Episode 47: Meta and Other Tech News with Atul Prashar

On this episode, David tackles the latest in tech news and changes in the tech landscape and what that means for you. David is joined by Atul Pashar, host of the Whiskey Hue podcast. Throughout Atul's career, he's had various roles as a hedge fund analyst, music producer & now investor and entrepreneur and social philanthropist, Atul Prashar is founding partner of umbrella investment/advisory company, KMH Group, focusing on the tech in media/sports verticals as well as various entertainment projects.

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Episode Transcript

Speaker 1 (00:00):
I'm David Grosso and you're listening to Follow the Profit.
I'm David Grosso and you're listening to another episode of
Follow the Profit. This week, we have a very special guest.
He's actually a friend of mine, or at least a
virtual friend of mine. We're pandemic friends. His name's Tools,

(00:21):
who lives over in New Jersey, and he's the host
of Whiskey Hue and the partner of k MH Group,
and he's also a board member at the Digital Diversity Network.
Try to say that three times a Tool. Thanks for
joining me today. What's up? Thanks for having me? This
is great out Sonny Kelly, or we're envious of you. Yeah, well,
you know that's gonna blow a hole in my bank account,

(00:42):
but you know a lot about that living in the Northeast.
So so much to talk about today. It seems like
the news cycle is a little boring because you know,
we no longer have President Trump. But the tech news
cycle is actually crazier than ever. So let's talk about
face Book because Facebook seems to be perennial, perennially in

(01:03):
the headlines, which evidently it's now called meta. Tell me
about Facebook as of three and a half minutes ago.
Apparently it's called meta So you know, we I think
you and I have talked about this. We talked about
on our pod as well, the Whiskey Pod. Um. Look,
Facebook as we've known it for the last ten fifteen
years two thousand four and five, they've been around, So
fifteen sixty years is going to be completely different from

(01:24):
the Facebook that is going to be ten years from
now that we're going to know, right, So he's already
signaled that he wants to kind of get rid of,
not get rid of, not just be an old person's
playground on Facebook. He wants, you know, there's just he
wants to kind of play another play another arena that
he wants to play and is the metaverse. So Meta
M E. T. A. Is a perfect name for a
guy like him. We can call him what, you can

(01:45):
have a personal judgment on whatever. He's cushion gate, whatever,
he's too small to sit up really tall at the
microphone in Congress, get it. But he's a genius whatever
however you want to slice it. The man is brilliant,
um maybe evil, who knows. But metaverse isn't an entirely
it's an amazing space we're playing in it, we're looking
to invest in it. I'm looking personally and through the fund.

(02:06):
So I think it's gonna be excited. We can talk
about the metaverse as much as you want, you call it. Yeah,
so Mark Zuckerberg, which is of course who you're mentioning,
you know, kind of change the way we view the world.
I was one of the first users of Facebook back
in two thousand four. I was a visiting student at
Columbia University, and I remember all my friends were like,
you should log onto this thing. And since then, you know,

(02:26):
it's revolutionized the way we live. So whether you think
he's evil, not evil, Superman, etcetera, it seems like he's
made a name for himself for changing the trajectory of mankind.
So what is the metaverse or what is meta Facebook? Yeah,
the good known as Facebook. Let's let's tee it up.

(02:49):
So what the metaverse is, apart from meta the new Facebook,
the old whatever? Metaverse is basically, it's a it's a
digital it's digital real estate, and it has coordinates so
you can actually point like just like you do in
your Google Maps. I'm going from here to Columbia University
or whatever you put in your Google mass Boom, You're there.
It guides you along the way. This also has in
the digital real world. It's going to be part of

(03:11):
web three point oh is it has coordinates? I want
to just think of it this way. Let's say Times
square is the way it looks now. Right, we know
the two thousand one version of Times Square. We know
the eighties version of Times square is significantly different. Right,
you could have got you could guys gotten a little
we got a little crack, a little skirt, whatever you want. Right,

(03:32):
there's a lot of a lot of interesting stuff happening there.
In nineties, you know, Home Home, We tried to clean
it up a bit and it got disneyfied. ABC Disney
moved in and now it's just it's very clean. Until
the pandemic happened again. What if you could You can't
visit the eighties version anymore, can't visit of the nineties
or the sixties version. In the metaverse, you definitely can.
So they what they can do is create the current

(03:52):
version of it, mimicking it basically you so you walk
in a digital world similar to roadblocks and all those.
Metaverse has been around since two thousand three two thousand,
four um since as long as Facebook basically in in
video games, but that was very two dimensional. Now it's
three dimensional because of the advent of blockchain, so you
can actually store and you can hit coordinate. So now
just think of it this way. You go to the

