Frank Chaparro - Attention, Media & the Future of Digital Assets - ep 181

Speaker A: We are only at the point where it is becoming somewhat acceptable to think about a 1 to 3% allocation to crypto. But that allocation process hasn't started yet.

Speaker B: This podcast is for informational and entertainment purposes only and is not investment, legal or financial advice. Opinions are those of the host and guests and do not reflect any affiliated entities. Investing involves risk, and past performance is not indicative of future results. The host and guests may hold positions in discussed securities now. Please enjoy the show. Frank, thank you so much for joining me today. Super excited to chat with you. All right, Frank, you're the head of content and special projects at gsr. GSR is a market making venture capital and capital markets partner focused on the digital asset sector. Uh, previously you were a finance reporter at Business Insider, and of course you were a founding reporter at the Block, where you did many things, but most importantly, you were the host of the popular podcast the Scoop. All right, Frank, how does it feel to be the Walter Cronkite of Web3? I've always called you that. I don't know if other people agree, but that's how I see you.

Speaker A: Well, I just appreciate you not comparing me maybe to the Jim Cramer of crypto. Um, has people.

Speaker B: Have people done it to you that,

Speaker A: that, that comparison has been made. Uh, I'll try not to drop an F bomb, though. I don't know if you saw him the other day talking about, uh, Trump's tariffs and he accidentally let the F word slip.

Speaker B: Oh, I did not see that. That is, uh, that is spicy.

Speaker A: Yeah, Gotta be careful with those on cable television.

Speaker B: So I have a question for you on media, just because I'm curious, I'm quasi media from this podcast. Is media a good business? I know that's a very broad question, but everyone I speak to in media that is doing well, like, I have friends, you know, Jason Yanowitz, Blockworks, and others that are killing it. And they all say, like, media is a terrible m, like miserable business. But what are your thoughts as someone who is in it?

Speaker A: Well, it's a tough business and it's, it's in crypto in particular, it's hyper competitive. Right. You do have blockworks, the Block, Coin, Telegraph, coindesk, um, all sort of chasing the same ad dollars and ad revenue. Um, so you kind of have to figure out ways to differentiate. And one of the big problems, I think with a lot of the firms specifically in crypto, is it's difficult to sort of get people to pay for things. And that's the case across the media landscape. But in Crypto in particular, especially as it pertains to data. Right. We're all trying to bundle up data in a way that's digestible, interesting, um, and unique. But when you have a market where 80% or 90% of most data out there is free, it's very difficult to get people to pay for the, you know, that 100% package where 20% might be differentiated and unique, uh, data sets. So that's the, that's probably the most challenging um, component to it. Right. And in a market where you have so many channels of information, um, podcasters like yourself, uh, you know, the DB Newses of the world competing in a sense in addition to the established or quasi established media brands, um, it's, it's difficult to get uh, people to open up their proverbial pocketbooks, I think.

Speaker B: Interesting. Okay, so the answer is kinda. It's, it's, it's an all right business, it's, it's variable.

Speaker A: Well, I think one thing that's super important for companies across the space is to in some component, in some fashion be uh, or have some element that is media oriented. Um, what's the expression or the saying? Right. Every business is a content business to an extent. Which is part of the reason why I was brought on, uh, in my capacity at gsr. Right. You know there are, when you have a firm like GSR or any trading firm or exchange that kind of sits at the center of the market. Um, there's some, there's so much insight, there's so many capable people day to day, uh, that are practitioners in the market and you, it can be difficult sometimes to sort of lift or extract those insights out to, to the market in a digestible way. Um, but that's a very important enterprise. Yeah.

Speaker B: Okay. So we're seeing that trend across I'd say tech and investments. And now I think you're probably the first signal of crypto and media, so to speak. But we have Eric Torenberg, uh, he joined a 16Z to kind of lead their media efforts. I guess Pomp is another example who's kind of crypto but also tradify as well. He's kind of a one man show though he didn't really join a firm. He kind of made a big audience and now launched uh, different entities. Harry Stebbins is famous for his podcast and VC and I guess Packy McCormick is probably another one who has a great newsletter and then leverage that to launch a fund. What do you think about this trend of this, I guess media investments combining into one. I Know you just mentioned it for gsr, but how do you view that more broadly?

