ethereum uh in the data center uh on the early side of that. >> may not be why I was invited out there. It was It was to say like should we do this type activity? >> Exactly. Exactly. Well, we had a great visionary um
[7:07] uh you know, CTO in Ryan Montoya, um who you know, pushed for us to do that. But we had an ownership group that was very technologically oriented. So, with my history at Facebook, with Vivek at Tibco, with the Jacobs family at Qualcomm. So, we had a bunch of very tech-friendly and tech almost obsessive owners. So, we wanted to have you know, something that would uh you know, sort of be easily upgradeable and building a data center in the arena was part of that vision. >> I also think that there's this element of like when you have an ownership group
[7:37] that is doing this like investing in Bitcoin, building a stadium, owning the team. There was a lot of education and like knowledge transfer to the players, which I thought was pretty interesting. And my wife would tell the story that we were walking through and getting a tour and Vlade Divac showed up and she was like, "You look like you're from Eastern Europe." My wife's from Bulgaria, right? She had no clue who he was and then she watched the documentary, she's like, "I love that guy." You know, he's got this amazing story. >> Vlade still works with us pretty extensively and he's just a delightful
[8:08] human being. He's funny, he's, you know, great to have around. >> Well, and and I think one of my takeaways from this was you basically have technologists that are running this team and it seems to be going pretty well in terms of >> Maybe not so not so not so much as we would like on the court, but >> Well, that that was going to be part of my question is if you think about let's take the New York Knicks as maybe an example, right? I think James Dolan got a ton of, you know, bad press and and a lot of
[8:38] attacks and critiques, etc. They just won the NBA championship, stock's up, you know, 2x. I hear a lot of people talking about about James Dolan right now. Now, there's still the hardcore Knicks fans that are like never forgive him for some crazy thing he said or whatever, but for the most part, winning solves a lot of this stuff. What I do think is interesting is the NBA in particular has really gotten good at there's money made inside of the arena, but then there is the real estate, there is, you know, the data set, like all of these other components.
[9:08] I stayed in the hotel that was attached to the stadium and I was blown away. I was like, "Oh, this is crazy." And so if you then look at this as like, "Okay, hold on a second. Bitcoin, kind of hard asset, benefits from inflation. Team, scarce asset, benefits from a lot of the debasement stuff. Real estate, >> [laughter] >> in a very weird way, somebody who comes from the early days of Facebook, you got a hell of a lot of exposure to like hard assets that are, you know, kind of insulating you and your partners
[9:39] from uh from the inflation and debasement. >> Yeah, and well, and we thought that you know, the the real estate side of things, if the if the team itself was not generating the cash that it's turned out to generate as well for a variety of different reasons. The real estate was always a safety play. One of the questions I had to ask myself was is this just a vanity investment as everything else, but it made sense from a hardcore economic perspective. The the real estate was always a useful hedge. >> Now, if we think of real estate and the
[10:09] AI industry, this has become a huge hot topic. You know, Facebook, where you worked, I worked there much later than you did. They are making immense amount of capex investments and going, you know, pretty hard into this. >> hit the stock hard for a while and now it's not that everyone's realizing, oh, those are actually useful investments that you can generate cash off of easily because >> Yeah, and and well, I think that's part of this is like the capex investments that were required for this stuff. We're I mean, they were bonker numbers, right? And people were like, you're going to do
[10:39] what? >> take capex from 40 billion to 60 billion? >> Yeah, exactly. >> [laughter] >> Oh, okay. >> By the way, if you're making 20 billion a quarter, you can do that, right? >> Correct. >> Well, but I think a lot of people had questions, is there going to be an ROI off of this? Now, it seems like there's really two things happening. One, things like Muse get released and for those that don't know, it's like a personal assistant that Facebook has released. By all accounts, I think pretty widely accepted as you know, one of the best, if not the best personal assistant >> in in two, three weeks of release. Like
[11:09] >> Crazy, crazy, right? And we were talking before this that there are two things I took away from my time at Facebook. Facebook is amazing at doing all of the growth and analytics work and they are amazing at building consumer products. And this is the you know, kind of culmination of those two activities shows up in this. But if you go through with the rest of the industry, Google, Amazon, you know, Grok and SpaceX and you know, all these they're all making these investments. And I think now the market is starting to realize, "Hey, they're all going to get an ROI off this."