(04:13):
in the visual world on your computer or mobile phone,
you go look at you kind of go and visit
your an avatar of You can go and visit times Square,
see what it's like. Now you can also then maybe
walk ten steps another coordinate you enter and then go
to the eighties version of it. So I'm looking at
this week. I think it's going to be a huge
play for brands. There's going to be the LVMH's of

(04:34):
the world who are going to try to make a stake.
They'll have their have their audience. Similar to how Glossier
was the brand that launched for millennials. I think you're
gonna have a crypto native or a blockchain native brand
that launches in the metaverse, which is sexier and which
is what the gen X folks want to play with.
That's the did I kind of sum it up? Metaverse.
It's just an alternative reality in a sense. And and

(04:55):
this in this alternative reality. If I'm not mistaken as well,
it's basically like you and buy clothes. You can buy
a virtual dog, and you could be an avatar of
the best version of yourself. You can basically identify as anything, correct,
you could be the best or worst version whatever your
whatever suit your boat, right, and you can absolutely and
think of it this way. So I always bring saying,
let's say we're in you're traveling, you, you're in Rome. Um,

(05:18):
it's going to complement what you're doing in your physical
world because you still have to access it through a
headset Oculus Facebook. We'll talk about what they acquired Occulus
two dozen, fourteen fifteen. We'll talk about in a moment,
But that's how they access right now. Right now, you
do have to access it through some device. At some point,
maybe twenty years down the road, you won't need a device,
and we'll talk that. That'll be creepy but amazing at

(05:39):
the same time. So you're you're the metaverse? Is that?
So let's say if we had visited Rome, the Colissey
and boom, I'm back in town now, I'm back in
New York, New Jersey area. Okay, I miss it. My
friends and I whoever they're sitting, and they can be
in Budapest, they can be in California, they could be
anywhere they want. Hey, let's do a meet up virtually
in there and have drinks, right, and you can get

(06:02):
sponsors to sponsor that drink and all that. There's a
lot of brand stuff that's gonna be happening. Education will
becoming this way. There'll be a lot of just friendship synergies.
But it's to complement real life. Right's augmenting reality, which
is so crazy because it seems like it's just pure
profit for these companies. Of course, this podcast is called
follow the Profits. Like a great business. I can sell

(06:23):
you a virtual bottle of wine that doesn't really have
any you know, sort of effect on your real body,
and I can charge you for it, can't I. Yeah,
And you know there might be something that's let's say
Nike drops a shoe, right, there's a shoe drop. I'm
trying to use young people's terms just to fit in.
So there's a shoe drop Thursday. You get the physical shoe.
Then with it, you get an n f T card

(06:43):
or something, and you get to kind of log in
and see it and then your your avatar in the universe,
in the metaverse gets to where that a design of
that shoe. There will be things where you design things
in the metaverse, and then you can actually have a
physical print out of it of a shoe, whatever it
is that you design there. It's gonna be fascinating, but
it's just it's an alternative reality. Can may have piggyback
and say one more thing when you since you mentioned brands,

(07:05):
this is a perfect segue. So think about authentic brands.
Is they buy old distress assets, right, so they own
not shock is still a Commodity's a hot commodity. They
own the state of you know, the digital the the
rights to Elvis, Marilyn Monroe. They just acquired Rebok from Adidas.
Adidas try to make an American play. They acquire that

(07:27):
for four billion several years ago, just sold them to
authentic brands for two billion. Why the hell would anyone
want to Rebok anywhere? No one's wearing it. But just
think about what I said earlier. Let's so you have
the time square version of the eighties version of times square.
If your avatars walking along, Rebak can now brand right,
they can have a little store like a mom and
pop type of store or in the foot locker there,
and they can have Rebok represented and they're getting revenue

(07:48):
of that. So it's it's pure profit play. All of
this is right. So so I can go, you know,
getting my DeLorean with my white rebox and my you know,
Latigue Grossher and you know, just be eighties out of
my mind in the metaverse. Then then like, you know,
then the poor guy, I can go and I shouldn't

(08:09):
say for guy. Then someone else if you're not, if
you're a Delorian, someone else can go to the kmart
which was around then get their members only jacket which
is around. Then, right, you can do all these brands now.
Brands never cease to exist because there's an opportunity for
them to be commoditize in any generation now, which is amazing.
So I can I can go back and you know,