Speaker A: Well I think it's a long story. Right. Even when I think about when I first started covering crypto, I covered it from the perspective of uh, market structure and the trading world. And it was super fascinating to see companies like Jump for instance, which if you rewind the clock back to 2017, if you went to their original website, it was literally just a landing page that said Jump Trading. And then at the bottom of it it had their locations. Chicago, you're uh, the city in which you operate and that was it. But then once they got into crypto vis a vis the VC arm, they started being more um, talk more loud, provide uh, more uh, insights and um, content. And in a way like crypto almost pulled that firm and other firms like DRW out of the preferable shadows of the market. And historically trading firms have been very behind the scenes and quiet. And that kind of stems from uh, a lot of the backlash that these types of entities faced in the sort of um, wake of Flash Boys and IEX and the drama around um, their role in the market, which still persists today. And in a funny way, the way market making has become a dirty word in crypto almost echoes and reflects the way in which HFTs were a dirty word in equities maybe seven, eight, ten years ago. Um, but anyway, not to get away from the point which is that crypto brought these firms in out of the shadows, right? Because crypto is such an interesting market where you have retail and institutions, at least up until this point, on a relatively equal playing field. And so to access deals, to access um, new markets, you kind of have to put yourself out there in a way that it was, was probably unusual for a lot of these folks and different. And so you saw, I mean if you go to Jump's website today, right, like it's way more um, um, dynamic so to speak. And this is, this is, this is, this is the, this is the heart of, of it. To answer your question, in a way, when you think about being an investor, right, um, early stage investor, which GSR is to an extent, right, we have a VC book I think above $200 million. We're one of the most active venture investors and partners in this space. You need to build trust, um, with founders and you need to sort of build relationships with them. Uh, and to do that, I think especially in the sort of AI world where um, allocating capital I think is going to become less differentiated. What you can differentiate yourself with is sort of um, this parasocial connection with market which can be achieved through things like podcasts for instance, and thought leadership and events and just putting yourself out there in that way. And that's why I think media and content is so important, uh, for firms operating in financial services. Because you almost need, because you need to sort of connect with clients, with partners and potential investment, um, opportunities and that. Right. With these treasury companies as well. Like they're all sort of going through this process of uh, building out their brands, hiring sort of these key spokespeople, whether it's like Tom Lee. I think obviously there's been rumors in market that Joe McCann is going to be spearheading a new um, digital asset treasury company in Solana. They need that sort of um, cult of personality, uh, to sort of uh, be the vanguard of the brand. You can't just sort of be um, a sleepy behind the scenes firm in this space, um, to really uh, drive momentum.

Speaker B: Yeah. Okay, so I mean you just said momentum, which is a really key word I think. But you're talking about media is important for investment firms, broadly speaking, in today's day and age especially. But from a deal flow perspective and also from attracting, ah, capital perspective and um, which, you know, that makes sense. That's logical. But if, I guess two questions. If everyone's doing it, doesn't that kind of dilute it? Like if there's, if everyone has some figurehead in front of their company, like you kind of, you know, talking about the company and you know, there's just a million of us all talking about our firms. Like does that dilute kind of the messaging a little bit or do you have to just get even? Almost like TikTok, where you have to get even crazier and make even better content to stand out. And then secondarily, um, what is with the world today where like momentum seems like such an important factor or like attention, you know, we're seeing Palantir, which you know, doesn't really trade off of fundamentals, uh, necessarily, um, meme stocks, of course there's a lot of crypto, of course that does that as well. So yeah, I guess like you know those two questions. But what do you think about those?

Speaker A: Okay, so the question was basically um,

Speaker B: it was around because you said momentum and then what I mentioned was the um, uh, if everyone, if every investment firm has a kind of a figurehead.

Speaker A: No, your, your, your point is really good. So the, like, I think what's one thing that I've, I've spoke to, um, I deal with a lot with founders. Like obviously as a podcast host you talk to a lot of founders. And then through a lot of the consulting and advisory I've done over the last year and investing, um, I work and talk with a lot of founders, many of whom are first time founders who don't know how to engage with media, um, or cut through the noise. And the one thing that I always tell them, the advice I often give is you need to think about where the market is. What are people paying attention to, reporters in particular, the way their minds work is they're thinking through what is the next trend story that I'm going to get ahead of before all my reporter colleagues. Uh, it's very competitive dynamic, right. Reporters oftentimes they want to look, um, they want to look smart. Like there's a bit of an ego to the craft. That is you want to call out, um, things that are problematic for uh, investors and clients of different companies and also point them in the direction of trends that are shaping the, in the given segment in which you might operate. And so if you're a stablecoin provider or you're a layer one or a layer two, these reporters aren't necessarily going to be that keen or interested in the day to day minutia and product, you know, roadmap that you might have. But if you want to break through the noise, I would, I always say try to think about what these trends are and ways in which you can contribute to that conversation. So the best way to break through the noise is not in, is not by hitting the market over the head with every product release or new hire that you have, but rather thinking very creatively about ways in which you can weave yourself into the conversation. Uh, whether it's the conversation about the proliferation, the Cambrian explosion of uh, uh, digital asset treasury companies as we're calling it, the profusion and uh, Cambrian explosion of different stablecoin tied entities or stablecoin like entities or sort of the, you know, a year ago maybe the impact of ETF flows on the market. And so just identify those trends and communicate to the conversation. Don't swim against the tide. Right? There are things that are interesting to people and the best way you can sort of have your brand amplified is by injecting yourself into that. Does that make sense?