[11:39] >> It it it is available because the demand is intense, and AI has driven a lot of that. Although actually, it's going to have to get a lot more efficient over time. That What do you mean? One of the companies that I'm backing now is using, you know, fundamental brain research to try to understand better how to both more efficiently do the processing that you're talking about in AI days data centers and also increase the explainability of what go when things go wrong with AI, when there's hallucinations and stuff that
[12:09] just doesn't work. What what how do we understand better what went wrong there? >> Mhm. >> Um and it it's, you know, the the key insight that it operates from is we're building, you know, two two gigawatt data centers to to do all this AI work. The human brain runs on 20 watts of power. Like it's the you got to get more efficient with the way that you're using the power and all of the the inputs that go into it over time and to make it more cheap over time. So there will be ROI on
[12:39] all of these things because the the, you know, demand for compute it's not infinite, but it's you kind of close to infinite right now. >> I think the hard part is we don't know what the like upper limit is. And so this like kind of sort of infinite, I don't know. The more that it comes online, the more it gets consumed and it almost is this like reflexive thing where we've also seen on the token costs. Like I I shared a chart recently. Grok came out with their like latest model and they, you know, plot out, but you can toggle on the chart between
[13:09] cost, efficiency, you know, kind of like compute power or tokens. Every single model, if you look, is just down into the right. And it's just like the price war is on. >> It is indeed. And what when you've, you know, invested type of capex that the big companies have, you can do that. And that's the way that this market's going to go. >> So, you think token cost just continues to fall? >> continues to fall. I think that, you know, you you have more widespread usage of the the the various frontier models
[13:40] and and, you know, I don't think that that, you know, anyone's revenue is going to go down because the usage is going to go up so much. But, um there will be a point at which um you know, revenue peaks. >> Today's episode is brought to you by Arch Public. Arch Public has just expanded its agentic trading platform beyond crypto. So, pay attention, this is a big one. Now, they are automating strategies across stocks, commodities, and ETFs, and I think that this is going to be huge. You can now automatically take profits when one market hits new all-time highs and rotate that capital
[14:11] into other markets showing more opportunity. Whether you're rotating capital into AI stocks, gold, if you're investing in the S&P 500, or you're accumulating Bitcoin, Arch Public brings real discipline and automation to your investment strategy. Additionally, they've launched a powerful new tax loss harvesting tool. With crypto being so volatile and its exemption from the wash sale rule, Arch Public can offset gains with losses without compromising your long-term positions. It's exactly what every serious investor does. Institutional-grade automation that works across every major asset class. >> [music]
[14:41] >> There's no more emotional trading, no more missing tax opportunities, just smarter, hands-free execution of your preferred strategies. Go to archpublic.com right now. Connect with their team, set up a time, bring your account in if you'd like, then you can learn what automated trading can do for you. archpublic.com >> What about in terms of um we haven't seen the financials yet, right? But if I had to guess, OpenAI and Anthropic have two different customer cohorts. There are customers who adopt their models and usage continues to go
[15:12] up and to the cost, you know, per token, if you will, falls. >> But the like net dollar retention of that customer is like through the roof, right? >> There's another cohort of customer though, like we have a AI CFO product that we've built and we are much more in the like own your own intelligence camp. And so we started off using the frontier models and then we've really built a lot of our own technology, we've trained our own stuff, everything is kind of unified and customized for our specific use case. Our token consumption, like number of
[15:42] tokens as >> It's just got down, Mark Cuban. >> Completely because the economic incentive is like we can do computations for 97% less than we could with the frontier. >> Exactly. >> As long as you have similar or better in level of intelligence for your specific use case, you would do it. >> So the verticalization of AI is exactly the way that things are going. >> And so those users, like the net dollar retention actually looks horrible for these large language models, but they're probably from a volume perspective, that cohort is still growing cuz they're signing so many people up.
[16:12] >> That's exactly right. >> So in a weird way, whether your actual usage of processing of tokens is growing or on a per customer basis it's decreasing, but your volume is making up for it, these businesses still seem to have quite a bit of runway. >> I think they've got a fair amount of runway to go still. But but there is a limit at the end of the day. Everyone's saying, well, when when when does it turn bubblish? And the answer is probably not yet, but will we know exactly when it does? And and is that at a, you know, 3x, a 5x, a 10x, you know,
[16:43] uptick from here? And I don't think we know yet. But I don't think we've hit there yet. >> So if you go back to 2021, which is probably for especially a lot of the younger investors, that was the first really like regime shift from 0% interest rate environment to all of a sudden, hey, market is crashing, what goes on? And probably the one thing you could point to is the Fed raise interest rates. And they telegraphed it. In November of 2021, they started talking about it. In March of '22, they started. And they did
[17:14] it very aggressively and and they kind of did what they said they were going to do, which a lot of people just didn't believe them. If you go back to '99, 2000, kind of similar story. Not perfectly, but still like interest rates were a huge piece of the story. >> Right. >> The Fed just raised interest rates 25 basis points. >> telegraph they had telegraphed that they were going to, too, which is the interesting part of this contra the president who appointed the new Fed head. >> So, also I've seen the charts.