(08:29):
buy my own Teddy Ruck spin instead of my parents
buying it for me, and host my own Ninja Turtle's
birthday party. You know, I can live in the past,
can't I absolutely? Well, that's really exciting. So I guess
it's segues into a topic that I always love talking about,
which is the you know the transformation of our world
through technology, and I think a very few people understand

(08:52):
the implications of what's going on right now and how
it's going to change our entire way of life. And
I always hear that, you know, the US is fading
into economic obscurity. But the way I see things, and
you can disagree with me, is that there's really no
country out there that's better prepared for this whole tech
revamp of our life, especially in a lot of countries

(09:12):
are really stuck in the past. I believe we're a
very forward looking society and will be the first to
latch onto things like the metaverse and to all this
type of stuff. Do you feel like we're prepared? So
I'm going to agree and disagree with you, right, So
I think, yes, we are better pared. We have what
we have the coffers of cash. Right, We're in net
debt society right now. But that that's that's the side point.

(09:34):
We never really to repay that if you don't want to. Yes,
tech play. So here's what The Industrial Revolution was very
operational and upfront cost heavy, right, so not everyone could play.
We America played and killed it. We actually owned that space.
Now with technology, it lowers the barriers to entry. It
makes it more accessible from a upfront cost perspective. So

(09:55):
I do believe so that I agree with you in
one component. Let's counter it for a second and get
back to agreeing with you so we can all be happy.
So Philippines, right, they created this game called Axie Infinity,
which is in the metaverse. You can actually go and
you have a token to enter the game, and then
you get to go and play this game. There are
people who are there, like millionaire billionaire folks, like hundred

(10:16):
millionaire type folks who are buying a lot of the
coins and they're getting there basically paying out a fee.
And during in this game, you go and collect other
coins and other assets digital assets, and you accrue real
money that's created in Philippines and now it's handing out.
Having a global play, I think something like this actually
levels a playing field a bit more where other countries Philippines,

(10:39):
there wasn't this kind of tech coming out of there
on par with It's something that Americans and maybe China
or some other countries who want to play, whether in
Europe now they are right. I think there's a slew
of talent. I'll be aware that if you just give
them access to creating money, which in tech they have
that access now is the lower bearers entry, they can
actually kill it. But America has a lot of coffers

(11:00):
of money, so we can end a lot of debt
that we can raise, that we can actually build the
rails and dictate terms for a short period time. But
I think China and a lot of European countries are
hot on the tail. That's really interesting. So they're actually both.
But of course our corporations kind of lead the efforts
for this technological transformation. It's obvious. You know, Facebook now

(11:21):
known as Meta is based right here in California. And
you know Rebok you just mentioned another American company, you know,
just offloaded by a German company and bombed by another
American company. So it seems like this is still the
capital of capital, isn't it. I agree. I agree with that.
So and you know, at the end of the day, China,
China and Japan. Japan holds more debt US death than

(11:42):
China does. But at the end of the day, that
we can just choose not to pay it repay it, right,
I mean, And that's that's horrible. That'll cause a lot
of other escalations, but there is that. But yeah, there
is we still have I think we can still dictate
terms but agree or disagree. I do think us has
a come to a place so complacency. Like in math
and science, we've kind of dropped off. We used to

(12:03):
be kind of lead the charge. That's where a lot
of other Asian counterparts are actually picking up the charge
because they knew that, Hey, they're looking up at America
say we need to catch up, and they really dial
down and try to educate their their younger population in
that space. And they've caught up now and they've actually
surpassed America in many capacities. That's scary. I do want
America to remain number one because it's just been our

(12:24):
bread and butter, and it's been great for all of us, right,
it's been a nice arena. So I think we've gotten
a bit complacent as a holistic society. But you really
only need five eight percent of the population to really
be to run the run everything right, Technically we're still
doing that well. I mean, and and if you look
at you know, uh, anyone anywhere, any elite program. My

(12:47):
husband's in a very elite program here in u c.
L A. And there's basically two Americans in this class.
So it seems like we're importing a lot of our
talent these days. Interesting, and that's that's a that's also
a margin play, right you get to charge international students
a lot more for the same program and then so
that that's a good thing too. But that's amazing there's
only two Americans. Interesting. Yeah, Well it's you know, aeronautics,

(13:08):
you know, advanced engineering, heavy math, and science. And it
seems like we imported a lot of our talent from Asia,
from Europe, from around the world. And it seems like
that's what keeps America powerful. Is this constant, you know,
never ending fountain of talent that is interested in coming here.
Can we can we play off that for a moment.
I'm gonna jump in. So used you said a brilliant statement.