Speaker B: Yeah. So for example, if we're gonna, I'm trying to promote myself or my company and Dijon said Treasury companies are very hot. Would I, would I make like a humorous take on stats or like come

Speaker A: up with a house view Right. Like, okay. Um, oftentimes as well, like I think m. A lot of founders or executives, uh, often think that they can't contribute to some of these conversations. I, I hear the amount of times I've heard, I'm not an expert on that or that's not my lane. Um, if I had a dollar for every time I heard that, I'd be on a boat somewhere, uh, in the Caribbean. But, uh, you need to be creative. You clearly, uh, are in your position and have gotten to where you are because you are smart. Um, and so I think be creative, be open minded and just contribute to the conversation.

Speaker B: So that kind of goes with the other point I made about the momentum. And I feel like today's markets and you know, I wasn't around like for the 70s or 60s or 90s or whatever, active in market, so I don't know if that was the same. But especially in today's day and age

Speaker A: of gray hair, there's still, there's a

Speaker B: touch of gray right there.

Speaker A: I was an embryo in the early 90s.

Speaker B: So the like. Is. Is momentum just ultra important in today's day and age? It seems like attention and momentum are almost like above everything else that is so important. We're seeing, and we're seeing like, yeah, again, meme stocks, crypto, there's a lot of interesting things around flows and that's mainly driven by attention. But we're also seeing companies do things that are very unusual, like Anduril, which is a defense tech company. They sell missiles and cool, interesting gear and whatnot. And they're making anime trailers for their new Barracuda cruise missile. Right. And they're releasing it. That is highly unusual. Right. Um, so, yeah, I guess what are your thoughts around attention at all costs and this momentum game that seems to be dominating the zeitgeist?

Speaker A: Yeah, I think that like everyone's looking for that tip of spear. Like if you have um, a franchise business, right, you need to think about ways in which you can, you can educate, delight and engage with what, what at the end of the day is a client base but an audience. And whilst you can serve them with your financial services tools, you can also engage with them as an audience. And that makes it the um, client base more sticky. I saw recently I was um, doing some banking stuff and I was on Chase's website and they have this like, interesting campaign with um, Joe Jonas or one of the Jonas brothers, I don't know which one it is. And basically they're trying to promote Zelle, which is their Peer to peer sort of, um, payments app that's, you know, shared across different banks. And it's basically Joe Jonas going to these various restaurants in New York City. Um, and at the end of the session he, you know, they split the, the payment. And that's the whole like, theme of the show, right, Is okay, we're going to these cool restaurants, coffee shops in the city. And then at the end we set up the bill with Zell. And I think it was super cool because I'm going through like one of the more recent episodes and it's this super sick, like, Japanese Matcha place in Brooklyn. And the, the, the content was just super compelling because I didn't feel like I was getting sold on Zelle. And here I am talking about it, right? Like, they were clearly very effective. This podcast is sponsored by Zelle. Um, but my first thought, I mean, was that this, I want to check this place out. It looks super sick. Um, so I think big swings like that are super important and making the content digestible. I was reading, um, and I often talked my old producer and our old head of podcast or multimedia at the block. Davis, um, is super at the cutting edge with a lot of, uh, multimedia video, um, trends. And one, one, uh, article that he shared with me a few months ago was that 80% of marketers right now are looking at how they can expand video content in an age where literally we're scrolling through feeds of everything. And I think we're going to move away. I mean, when you look at all the crypto media sites, right, they're all dashboard oriented and replicating and in some ways replicating or attempting to replicate the way in which, um, traditional media companies have their landing pages set up, I actually think we're going to move away from that. When the block started, we were like just uh, almost like X, where it was just a feed of content. And I think we're going to move more towards that with more video, um, and sort of we're going to have folks meet the market where they are in terms of the way in which they digest content. Um, more clips, more sort of quick, um, content, uh, because people don't really read anymore, right? Like they just read the headlines. And so I think you need to meet them where they are in that. In that sense. Same thing with podcasts, right? Like you can record for 45 minutes or an hour, but most people are going to digest content in different ways. And so if that means splicing it up into different clips versus, uh, uh, in addition to having this Sort of long form. Uh, I think that's, that's very powerful.