[17:44] The business cycle of the global liquidity tend to be about every 4 years. >> [laughter] >> Uh well, 4 years ago, 5 years ago was the last time that we kind of peaked. Are you worried at all? >> Uh concerned, but not worried. That's the way that I would put it. >> the difference in your mind? >> that there's a, you know, I don't think that we're going to have a radical war on inflation that, you know, causes true a real spike in interest rates from here. I think that there might be another hike and then it sort of settles
[18:14] in. And some of that is the counterbalancing that that, you know, the president trying to jawbone it down. Um but I also think that the fundamental health of the economy that sits underneath um a lot of the investment that's been driven will will, you know, not cause too much inflation. Yeah, we had this very COVID-driven inflation last time. I don't think we have that factor at this point, although, you know, war could substitute for COVID and that that's not a good thing for anyone. >> Now, if you think in the AI field specifically, it does seem like also
[18:45] some of these large players are taking very different approaches. Some are truly closed source, kind of American model approach. Facebook meta taking more of a little bit of an open source, you know, type approach. >> And and and after sort of doing a restart to say we're going to do frontier models, too, but then we're going to open source them, which is interesting, right? >> What do you think about that strategy? >> I think it's been Look, I I think open source strategy is and from the very beginning of the company um we believed in open source. Um and and in open sourcing a lot of the things that we were doing in terms of performing
[19:16] improving performance on the internet. >> [gasps] >> Um we think that that's a healthy way to make sure that, you know, costs are reasonable. And if you look at I mean Linux and Apache stacks still run the backbone of web servers everywhere. It's open-source is a critical part of internet success. But you figure out what your secret sauce on top of that is. And for Facebook it was personalization and and you know and personal contact and having a view of the social graph um that you know they may have gotten away from a little bit for a while in talking about the
[19:46] metaverse and things like that. But I think they're pretty firmly back to personal AI as they are and then AI as it relates to your social group. Um and that's an I think that makes it an exciting time for them. But mostly open-source is is a way that drives value throughout the ecosystem. And you can still find ways to be, you know, immensely profitable um in those in those contexts while supporting a a community around uh around the software that you're running. >> The other aspect of Facebook that I think people maybe forget is
[20:18] 15 this years ago can they make money on mobile? >> Absolutely. >> question. [clears throat] >> really just at the time of the IPO and and sort of, you know, affected the stock in the marketplace view of the company um for when 2012 when they went I think it was 2012 when they went public finally. Um and then, you know, obviously mobile turned into this massive monetization and and [clears throat] you know another you know set of data that gets collected about where people are and and how
[20:49] they're operating and how they're interacting with, you know, other people and businesses um in that in that stack. >> Now the question of the time was can they monetize mobile? >> Mhm. >> Now I think that people don't question whether Facebook can make money. >> Right. >> They don't charge a consumer subscription for the personal assistant. >> Right. >> Because I think they understand the one thing that Silicon Valley legends understand, consumers don't like paying for stuff. >> That's right. >> And Facebook is an advertising business. >> Yes. >> And they're real good at it.
[21:19] >> Yes. >> [laughter] >> And uh if you're handing over your email, your calendar, your Uber, your DoorDash, your name whatever accounts people are putting into here, I mean, this is like Facebook's, you know, dream. >> Well, I mean, from targeting Google figured that out with Gmail, uh sort of when they when they launched that, you know, well back in what was 2001, I think it was. Um so, you know, this is a a tried and true Silicon Valley story. Um still
[21:49] primarily an advertising business. Um and when we started to recruit a number of people from Google at Facebook, I thought that was a smart thing to do. I think that there was a an understanding there that uh um was going to be, you know, build a very valuable business and one that worked very well. >> Mhm. It it feels to me also like there is this uh really big opportunity in AI in particular to play multiple aspects of the stack, right? And so, you've got, you know, kind of power land, data centers, you got the chips, and all that, but then you've got the applications.