(13:29):
So they came here and typically until recently, they used
to stick around you. So there was a brain gain
in America and a brain drain from other poks of
the world because there they would come here the opportunities
were here, which is why I want America to own
the rails continuously. Two they used to come here, but
now a lot of them are going back because there
are other opportunities where they're from because the resources there,
tech has enabled that. Right, So we want them to

(13:50):
be trained here and stay here because then we absorb
all the innovation. But if it's elsewhere, that's not that's
not going to help us improve unless we kind of
pick up a tangential piece of it. Right now with

(14:11):
one of the interesting things about the pandemic has been
is that developing countries, you know, you think we have inflation,
they have some serious inflation problems. And I met a
girl last night right here in Los Angeles who started
an AI company in India, and guess what she did.
She packed up her stuff and she moved here. And
even though she runs an India based business, guess where

(14:32):
she's raising all her money from. Intint wink wink. It's here.
So it seems like the whole idea of migration to America,
especially because you know, this is where the funding comes from.
And maybe our consumer basis won't be from here in
the future, right, Maybe we'll look to places like India
because they have a massive population and you know, a
lot more room to run economically than a developed country

(14:52):
like the US or Canada. But I think that we're
still going to see a lot of people wanting to
live here because the quality of life is also very
good here. So there's really life and access to capital
markets is phenomenal here, right, far superior to many many
places in the world. That's why China, when they're shutting
down on their tech place to I p O in America,
that's a hindrance to their local economies because that's shutting

(15:15):
off all the access to the interreesent horowitch Is or
the or Googles of the world. Right, they don't want that.
So I agree with you on that statement. Absolutely. Yeah,
that's been really interesting. Let's talk a little bit about that,
because it's been counterintuitive. Right. China recently, uh you know,
stopped I p o s initial public offerings on American markets,
and that's exactly what you're talking about. You have really,

(15:36):
really smart people like Jack Ma the founder of Valley Baba,
who disappeared and lost half his wealth because he said something,
you know, against the Chinese Communist Party, and there's so
many other you know, very prolific entrepreneurs in China building
great businesses, and the government paradoxically is hurting their own economy.

(15:58):
How how does this happen? I mean, I think any
other country, a place like Japan or Korea right next door,
would be like, hey, please list on the American market.
It makes our country stronger. It's an interesting dichonomy that's happening.
There's a lot of so we always kept thinking China
is the next frontier and possibly a large population still
is I and I may I'm still in defense about it,

(16:20):
but after these recent things that have been happening, literally
in the last two three months, it's odd to see
what the direction they're taking. But they want control. I
think they're looking at from it. Let's let's get the
simple thing out of here. What we're able to say
about our presidents and all and anyone empowered due to
futimutive speech. They don't want that because that's just crazy
effort to them. They don't want to it's a mess, right, No,

(16:40):
but we are allowed to say anything and everything. There's
no repercussion technically, right. Uh. There, they don't want that. Okay,
that's a simple thing out of the way. Now let's
look at so China, so they're the entire Okay, this
is gonna how can I say this without signing, so
antipe on PC and so pro American. I'm very pro American.
But we they copied our blueprint in a sense, right

(17:05):
we you know, Senior Bush pushed through and then generated
the idea because he wanted access to their markets to
sell our goods to China, and then Clinton pushed it
through in Congress and got it done. So those two
together got that done. That was mainly for us to
sell there. The part of the trader gams, we would
release a lot of the trade, you know, make it
easier to trade free, free trade between the countries. But

(17:26):
they're part of the deal was Leu's lower a lot
of the import tax and all that. But they then
started inheriting a lot of our tech and not sharing
as much of us. They stopped Google and Facebook from
playing there. We didn't even know Microsoft was still there
until like two weeks ago. LinkedIn is now being shut down, right,
I thought that everyone was gone. So I was shocked
to I'm like LinkedIn existed and they're still there. Yeah.