Speaker B: All right. I want to touch base more on that kind of the video trend and the kind of uh, bite sized content trend as well. But you mentioned previously the creativity or kind of what I took as creativity, trying to break through with the interesting messaging. You're talking about Zelle and they had one of the Jonas Brothers on doing the, you know, going to Brooklyn with the coffee house. Um, and that was different and intriguing to you. And so, so, you know, are you saying that in order to cut through the noise you have to number one participate in the conversation? So you're, you're with the tide, but in addition to that you also have to be creative and come up with your own theses and thoughts around like, hey, what, what is different that I like, for example, Andrel launching an anime for their cruise missile. Right? Like, is that it's a little bit of both.

Speaker A: Yeah, I think that's exactly right. Like you, you, you kind of summarize the point very precisely, which is you need to sort of meet the market where they are from the perspective of, from the perspective of how they're digesting the content in addition to the topics and trends and themes that they're interested in. And if you don't do that, if you don't do both of those things, you don't have the right, um, mix, uh, for. You have the recipe for success in my opinion.

Speaker B: But so why is like, you know, City Sweeney, she just did an American Eagle ad, uh, where she's wearing jeans

Speaker A: and whatever a lot you're seeing. I was watching um, ESPN yesterday and they had a commercial, uh, Gillette commercial. And I didn't recognize, I didn't know, I don't know the name of the gentleman who was in the commercial. It was a dad. A sum that I rec. I remember them from, from Instagram. Real memes. And I feel like brands and um, influencers are becoming increasingly a new marketing tip of spear top funnel. Um, and because of the proliferation of these influencer types, I think brands are trying to replicate that, trying to incorporate that into their marketing strategies, um, more so than they did in the past because that's where people are, that's where people are spending their time. Like people if you, I mean I am, I for one am turbo guilty of just like endless doom scrolling on, on, on my, on my feeds. And so I think brands have to, have to leverage that.

Speaker B: Yeah, no, it's uh, it's an interesting world where like hot girl with jeans on, you know, causes American Eagle stock to like, increase dramatically when. Like that. That was just like a normal ad back in, like back in the day. But now it's considered different. Maybe.

Speaker A: Yeah, I mean, there was some controversy, controversy, controversy around it, I guess. Um, but. But you. It get. You get people. That's how you get people talking or even. What was the one with the bathwater? Was that her too?

Speaker B: Yeah, I believe so. I think she sold. My sister was telling me this yesterday. She sold some of her bath water, I think, for like. I think it was like $100 a jar. I don't know how she sold it,

Speaker A: but they made soap out of her bath water or something.

Speaker B: Okay.

Speaker A: Um, and that was, um, Dr. Squatch, I think.

Speaker B: Interesting. Yeah. So. So like, again, creativity. Very weird, unusual stuff that you. That you can do and kind of stand out there.

Speaker A: So.

Speaker B: Okay, so what do you think the, the media companies of the future will look like? Because you're mentioning kind of, you know, this shorter form, this digestible content video being a big one, and now with AI Video, like, I guess what is. Because in my opinion, it's like you either want to go really, really short or you want to go really, really long and go really in depth. But, uh, like, how do you. Well, what are your thoughts on that?

Speaker A: I think that there's a. Well, I think there's. There's two things that are going to happen for. From. From one perspective, the media landscape is being challenged by individual brands. Right. Um, and at the end of the day, people, especially given we can talk about like, the erosion of trust in our institutions, which is a trend that underpins markets and, and media and has for, you know, the past decade. Right. And as a result of that, I think when you ask most people, um, who they read or, or who they trust or who they kind of, uh, you know, lean on for being up to date, being educated on market. They'll give you a name, right? As opposed to. They're not going to say the New York Times, they're going to say Andrew, uh, Steinwald. You know, they're not going to say npr. They're going to say, you know, Frank Chaparro. And you. You've had a lot of, um, really successful reporters kind of go off and just start their own, um, entities around themselves, around their brand. And I think you're going to see more of that. And then from that you can build a whole range of. Of services and businesses. I mean, pomp's an incredible example of that. Bankless, uh, is another incredible example. Of that where you, you know, basically start with, um, a content business that then parlays into venture investing, um, different types of financial services, um, deal making. So that's, that's something that firms, traditional media firms need to pay attention to. Right. Because at the end of the day, like this direct connect connection to an individual is only becoming more, um, powerful. And at the end of the day, like, it's, it's people's affinity for Joe Jonas that's going to deliver more business to Chase than the existing, the existing brand. Right. There's this parasocial connectivity to, um, the, the people that represent the brand.