[22:20] How do you think about investing across that stack? Are you just like, "Hey, I want to own as much across as I can?" Or do you kind of pick >> I think infrastructure is is still a a great, you know, set of businesses that you can find that are are maximizing, you know, value in parts of the stack. And so, I've been happy to to do the the main investment, the fund that I've run is focused on blockchain-based businesses um because I angel Alchemy, which is a huge infrastructure provider in the space. Um and I believe very much in the way that blockchain-based
[22:50] businesses will be, you know, sort of taking over aspects of the infrastructure stack over over time. You need to have distributed trust in the numbers of of every enterprise, and blockchains are the best way to do that. You need to make sure that you have provenance checked of of what AI is generating and and that you can trace it back to, you know, is it a human doing it is it AI is it an agent all these different things blockchains are an easy way to trace that. So I think that that that that those infrastructure plays are all going to do great. I think that there
[23:20] will be consumer you know verticalized consumer plays and there will be verticalized business plays for each of the AIs and specialty you know players in in you know whether it's finance intelligence or things like that. You know, I I look for I look for great founders more than anything else and so I've done some things that are a little bit further field I've also done a little bit of hardware here and there you know with the guys at Etched who've done a fantastic job of building new chips. That's exactly right. So I'm in the seed round of Etched
[23:50] and yeah exactly. >> [laughter] >> And and you know just very very happy to see a lot of these businesses. I'm also in the seed round of Zipline you know which hasn't gone out yet but it's done extraordinarily well in delivering amazing things to the world. So that that physical infrastructure and actual deliveries is is is is a is a big part of the way that these things work. >> When you mentioned earlier blockchains are going to kind of take over. What does that mean? Like what is your vision of that world? >> So it's it's a it's having a independent trusted you know
[24:20] a network that works to validate transactions and and works to trace them back in an immutable format. It's an audit trail for the way that everything went on because you know it it it says it carries important information about the the trust level of a system. And you know you need that and the reason that we have you know audit you know audit firms and public companies and all these different things is to build trust in a system over time that you're actually getting the information that you want and that you need in order to make a a
[24:51] judgment about it. And so blockchains are a very efficient way to do that. They are inefficient in the short term and that you have to do all of the writing and the validation, and you have takes a while to get a network up and running for that. But, once it's up and running, you have Bitcoin and Ethereum and and all of these you know, other ones that have escaped you know, so they're they're theoretical levels and Solana and XRP and all all of these auctions are blockchain based that have
[25:23] various purposes for the token that they use if they use a token. There are a whole bunch of businesses that use blockchains that don't have their own token, too. And that infrastructure you know, is a is a powerful one to invest in. >> When when you think of that future world, one aspect that if people were to critique this podcast, they'd be like, "Hey, you talked a lot about Bitcoin and cryptocurrency and and that world. Now you talk a lot about the AI stuff." And I actually think these two things are very intertwined. >> And some of the like the the elementary analysis would be like, "The machines
[25:54] need a currency." >> Exactly. That That's where you start, right? >> But, it feels like the blockchain, the digital network I mean, what is an AI swarm? It's a different version. But, like it is a bunch of quote-unquote nodes >> Yes. >> working together >> Yes. >> to get things done, validate You start almost see this convergence and you're like, "Are these two things like actually the same thing?" >> But, they're they're definitely closely related over time. And so, you have
[26:26] these agents when they can swarm, they can you know, build multiple instantiations of themselves. And as we've seen in the Hugging Face hack and and other things like that, they can think over time, you know, think is a little bit strong there. But, they can operate over time as if they are executing a strategy to get to a result. And one that may transgress a variety of rules that they're that they're told or taught or that are tried to be hardwired in the system. And so this is where some of the the regulatory questions start to
[26:58] come up and get more active. And I think we've seen some responsibility on the part of the industry to say, "Hey, we've got to figure out how to get independent people other than us making these judgments over time." And people who are trained in the and and they're technical experts and available to, you know, say, "Hey, this is where risk gets a little bit too big." And I think that's a helpful thing, but it has to be done in a way that's not, you know, inherently anti-innovation. And so I think that
[27:28] there's been rightfully a lot of worry about that over time. We faced a lot of these questions in the design of systems around safety for kids, you know, on on the online environment. And you know, in a variety ways that, you know, a lot of people would argue that Facebook sort of went off the rails on on a number of these things. And they've, I think right quite rightfully in my view, you know, settled out on some conduct remedies that are, you know, are are more active in restricting kids access to, you know, what can be very powerful technology,