(17:46):
So basically they uh, they inherited a lot of our
I P without giving backs and now they're building Ali
Ali Baba is a behemoth compared to Amazon. It has
it's you know, everything in play, whereas Amazon is a
marketplace supposed a lot of other things. Ali Baba was
all that and then some right, so that a lot
of that the idea ideation was from here. Now when
they're shutting down access to our capital markets, you would

(18:09):
think that could be a great play for That could
be great for America because then maybe some of their
best talent would want to come here. Back to your point, right,
because they we can build free reign there and do that.
I almost think that we they And the funny thing
is they empowered them. They had state backed companies allowed
them to flourish like Ali Baba and then you know
in all these companies and we chatting all of these

(18:31):
and they just grew to crazy scale. But now if
you're retracting all of that and the support of it,
it's gonna be messy. I think they have other issues.
Real estate is going to implode there unless they get
around it right. So they're having a lot of things
they're having. There's a lot of things while they're playing
both sides of this fence that are going to either
take them to the next trast year. As many assumed

(18:51):
or this latest play that it could hold them back.
They have an aging population as well, right their productivity
can't keep up, which is while they allowed now I
think up to two or three children for family where
used to be one. Forever they're trying to control the population.
And now they know a couple of a couple of
decades from now they're they're there at one point three billion,
they're gonna be down to seven million, so in inarily
their productivity will fall because of that. So now they're

(19:13):
allowing more children to kind of keep pace with the
rest of the world. Yeah, I was with a bunch
of I was with a bunch of very very wealthy
investors last night here at a whiskey tasting party in
Santa Monica. You would have enjoyed it. And you know,
the number one thing that I heard last night was
that China and the US, whether they like it or not,
are starting to dcouple. This whole Chimerica relationship which defined

(19:39):
the past twenty years of economic development. You know, making
cheap stuff in China to ship to the United States
and then taking our capital and reinvesting it in China
is done. I mean, it's still there. I don't think
it's going away. You're talking about the two largest economies
in the world, but where nobody's doubling down on old
bets anymore. And the funny things, we still need each

(19:59):
other many capacities. Right, But if we decouple, then then
that means a lot of manufacturing has to move back
on shore here locally, and that means they can't sell
So what we buy a lot of I don't know
what I can how far we buy a lot of
their ship, right, we buy a lot of great pots
and a lot of not so great products, and a
lot of not so great quality products. Right, So if
they can't sell this here, they must believe that they

(20:20):
have pockets in Europe or other pockets in the world
that they can actually sell their great and crappy quality
items too. Right. And another thing that's a big part
of this is this is completely going on rails real
men as you need. So we America always used to
control shipping globally. We're trying to pull back from that.
We were the We were the shipping police, which is

(20:40):
why our goods and goods always reached us when we
needed them, and that that's that's by design, because we
put a lot of money into that, a lot of
Capple endorsed it. Now we're pulling back from that, and
guess who's sweeping right in so China. So so that
these are it's these are very tepid times that we
don't know which way the powerful ships is if they hey,
they have their own real estate and aging population shoes,
but then they're controlling the rails as far as the

(21:02):
ships shipping industry. And you know what we're doing with
the Belton Road initiatives. We know they're they're grand design there.
It's can be scary. If America is not policing all that,
then America then won't be high priority anymore. Right, So
it's let's see where that all plays out. I have
a contrarian opinion about this. So a lot of the
Belton Road initiative, which if you don't know what that is,

(21:24):
it's just China just shoving money into developing countries to
gain political access. And here's the thing. We have the
thing a little organization called the World Bank, in the
International Monetary Fund, the i m F, as well as
private banks. Right, don't you think if there were good
deals out there, a tool that these people would have
found them already. So that leads me to believe that
the deals that the Chinese are signing are stuff that

(21:46):
Western banks and Western multilateral institutions probably are not willing
to do now. In the long play, They're not going
to be profitable now, politically, I'm sure we'll grant them
a lot of access. Is this sustainable at the end
of the day, you have to make money. You can't
just you can't just feed you know, the machine and
expect good results just burning cash. I like that point.

(22:10):
I love that point. Okay, so I agree with it
all right. So here's one thing. Africa was this continent
full of natural resources that was untapped because a Western
countries didn't want to deal with it. This is you
know around we, like I said, Bush and Clinton, we
helped get them into NATO and all these other programs
in the world on the world stage to compete. They

(22:32):
got a seat there because of us, we said, because
we basically wanted China. China's not a NATO. No no, no, no, China,
I'm sorry, notization. Yeah, so w t O. So we
gave them that seat. What did they do? They parked
up in Africa because it was untapped and they were okay,
dealing with the political instability and the corruption, They're okay

(22:53):
with it as far as the local governments are concerned.
Nothing against the people. So and they said, okay, we
got to inherit that they did, they're kind of just
what we what America did in Venezuela late in them
with debt with a incredibly high interest rates. That's exactly
what they did. First. It was a win win between
African China. Now you look at Angola and all these countries,
they're laden with debt and they camp they're buried in
it and how they get it. So the Chinese influence