Speaker B: Yeah, I mean you're, you're the exact, you know, kind of example of that. It's like, I trust Frank from the block, and Frank is Walter Cronkite of Web3. Uh, I'm going to start that. I'm going to make that a thing.

Speaker A: But I mean, I, I didn't pay you to say that, but I might have to.

Speaker B: How is, uh, how is AI going to impact the media landscape?

Speaker A: I mean, it has, I mean, my alma mater, Business Insider, laid off, I think, uh, earlier this year, like 20% of staff. Um, and you've seen a slew of, um, of layoffs in media because of the impact of AI. I, I don't, I don't. I. I think AI is a powerful tool, like it is. And ultimately, I think whether you're a media company or professional services company, if you don't leverage it, um, you're gonna fall behind. I mean, it's basically that simple. Um, I think it's going to make reporters more efficient. Um, it's going to make reporters quicker. Um, but at the same time, right, it's also going to result in. What are we calling it now? The AI Slop. And we see you see it on Twitter and it's like so asinine, where it's like, you can tell from the em m dashes and from just the way, you know, ChatGPT has a specific, like, tone and it's very cheerful, very cheerful. It's kind of annoying and many ways. And so you're going to have like a Cambrian explosion of slop. But that gives media companies and, and these media brands, um, a really great opportunity to differentiate themselves. Right. And I think about a lot of accounts on, on Twitter, a lot of company accounts, and there's a, there's a founder. The founder of Noise has been tweeting about this. A, uh, company I invested in. Um, how. It's just, it's so it's so apparent like it's basically like the equivalent of like we'll be able to identify genuine content powered by AI vs AI slop. Um, in the same way that you know, we kind of cringe when our boomer counterparts use a bunch of hashtags in a social post. It's like that's the M dash, right? It's like okay, this, this, there's no soul in this. And again that's why there's an opportunity right for brands that have that, that genesis qua, that ability to identify the zeitgeist, um, those, those unique brand elements that make them who they are to um, stand out. And in a world of AI slop. So there's an element where um, there's going to be less differentiation in some of the content but how the content's presented by the person that's doing the presenting, um, will become an opportunity for people to differentiate themselves.

Speaker B: Do you think that M, I guess going back a little bit, do you think that your move to GSR is going to signal that kind of a broader trend within the crypto investment sphere? That other I guess media like folks are going to join these firms to kind of bolster their, you know, their renowned and kind of send more deal flow and attract more LPs and kind of just do the whole, the whole cycle or what do you. Is this kind of in your opinion like a one off kind of uh, event that you think is pretty rare?

Speaker A: No, I think it goes back to the point that I made earlier about the importance of um, multiple multimedia content and creating relationships um, in an environment where you know, you, if you think about where AI is going, right, the investing element, a lot of that will be done by AI and portfolio construction and thinking through investments will become less differentiated um, because everybody's going to be working with the same tools. And the thing that will differentiate people in that environment are the personalities, are the individuals that make up that, that franchise. And I've worked with a lot of clients at different firms that um, there is a trend there because everybody wants, everybody wants to in some capacity be or have some sort of media content function, um, because of that, that connectivity to market that it establishes.

Speaker B: So okay, so your title is uh, it's headed Special Projects and Head of Content. Is that correct?

Speaker A: Yes. Yeah. So there's a lot of intricate, um, there's a lot of projects at the firm, um, that when I think about that component, right. Um, we do advisory, we do venture, we have systematic OTC token market making, um, as new Products are built out or expanded upon. Thinking about the positioning of those new products to market is important across all business lines. So I see my role as coming in and thinking through like what exactly is to go to market for this, um, and helping create this bridge, this connectivity to market across these different verticals.

Speaker B: That's awesome. That's a super fun role because GSR is so. I mean you mentioned you guys are very active. I know you guys are very active because I see GSR on a lot of deals. So it must be a pretty exciting uh. And also what a cool name. Like how to special products is a

Speaker A: pretty exciting, uh, I'm some sort of

Speaker B: like OPA secret agent. Yeah.

Speaker A: You know, people call me up and I'm like, I've got a special set of skills, you know.

Speaker B: Yeah. Oh yeah. So, so okay, within that, what are, what are some of the reoccurring themes that you've seen with startups in the, in web three that are having issues like what, what are these, what are the reoccurring problems when it comes to go to market or just kind of, you know, distribution and whatnot that that startups keep running into within our space?