[27:59] social technologies. Um but doing it in a way that that's that's, you know, teaching and and and sort of a like a media literacy approach to things instead of a, you know, "Hey, you just it's too dangerous for you." Um we always tried in the early days as we expanded into high school. So when I joined Facebook, it was still called college. >> college. And it was all validated based on an .edu email address. When we expanded into high schools, I tried to work with a lot of folks in the particularly in the law enforcement community around how were were we going
[28:32] to make sure that people the kids were actually members of the community that they were joining and that they had access to other kids in, you know, how we were going to deal with fake accounts. Um and I think we did a reasonably good job of that. And you know, that's one of the reasons that Facebook sort of won over MySpace and a number of other, you know, sort of people who had approaches there. Um, you that can uh, deteriorate over time. And the dedication to that can deteriorate over time. And I think that that that's what may have happened. And now there's been a bit of a reset in the company
[29:02] engaging I think very productively with regulators. I think we'll see a lot of the same things in AI. I I I don't think that that there's a uh, uh, uh, uh, uh, I don't think it's it's valid to say um, we should just have a free-for-all. There's no way for us to regulate that. It's it's just not accurate. Um, you know, but you can have smart regulation or dumb regulation. And I think we're moving towards there Some people will call for dumb regulation, unfortunately. And that's, you know, that happens in the space. And it's easy to crusade against technology companies. And you're seeing some of the data center backlash
[29:33] happen right now because it's a proxy for, "Hey, I I don't like the fact that I feel out of control or my kids may be on this technology and I don't and I can't control it." Um, how we give people more of a say in that and how we regulate in an intelligent way is one of the key questions that we've got for the next couple of years. Luckily, there are a lot of people who've done this, uh, you know, and and who think about it a lot. And we're you know, we're all engaged in that dialogue. I think in mostly a meaningful way. Uh, there's some postury stuff that goes on and on both sides. But I think that, um, the
[30:04] companies are deeply engaged in this now in in AI and and the broader technology companies, too. >> We recently heard some of the uh, AI leaders say that, you know, 10% chance this could like kill us all or whatever. >> This is the Skynet problem. I always refer to this as the Skynet problem. >> To me, it just feels like, um, the people who are saying that seem to be the new companies. I don't hear Mark Zuckerberg saying, "Regulate me more." I don't hear him saying, "We need to slow down."
[30:35] >> Although, I mean, interestingly, I mean, they did the company did agree to a lot of, you know, restrictions on on, you know, access to Instagram in particular. >> Sorry, I'm talking about the AI domain. >> and but I'm I'm I'm saying that they're they're somewhat similar at the end of the day that that you know >> Cuz you're saying the AI powered algorithm >> a lot of the the things that are allegedly addictive mechanisms for this. And so I think that when you're talking about regulating all of this you're it's it's a there are more particular problems in the AI space that that have
[31:07] their own individual parts, but the AI is touching these other ones where there's some been been some I think quite reasonable consent to redesign and some rethinking about how how the systems work with with humans. It is all a talk about humans regulating the technology and ultimately having control of the technology rather than letting it letting the technology take over the the conversation. >> I recently saw a demo online. Somebody
[31:37] had built a like it was some like a Chrome browser or something some sort of other thing where they were going through acts. >> Uh-huh. >> And as they were scrolling, it would basically uh mute or like a kind of dull >> Uh-huh. >> certain posts. So if it was an ad, as they were scrolling, it would just you'd get to it and it would just say >> ad. >> But you couldn't see the ad, right? >> it out. >> Correct. Or it would be like slop. >> Uh-huh. >> You know, and like [laughter] like you don't need to read this, right? And as it was going, it was like
[32:08] maybe one every four posts, five posts, you know, in the demo was like actually worth consuming for the human. >> Right. >> And again, like cute demo, they were trying to show how, you know, real time. I think it was like something that was related to Jev and the ability to kind of do this, you know, synthesizing in real time. But it got me thinking like if you don't have that turned on you you and my brain is just consuming it. >> And this is like the ultimately the scarce resources time and human attention. And so the question of how
[32:38] can you use AI on your on your behalf to make your time and your your attention more efficient to get you good information. You know, the problem of course is that it can be manipulated to present bad information or or you know, false information or questionable information and to advance, you know, arguments that that might be, you know, uh divisive and uh and so all of these are concerns and and looking at facts and who has incentives to present disinformation is is a critical part of
[33:09] all of these networks and how it gets surfaced more effectively for people to make their own choices. >> Today's episode is brought to you by Uphold. Are you someone who's tired of juggling multiple apps just to trade, earn, stake, or spend your crypto? Then listen up because Uphold does all of that in one single unified platform. You can access 300 plus crypto and fiat currencies with an interface that works for you, whether you're a beginner or an expert. [music] Uphold also features any-to-any swaps where you can swap crypto to fiat, fiat to metals, and tokens to tokens directly