(23:14):
is even stronger there. So they have built this pipeline
of resources and they've skipped around India because they're there
contrarian uh messaging, and they've gone developed shipping ports in
Sri Lanka. So America's best bet to move forward is
you know, Japan, Australia, India and America are working together
and they've already established some sort of agreements to do that,

(23:34):
because there's like a better world is whatever what they're
kind of aiming for, right, And that's the problem with China.
I mean, China has been very smart with their geopolitical tentacles,
but the rest of the world is against them. So
I think it's it's hard to have a lot of
confidence in the Chinese regime when literally everyone you just

(23:56):
named India, China, you know, South Korea, Real Australia, Japan,
Western Europe, everyone. I mean, really, there's only two powers
in the world today, and you know, with North Korea
as a side show, and of course that's Russia and
China and everyone else besides maybe Iran and a few

(24:16):
other counterexamples like Cuba. You know, everyone's on the same
on the same page fundamentally, more or less. I mean,
we definitely have our big cultural differences in our spats
and our problems, but more or less everyone thinks that,
you know, and this is a dirty word these days,
neoliberal economics, you know, capitalism first policies are basically the

(24:37):
consensus these days. But think they're in. They're pulling right in.
So like we pull out of Afghanistan right just recently,
and then China walked right in. So they have access
to what do they have rare earths which you'll need
for like solar power and a lot of these other
things that are coming in the future. Future technology. They
have direct access to them at extremely low cost. It's
scary in a little bit, but yeah, I agree with

(24:59):
you if these other countries can a line the rare earths. Okay,
so I wrote it out bad about this for Yahoo Finance.
If you want to die about rare earth, so don't.
You'll school me on it. So rare earths aren't rare
at all. Basically, the way China is winning this game
is because the process of manufacturing or extracting rare earths

(25:20):
is so intensive, so unprofitable, and so enormously polluting that
a lot of people aren't willing to touch it. In fact,
for years, all the rare metals came from here in California. Uh,
we still do that, but we ship it off to
China for final processing because the stuff that is allowed
in China would make you know, basically any environmental agency

(25:40):
outside of that country shut it down. And it's also unprofitable. Right,
but it's a power thing, right if you have the
we'll call it unobtainium like we live in Avatar that
you need to power a phone. You know, it makes sense.
And this is the smart thing about China's They do
things that don't make any economic sense, but they make
political sense. I've been saying this all the time. Where

(26:00):
politics meets economics, politics always wins, right, even in this country,
but especially in China. So rare earth metals is one thing.
But there are already a lot of efforts to bring
back rare earth metal processing to western countries, including one
very ambitious one in Western Australia. So look, again, the
decoupling is taking place. But of course this takes a

(26:22):
lot of time. I looked at article up. I look
forward to reading that. That's amazing. Yeah, well, you know,
it took a lot of research. You know, I get
asked to do a lot of commentary about you know, China,
and you know, all of these issues, and they all
tend to be tethered together. And really, these wild supply
chains that we've built are coming back to haunt us

(26:43):
right now. That we can't even go to the store
and get what we need is alarming. Do you think
that's going to change? Finally make companies say, you know what,
I'm going to set up a factory in Michigan. I'm
going to set up a factory in Kansas, Like, screw
this whole just crazy game of playing chicken with you know,
shipping lanes and multiple countries, like are they fine or

(27:05):
maybe even sourcing it here in the Americas in Mexico
or in Central America and South America? Do you think
that the needle is moving on manufacturing? So yes, and
what comes with that though? Right, goods will be more
expensive because we pay our salaries and our wages here,
So there's that. There's that's one one of the main
reasons we shipped it off right well, allow that entire

(27:27):
industry to kind of leave our shores for the most part.
So if it comes back, things will be more expensive.
But then you get to control the supply chains. Like
during COVID what we ran through, Hey, we couldn't get
access to a lot of things because we didn't control
the manufacturing and the rails, the supply chain logistics of it.
So that showed us like Apple now is making chips
internally and they're not. They're not relying on solely just China.
They're building elsewhere. They I think Indian Taiwan, I believe

(27:50):
they've partnered with So yes, if we bring things back here,
then people have to get a custom for paying a
lot more for goods. So capital get, will get internal domestically,
will get redistributed, right or reallocated. Maybe you're paying a
little bit more for your house before you might pay
a little bit less because goods costs a lot more. Right,
so you have to see you an extra ten twenty