Speaker A: It's a good question. I think. Um, one thing that we've talked about on, on this program, um, is just the issue of, of cutting through the noise. And I think in a market where you have, I mean, okay, even just like if you go and look right at every. And this isn't a slight and it's, it's not um, a criticism necessarily, but if you look at the block coindesk and block works over the last few weeks. Right. 80. I mean yesterday, I mean we had three digital asset treasury company deals and uh, BNB, Tron and Sui, I think all announced, you know, about $2 billion worth of

Speaker B: deals.

Speaker A: Um, right. Um, whether, I don't know which one was. One might have been a pipe, one might have been a shelf. Um, but if you look at the, you look at the coverage over the last few weeks, I don't know, like 70% M. 60% of the stories are about the launch and rollout of these new DATs. And, and, and, and then every time that one of these dats purchases or makes a purchase that's covered. And so it's, it's, it's. When you think about that reality where each of these teams maybe has 10 reporters or 15 reporters and they've got this new coverage segment to be on top of. I mean it's a herculean task to be a founder with something that you're announcing and then get coverage in a market where so much of the attention is being sucked by or captured by dat's. Uh, um, and then of course a few months ago it was, it was Trump and Trump adjacent meme coins that were getting all the attention. And so that uh, is the, that is a challenge. Right. And I hear that echoed across market from founders who just want some attention to be paid to what they're doing. And that's why, and then that goes back to the point that we've made throughout this show, is that that's why it's so important for firms to control their messaging and have some degree of content to share their story and again not to share their store in a way that bangs the market over the head with whatever it is that they're doing, but meets the market where they are and sort of tactfully and tastefully engage um, with the, with the topics uh, of, of the day. But that's, it's, it's challenging. Right. Um, especially in crypto where things are moving so fast and you know, the, the hot thing of the day literally can change day to day. I'm sure you're the same, same thing. I mean it's crazy. Like I think yesterday if there were 15 stories published by um, new news agency Y, 10 of them were uh, in some way related to DATs.

Speaker B: Yeah but I guess in order to really stand out you have to be super creative and being super creative, no,

Speaker A: you need to acquire a company on the NASDAQ and, and purchase ah, even a hundred million dollars worth of crypto isn't even a lot at this point. Like we're looking at billions of dollars, um, maybe not raised but at least like targets obviously targeted raise. And I mean I, I just think that that in, in a, in a way is, is I'm eye popping, um, and just totally different from the environment seven years ago where I mean I remember covering like tether supply going above 100 million for the first time and that was a huge deal. Now GameStop is uh, I mean that's how much GameStop is allocating to, to their Bitcoin treasury. Um, and then the question is of course like when will all of this come to a screeching halt? Which it will ultimately, inevitably, inevitably come. Uh, to. Um, but that's just, that's just crypto. I mean it's so, but if you're

Speaker B: a startup, you're trying to stand out, you're trying to get attention from and you're not doing A dad like, you know, what is you. I feel like you have to come up with something totally unique and totally random that really catches people's attention, which in of itself is exceptionally difficult to do. You know, if you're trying to, trying to run a company and trying to build a product and whatnot. And then you have to also be like, okay, now we have to come up with some very unique strategy that, to get all the, out of the eyeballs. Like that's uh, it's like a very, I don't know how people are supposed to do that, you know, and then

Speaker A: you have, I mean, and then things just can, can, can flip so quickly, right? You look at the market share of um, uh, a, uh, pump fun just over overnight, just evaporating. Um, so it's not just, it's not just competing for the attention, it's also competing for um, usage. And folks, pocketbooks, um, quickly change on the flip of a dime. And I think that this is the biggest challenge. I mean at the end of the day if you're not keeping up with that pace, you're going to fall behind.

Speaker B: It's not easy. All right, so you mentioned the digital asset treasury companies. You think they're going to fail in a spectacular fashion. What do you think is the primary or uh, what do you think are the primary risk, risk vectors when it comes to DATs?

Speaker A: Well, I think like, I mean the question is really like do, do they create value? Right? Um, it just seems at first glance so, you know, so they're basically turning $1 into, into three and like at some point you have to think like this, this has to come to an end. I think that all the easy money has been made, um, and people will try to innovate, try to do this with more assets. We're already going into the long tail of assets with, with well, you know, the quote unquote long tail. Um, I don't think that the vast majority of people want access to tokens beyond the top 3-5m in a way that's sustainable.