[33:40] in the app. If you prefer self-custody, Uphold's Vault gives you multi-sig security, key recovery, direct trading access, and peace of mind without giving up convenience. Uphold is also 100% reserved, meaning no fractional practices and proof of reserves are updated every 30 seconds so you can verify your assets anytime. For US users, you can even earn yield on dollars with a USD interest account. No fees, no minimums, and funds are insured up to 2.5 million dollars through the Atomic Cash Sweep program. If you want
[34:10] one app for your entire digital asset life, check out Uphold today. Go to uphold.com to learn more. uphold.com. [music] Go check them out today. >> When when I think of networks, again, going back to this example of like Bitcoin is an open network. Anyone with an internet Excuse me, anyone with an internet connection anywhere in the world, they can get online, they can buy some Bitcoin. And that's part of the beauty is just like open accessibility. Uh sports teams >> Not exactly so easy. >> No, it's not and that's part of the
[34:43] the insight that I think, you know, we're trying to take in the new project that I'm working through on the fund. >> So, I was going to have you explain it is this idea of like you're almost trying to take some of the like Bitcoin ethos of open accessibility and say, well, this asset class of championship or professional sports teams are so hard to access. If we could somehow democratize that access, there's probably a lot of people who'd be interested. >> Exactly. >> And so, describe kind of your strategy
[35:13] cuz I think it's a little bit different than anyone else I've heard with this I think the fund is called Sports One. Sports One >> Sports One is the focus on this and the goal is to own multiple minority stakes in teams and use that as a as an effective sort of basket of, you know, of sports assets that people can either buy the equity in the company will be a public company or buy a token that's associated with that. And the token is designed for people who
[35:43] may be more casual users who want a cheaper access point. Um the the we think that the multiple minority stakes in the teams because there are regular public valuations and discussions about the teams that that, you know, will provide enough of an access point. It It is incredible there is incredible scarcity and incredible challenge that there are a lot of people who have made a lot of money in other businesses and who run family offices of, you know, where folks have have have been wealthy for years and they're looking at this as an asset class. It's It's actually
[36:13] really hard to access because you have to get the approval of both the team, you know, somebody has to be selling something and then the leagues also have a pretty extensive approval process. And And then also, as we're seeing, you know, recently, there are a lot of rules you need to pay attention to in the league, too. Where some, some things that have been, you know, sometimes are are seen as just healthy competition and attempts to evade the rules that that sometimes get get cracked down
[36:43] on quite extensively by the leagues. And for good reason because you're trying to preserve competitive balance. You're trying to make sure that this ecosystem works well. So, our approach to access to sports as an ecosystem is we'll acquire sort of somewhere between ultimately sort of we target three to five teams to start, minority stakes in teams. And that'll provide a floor value of both the equity in the company that owns them and of for the token that's associated with it where we'll hold about 10% of the token, 10 or 15% of the token
[37:15] in the company. And you can back into a floor valuation from that. From there, we plan to do a lot of stuff that's very pro athlete over time allowing people to issue their individual coins uh to support their own careers that will raise the money that will allow them to, you know, participate in and get from there. We know we we really want to you know, have the the, you know, striving athlete who's up-and-coming be able to be financed by a set of fans around them. And obviously some famous athletes will want to
[37:46] participate in that, too. We think that's great. But, you know, and they can use that as the basis for their fan club or how to communicate with people over time. We needed an extrinsic source of value to, you know, think about that ecosystem. If you even if you launch with a famous athlete, a coin that doesn't have something associated with it, you know, it's it's it's ultimately going to crash. So, and there there have been a couple examples of that. So, we decided that if we had an associated company that tied to the
[38:16] token that actually owned multiple minority stakes in teams. And that way you don't have a there's not a control factor that you're worried about. You're not, you know, sort of deep in the day-to-day of any of these teams, but there's, you know, the Sportico and the Forbes and the CNBC valuations that all come out and and provide these estimates that investors can, you know, have a access to the to the to the asset class. Um, and and and you know, and support the teams that are part of the basket,
[38:46] too. >> When you think about this strategy, how do you go about which teams, right? It's different if I want to buy a team in, you know, one of the less popular leagues that maybe I don't even know that much about the team versus, you know, Apollo recently wants reportedly 15 15% of the Yankees. I'm a Yankees fan. That I know they're going to be valuable. It's all professional sports, but how do you kind of think through selection? >> We're going to have a variety of discussions with, you know, the variety of current owners and where we think we