(28:10):
grand a year or ten k a year, whatever it is.
I don't know, but that's going to have some impact
on our lifestyles as well. I guess I'm befuddled by
the whole thing because there's so much money on the
table for corporations that get supply chains right. Like, if
you are able to consistently deliver a product, and let's
face it, most people don't care where it comes from,
how it was made. They care that it's on the

(28:32):
shelf or at least in your virtual shopping car, right,
and it's available and it's a good price. Right. How
so many companies get this wrong? How can? How can?
Why wouldn't they have rich supply chains where they say,
you know what East stage is cheap, We'll get some
from there, We'll have some domestic manufacturing, will go to
even lower cost markets. I mean, these are some of

(28:55):
these are trillion dollar companies. How are they getting this wrong? Well?
It was a margin play, right, so you could you
you increase your margins. So China absorbed a lot of that.
So then we just okay, let's deal with them. Let
them handle that, will handle everything, branding and everything this
side innovation and branding will handle, send it off them
to create it, and then we bring it back when
you get the distribution everything right. Now, when we've in

(29:16):
China just kept escalating and accelerating their process, then it's
now once they get it right, then it's just a
capacity thing. You just keep to keep building out in China.
So we just kept sourcing with them from them, so
then it didn't make sense to partner with other countries.
But now that we saw that there can be a
supply chain disruption, last year was a wake up call.
Accelerated tech ten years and now we're seeing logistical Supplieschins

(29:36):
need to get going out. They didn't want it to
eat into their margins. They said, okay, it's low cost margin.
China was smart to play that game, right, Let's keep
it low cost and they'll keep coming to us. But
now we know that we can't rely on them solely,
so that is going to come into play. I think
a lot of them are now starting to re shift
their focus around on shoring these and the manufacturing of
a lot of things that help economy. But part of

(29:58):
my friends as well, this is just bid, you know,
like there's so much money on the table. We knew
that eventually the supply chain would get disrupted eventually because
of something we didn't envision. It would be a pandemic, right.
We thought it was going to be a trade war
there for a second. Right, So already it's like, hint, hint, wink, wink,
this isn't working out. Well, don't you think that would
be a powerful indicator of maybe not even just just

(30:21):
maybe not worry about your quarterly report for five minutes
and think about the long term or we just stuck
in the whole perennial short termism in corporated. That's the problem.
So I'm and you know, I invest in the public
and private market, so I'm a big fan of equity markets.
But that is a big problem. It's about reporting quarterly
and returning money to the executive at the top and

(30:42):
less the shareholders per se. Well, you have to keep
shareholders happy. But that's what it comes down to. Let's
it's a short term vision, which is what China is doing,
a long term vision as a contrarian point right there,
looking five ten years, twenty years down the road, maybe
a hundred years down the road. And I think so
I've spoken to some folks who are economists, Nina and
there look at his Hey, we lost the last hundred

(31:02):
of years, but for five thousand years we kind of
ran the show, right in their opinion. So that's and
and so they're thinking, we lost the last hundred, Well
let's get it back, and this is our way to
control everything. So yeah, I agree, get start having things
built here again. They will spurn pockets of our economy.
But let's see, there might be costs and other things
in as well. It's just then the person who figures

(31:23):
that out is the next trillionaire. And I think that
person is Elon Musk because his car company, Tesla, you know,
went from oh great it's electric too, now like, oh
you have cars, that's great, Like I can go to
the dealership and buy a car because these days. I
just did a video today there's there's five year old
Kia's with eighty thousand miles going for more than ten grands.

(31:43):
I mean the car my car. I have a four
that I bought last year forty four thousand dollars. It's
worth more than that even after driving it around for
a year, and just you know, with all the knicks
from Valet parking and from my terrible pair a low parking.
So to me, it just signals that anyone who could

(32:04):
just deliver a consistent product at a reasonable price, just
like it's always been, stands to, you know, rule the
world right now? I agree, I agree, but then it's
ruling which world right. So if you're if you're focusing
your manufacturing here, then you're catering to the domestic audience.
You can maybe export it, but then they can't. What
if they can't rely on you, if you're exporting to
Angola or Germany or somewhere, what if you If everyone

(32:27):
takes that vision, then that's an interesting conversation as well.
But I agree we need to bring a lot of
that man manufacturing back. There are other caveats with that though,
right as we discussed, as far as the margins will
get hit. But then and then if you're paying more
to get good, you're gonna pay less. All the work
assumption economy in America and Western countries are all consumption economies,

(32:47):
so you want them spending where our economy is designed
for us to spend consistently for it to keep running.
So let's see, let's see how how it plays out.
But if they a lot of times, technology has come
such a long way, Like even in the past year,
it's come so much further. You know, the studio that
I'm sitting in, the cost of just all this equipment