Speaker B: Um,

Speaker A: but I, I think we'll see. I, I, I don't think that um, it introduces, it, it introduces some additional risks to the market. Um, and just like with anything else with crypto, like I do wish things like stabilized and slowed down a bit. Um, but you know, at the end of the day, like these approval, some of these things are spacs, right? So the approval process is very long, um, three to four months at best. And during that period investors can't sell shares. Um, so Anything can happen over that period of time. Whilst we've had a lot of announcements over the past few weeks, what will be interesting is in three to four months how many of those, like there is risk, there is deal risk that some of these things don't get approved at all. Um, because a lot of these, uh, a lot of these crypto treasury companies, SPACs specifically have not reached final approval. So they can't raise um, equity, uh, at the moment. And their, their, their, their um, model effectively is on pause at the time being. So I think in a few months we're going to see a lot of these things kind of like wind down. Um, but I don't think it's going to be in a few months. We're going to see some spectacular like leverage blow up. But I could be, I could be wrong. I think they're all, a lot of them will just kind of die quietly in the night.

Speaker B: So to, to push back on that just to.

Speaker A: I'm not an expert on this. This is just my, yeah, my.

Speaker B: Wouldn't, uh, you. Isn't there a case to be made, um, I'm playing devil's advocate here, but isn't there a case to be made that these stats are useful in the sense of uh, investors that are used to acquiring, buying equities and just regular stock market Fidelity, their Charles Schwab, whatever those accounts, uh, they just want access to easy crypto exposure versus going on Coinbase and buying Sui or whatever. Um, and isn't there a case to be made that it's just a different set of customers that are acquiring tokens? Just as if when you first enter crypto, you buy some Bitcoin, then you're like, oh, what's Ethereum? Then you buy some Ethereum, you're like oh, what's this thing? And you kind of go down that rabbit hole. Isn't this kind of just playing the same model out in some sense within the traditional markets, but with these kind of SPAC type DAT vehicles?

Speaker A: Well, there's, there's the component M. So there's two components here. Um, the, the idea that it's sort of like a more traditional mechanism of exposure is definitely one component to it. Um, buying one of these treasury companies is a lot more straightforward for people, um, for institutional capital than it is to buy direct crypto. And then there's also a leverage component. Right. Like I think we saw recently that J.P. morgan, um, for instance will allow certain clients to borrow, uh, against their Bitcoin. But that's just Bitcoin. For the time being. Right. I don't think that banks even in the new regulatory environment have the mandate necessarily to offer leverage um, against um, or prime services against crypto. And so this solves for that. Right? Like if you have um, equity in a crypto treasury company you can borrow against that position um, in the traditional system in a way that you can't with um, uh, direct crypto holdings. So you get this element of uh, leverage that is super beneficial and makes things more capital efficient for investors. And this is also tied to the broader trend um, that I think is super interested and not talked about enough. When we had our credit crunch, our credit crisis in the wake of ftx, which is really what, what that drawdown was. It was effectively um, an over levered market that quickly unwound because you had not necessarily under collateralized loans but you had loans that were collateralized by bad collateral. Um, and so you had loans on FTT and so those loans might have been collateralized until FTT then drew down 80% or whatever. Drew down, um, and so you basically had uh, the evaporation of credit in crypto. And today we're sitting here at ah, ah. And and so that market almost has been replaced in a sense with, with these DATs from a leverage perspective. But uh, what's super interesting about that is we're sitting at 1:18 Bitcoin without sort of this incredibly frothy unsophisticated credit market. Um, and so I think as those pipes roll out and become more robust, crypto will benefit. Um, and we have much more of a floor without that propped up leverage today than we did um, in 2021 which I think is very, very bullish for the asset.

Speaker B: So, so you think dats are a, are like a symptom of a lack

Speaker A: of, I think they're a manifestation of yeah, a lack of robust um, credit

Speaker B: infrastructure because folks want to I guess be, be, be a little more degen essentially. Is that kind of the, the.

Speaker A: Yeah.

Speaker B: Interesting. Very interesting. Well what about these crypto IPOs that like these traditional companies like Kraken and Circle and whatnot that, that are launching, that are, that are also kind of um, these are regular companies, these are solid companies. Um, but Circle like for example is almost in meme stock territory. So you know, is, are the public markets a star for new narratives and

Speaker A: excitement Goes back to your point about um, this desire for crypto exposure. Um, you don't, you know, the process by which you, the process you need to go through to you know, get a bag of Sui or ton is, is much more, um, lengthy and um, um, complicated than it is to just get equity exposure. So I think the price of circle being where it is, like, you know, it's some insane multiple. The revenue is tied to the fact that companies simply just want crypto exposure and, and it's difficult for them to do that via direct, uh, crypto. And also like, there's a, there was an interesting juxtaposition for a while where, you know, Coinbase wasn't necessarily benefiting from uh, that same tailwind. And I had a colleague, a former colleague at the block, Stephen, who made the interesting point about how like, to an extent, you know, Coin, Coinbase, I mean like, to an extent the market just wants new shiny things. Like how, you know, 2017, uh, what do they call them? Dino Corn Dyno coins don't uh, benefit as much as like newly launched coins. The market just wants something. It's a mix. They want the crypto exposure, but they also want something that's new and shiny and that's how you get a circle, a uh, circle pop like that. And, and, and there's also the undercurrent of like just stable coins being so red hot. I mean everybody's, everyone's buying into that narrative. There's no there, it's almost like not, there's, there's not very many, um, contrarian voices on stablecoin at the moment. And so I think, yeah, so a mix of equity exposure, something new and shiny and just uh, the stablecoin narrative definitely.