[39:18] can be a good partner because of our experience in the space, my experience with both the Kings process, but also in Major League Baseball. So, we bought the Giants AAA team in Sacramento 5 years ago, 6 years ago now. And and then we've leveraged that in in some discussions and and helping out, you know, a challenging situation for the Oakland A's. So, they've been playing in our ballpark before they in West Sacramento before they move to Las Vegas eventually. And while
[39:50] while their ballpark is constructed and while, you know, we we obviously, there are a lot of East Bay fans that can still have access to the A's for now playing in West Sacramento. Ultimately, the ownership there decided to move the team to Vegas and there's not much that anyone can do about that. We, you know, think that that that's been a pretty good transition for them and for us. And and, you know, we think that there's just and what we also had to go through the Major League Baseball approval process, which you
[40:21] have to do for uh for AAA teams. So, having been through the process in two of the four major leagues, having partners of ours that have been through the NFL process, that have been through the NHL process, um we think we have a likelihood of success in getting pieces of these teams and getting approved by the leagues. Um but also we think that we have a lot to offer those partnerships in terms of our experience. Now, the leagues have set restrictions on institutional owners
[40:51] such that they can't take board seats, they can't, you know, be, you know, involved directly in the day-to-day operations, but that doesn't mean that we can't be good advisors and good partners. >> Mhm. Um you mentioned that there's equity in the company. Um I think you've announced a public transaction that you are uh planning to >> public shell that we are planning to merge into. >> Okay. >> Um and uh and then from there we'll be, you know, sort of purchasing the teams within that company. >> Okay. And then you mentioned that there's a token as well. What is the difference between the equity and the token? >> So, the equity and the token, so the
[41:22] token will be a um you know, a sort of a separate uh way to have uh association with the company and with the ecosystem that we're building. Um the equity will be a classic publicly traded, you know, on on public exchanges and and available largely for we think larger holders, whereas, you know, the token will be a way to buy in for uh for average consumers and a way to participate in the system. >> Mhm. And it also feels like those two things are converging. Like we see a lot of tokenized securities, all that stuff
[41:52] is now starting to to kind of show up. Uh do you think eventually there's no difference between the two? >> Uh I think that the you'll you'll see some um trading, you know, between one and the other for various, you know, aspects of what people like the the token may have, you know, some formal associations with it uh uh terms of access to the underlying uh you know team benefits that that the equity might not. Um but we might end up offering it both to equity holders and token holders. I mean, we think that that will just evolve over time.
[42:24] Um and we'll watch the way that marketplaces react to the way that it trades and the way that that the people think about it as a store of value. >> Mhm. It also seems like uh domestic markets are very equity-focused. International markets start to be more token-focused. These leagues are definitely trying to expand. I mean, the NFL's got games, you know, where they recently played a game in Australia. >> Yeah, exactly. So, Melbourne the 49ers Rams in in Melbourne. >> Oh, yeah. Yeah, 49ers played, right? >> 49ers Rams in Melbourne and there will
[42:55] be I think a game in Berlin this year. Um there's a Mexico City game coming up. There's, you know, and the and the NBA has largely in preseason uh done uh you know, games in the Philippines, in um in um in China. We went with Kings, we went to China. We went to India with our partners, you know, two of our partners being first-generation Indian immigrants, um including Vivek, our lead partner. You know, we went to Mumbai and played the first NBA games in Mumbai. Um
[43:26] there's a whole bunch of different internationalization that's going on here. And we'll look as Sports 1 at um at the English Premier League, at a variety of of your you know, other European soccer uh operations and the possibility of of having those in our basket. We'll look at Indian cricket um and a number of others. I've also I'm I'm part of a of a group that's uh there's a 1899 Innovation Fund associated with FC Barcelona um that I'm partici- participating in with a bunch of
[43:56] friends, mostly from the States, but but a number obviously from Europe as well. So, >> It feels like sports, when I grew up, it was It's like people bought teams for the love of the team, right? You knew there was a business, but it wasn't as obvious, and I don't know how much money the sports owners really made. But, you know, they made money, but like it wasn't what it is now. It feels like this has been professionalized. It feels like it has become much more competitive and and almost like a level of ruthlessness to
[44:27] it, especially when the private equity firms are getting involved. Like college sports, you're definitely seeing this happen. >> It's been an interesting the evolution. >> positive or negative? Or like how how do you evaluate how sports themselves are changing? And we see it like the players now are transferring teams in college. Lane Kiffin this weekend. >> [laughter] >> I mean, you know >> an interesting set of conversations that you get you know, Morgan Freeman calling you out. >> Calling you a rat. >> It's a it's [laughter] a it's a very powerful thing, right? >> Yeah, so like how do you just think