Speaker B: I mean, unstables. It's like, I feel like the contrarian thing now is to believe that we're all going to use some unified stable, right? It's going to be like all USDC now. It's like, oh, PayPal is going to have a stable. Walmart's going to have a stable. Like, everyone's going to have stables. Like that's like kind of the, the, the new thing going back to the, the crypto products in these public markets, you know, we have, you know, BTC, ETF, we have the Ethereum ETF. We're going to have ETFs for like probably a lot of coins. Do you think that we are going to just how crypto is like always copying finance or tradfi in some capacity or like relearning the lessons of tradfi? Do you think that the public market investors are going to kind of do this, do a similar playbook that crypto investors have done for years, where it's like you buy Some Bitcoin. Then you're like, oh, what is Ethereum? And you buy some Ethereum, then you, you slowly go like, you know, kind of down the, or I guess up the, the degen scale. Is it. Do you think it's going to happen?

Speaker A: Yeah, I mean I, I think so in terms of, um, Well, I think every, every. So the question is, um, will you have this, you have this like maturation effect, right? You kind of start with like futures, you start with derivatives, then you get an etf, um, and then once you kind of have all that in place, different financial, um, services companies can start offering services around those assets and access to those assets. And yeah, I think basically every asset will follow, um, that same path of asset maturation.

Speaker B: But I guess more so in terms of price action is going to be Bitcoin goes up and then people are, then eth goes up and then xrp. And these are the ETFs is what I'm talking about. Like, are people going to follow that, that, you know, quote unquote, traditional crypto path, uh, in the public markets? In some, in some sense I think

Speaker A: that there is a, uh, blending effect that's happening. For one, the, they don't look as different as they, they once did. And at the same time, whilst crypto and equities are kind of becoming more, um, intertwined, um, you're having diversification happening within crypto where you don't necessarily see, as you did maybe a few years ago, bitcoin go up 5% and then alts go up, like sort of uh, echoing that price action by, I don't know, serving as some sort of like beta to Bitcoin. Um, you're going to have different segments, um, catch, catch sort of waves, um, whilst others don't, um, over the next, over the next few months, I think that's going to underpin, underpin this cycle.

Speaker B: All right, Frank, you have to go in two minutes. Unfortunately. Even though we could talk for hours and hours, but uh, Ray Dalio just recently said you should have a 15% allocated to gold and bitcoin. What are the ramifications of that? That's huge.

Speaker A: So I think his, I tweeted about this yesterday, like his journey, almost like I feel like he was a hater. It almost like I can bookmark, um, my own career covering crypto with these, with his evolution. And his evolution is not totally unique. Right? You saw the same evolution with Larry Fink, who in 2017, and this isn't to like hate on them, but 2017, it's every. All these Wall street types, they go through the same cycle of like all of crypto's evil and money laundering scams to okay, we buy into the, we buy into the power of the blockchain. But crypto is something else to then actually like crypto could be interesting to then crypto should, um, be a part of your portfolio too. It should be 1% to 3% to 5%. Um, uh, Rick Edelman, who is a big player wealth manager. Yeah. In the IRA space. I don't know, his number I think was like 20 or something.

Speaker B: No, 40%. He said it. 40.

Speaker A: So all of Wall street is almost like kind of operating on the same curve of adoption. Um, and I think that's super powerful. Here's the last thing I'll leave the listeners with is that movement of flows has not even begun yet. Right. Like we are only at the point where it is becoming somewhat acceptable to think about a 1 to 3% allocation to crypto. But that allocation process hasn't started yet at all. So it'll be exciting to watch, uh, that play out.

Speaker B: Amazing, Frank. Thank you. This has been incredible. Where can people learn more about yourself and gsr?

Speaker A: You can follow me, uh, uh, on Twitter or, or X rather, uh, Fintech. Frank. And then if you want to learn more about gsr.gsr.IO Amazing.

Speaker B: Thank you sir.

Speaker A: Thank you. Take care.