[44:57] about and and maybe college is like a more pure thing or it was and so like >> I would say. >> you see it more obviously versus professional sports. I think people, you know, they've heard the stories. You could be the star one year, you're cut the next year, right? It's kind of a business to it. >> And but I think that we have aspirations through Sports 1 and and the you know, athlete coins that we think will be affiliated with it over time. Uh at at returning to you know, both making athletes more powerful in that process. But over time, you know, we
[45:27] think that that that allowing another access point for individuals that's not necessarily it's not betting. It's not all these different things. It's other ways to express you know, your interest and your love for the athletes and the teams that you that you're around. And you know, we think that that has some financial basis to it. You know, people spend their money on tickets, the time that they spend at at stadiums, and then they own memorabilia, on all of those things that that go into this. We think that that ultimately is a
[46:00] a that people positively associate um even when there's a rivalry associated with it where there's there's you know a deep enmity >> [laughter] >> going on for you know for if if if you're if you're a Yankees fan that not so much the it's the Red Sox not the Mets in town but you know Dodgers Giants and all of these kind of classic rivalries. >> I told you earlier you know the Brooklyn Nets and I said don't no one get mad. The reason I can say that is because
[46:30] no one no one really cheers for the Nets as much [laughter] right? Now if I was to say the Mets and the Jets you know not only would I get beat up by our friend Matt over here but but but there would be plenty people mad. >> But but ultimately we think that the those rivalries are are healthy ones and that you know this is another way to to experience it. >> I also think the reverse is true like financial markets have become somewhat like sports right and people cheer for their favorite company they wear the company swag they are um
[47:00] I see people all the time tweeting out charts of like this beat this and you know I mean it is kind of interesting to see >> there is definitely a a rooting nature that goes into investments and that people have you know their own selection bias that they want to be they want to be smart and they want to be right and that's a very human thing that >> The rise of sports-like enthusiasm in financial markets is also meeting the rise of sports betting. >> Yes. >> Right and it's like people want their money and the things they deem
[47:30] entertainment >> Right. >> to be aligned. Now I would argue that you know although I believe the stock market is just as much of a casino the odds are better you know than much in sports gambling. >> And then the and the public nature of that data is a significant part and this is another part of our SportsOne business is that we're trying to gather better data and apply AI in a smart way to you know give people deeper insights into individual athletes and teams and both their business on the business side but also on the on the live performance
[48:01] side. >> Mhm. It's fascinating to me that um no one's done this yet before. I I think that the first time we talked I told you this like of course people want exposure to these assets. There are things like um what is uh Fenway uh Sports Capital Group they they own some teams but I think >> And Arctos and Dial and the all these players have have amassed certain minority stakes in teams as sort of closed-end funds for you know largely the wealthy investors who are already putting into that. We we want that to be much more democratized and we think that
[48:31] that's healthy for the teams um for the leagues and for and for fans everywhere. >> Yeah, I mean it makes uh makes a lot of sense. Where um for people who are interested in Sports 1 where where should we send them to uh uh >> So right now we're you know so we we've you know announced that we plan to to merge with this public company was originally called Sono um that's out there um and we we expect that we will you know get that done and and you know it's it'll take some time. But uh >> But they can go read like publicly they
[49:01] if they just Google Sports 1 >> If they Google Sports 1 if they Google you know Sono um they'll see the basic uh plan from here that we've announced so far and obviously there will be further announcements as we moved on down that road and then from there you know we'll we'll achieve the the you know hopefully multiple stakes um in in a in a matter of you know we never want to put a you know too much of a time frame on it but uh um we think we can get that done quickly given our experience and our knowledge and the conversations that we're having.
[49:33] Um so from there uh that you know will will launch the token eventually and then uh we we want to provide uh for athletes and for their fans uh the ability to invest in individual athletes too. We'll we'll we'll get to that in in the right way. And luckily the SEC has been a lot clearer in terms of what what are securities and what are not and that's enabled us to think about that and design these in a way that that will provide the broadest access that we can. >> Mhm. I I think
[50:04] I think that this is a a convergence of things that people learned in the Bitcoin world, in the AI world, in the sports world, in the Facebook world. Like you you were kind of uniquely positioned given all of your interest. >> We're trying to bring it all together >> [laughter] >> and I'm trying to bring it all together. >> Very unique way to do it but but I think that uh by the way, the government's never going to stop printing money. So I do think these assets will probably be worth more in the future, too. >> I think [laughter] I think that's right. >> Amazing. All right, well thank you very much for doing this, Chris, and we'll do it again in the future. >> This is fantastic. Thank you.