(33:10):
is come crashing down. And even if we did on shore,
those big you know, the Detroit of the ninet sixties
is never going to come back. Right, There's a lot
of this is going to be mechanized. Can't these big
multinational companies figure out how to make products cheap? And
if it's not in the US, maybe in Mexico. You know,
there's it's Asia. Seems like they cornered the market. And

(33:34):
I'm sure they'll always play a role in you know,
getting our wares. But maybe you know, have you ever
heard there's power and diversity and nature, and you know,
like you can't just have You're hoping that some some
factory in Guadong is able to get the crap on
the boat and then it doesn't get stuck in the
port of l A. And then oops, there's not enough trucks.
Like that's that sounds incredibly stressful and silly. And just

(33:56):
to further cement your point and why we need to
do it here, look at the look you're you're dealing
with it in l A. The shipping issue, right, the
container issue. There's a build up because things weren't getting
created in time manufactured. Then then they're running backs. They're
actually shipping containers back to Asia empty because it's it's
more equitable for them, the marginal uppressive. If they actually

(34:17):
if they unload those things and get them onto the
trucks and distribute across America. Here, then they reload them
with soybeans, which America is a huge exporter of, let's say,
and get those back to the country. They have to
go and drop those off in three four locations versus
going directly to one market to pull more goods to
sell back to Americans. Right, So there there's a ton
of shipping costs have gone through the roof because of
the demand and supply has been scarce. And this is

(34:39):
a this is a kind of a problem here. So
if we wouldn't have to deal with that. Right now,
you're literally to have empty shipping containers go across the
ocean just to get more goods to sell us because
we're there in such demand, right, So that that's incredible,
it's it's incredible furthering your point that we need to
control production here. So let's talk about cash, and this

(35:08):
is something you and I talk about all the time.
You know that the conception of money is changing, right,
We kind of figured out it was all bs, right
and it's uh, you know, now there's crypto, Now there's
non government ways to save money. You know, it seems
like that the earth has been flattened for saving money
and through different instruments. At the same time, it seems

(35:31):
like the value of the world's most powerful currency, the
US dollars, seems to go down every day. Everything's expensive,
you know, everything's through the roof. Where do you think
the future is of money? Is it crypto? Is it
something else? And how is our relationship with money changing?
I do think there is a coming, A world exists,

(35:53):
there's some hybrid combination of it. So I think we
will go to digital currency. Just keep that park that
right now, it's who'se YouTube if inflations have literally we're
living in realized five six percent inflation right now. You
can keep it in the bank, you're getting point zero
zero one percent as you're losing money technically year over year.
So invested now. So crypto on the other side, do

(36:16):
we know of Bitcoin, Ethereum all them? I'm I'm a
heavy believer in some capacity of crypto. The projects are
absolute garbage. They're gonna fail, but a couple of them
will resolve and be the be the currency of the
world potentially rights which is scary for the U. S. Dollar.
We want every majority of the world is pegged to
the US dollar, so they have to keep our value up.

(36:38):
If you have crypto, which is completely un native to
any country, right, it's a completely deregulated there's limited use
for the U. S. Dollars, so you don't have to
peg your local currencies against the US dollar more you
can be pegged against something else. Bitcoin is knowing as
the digital goal right right now, because it's the oldest
guy in the playground, but it's also only you know,

(36:59):
it's two, right, it's not that old, but it's kind
of the premier. Ethereum the second largest by market cap
is two fifteen sixteen, so it's just five six years old. Yes,
there's But I think digital currency, how easy is it?
How often do you pay with real cash anywhere? Right now? Never? Yeah? Right?
I mean you're you're at most if you do, think

(37:20):
you're doing Apple pay, which is pegged your credit lines
of credit which are then come out of your bank account,
so it's pegged to some dollar at some point. I
like the whole digital currency play. Who's gonna be around
ten years from now? Who knows. I think people are trying.
Investors are piling in. So institutional investors just look at
it this way. Whether you believe in bitcoin or dodgecoin, dodgecoin,

(37:41):
you should seek help. If you believe in that as
the currency of the future, you can make money in it.
You might make a million, two million dollars in it.
But I don't think it's the currency that will be
around ten years from now. I'm just gonna put that
out there. Bitcoin might might not be, but a lot
of institutional investor if you look at a lot of funds,
they're pouring money into big coin and ethereum, but more
so Bitcoin because they believe in it as a stake.

(38:04):
So that inherently creates a floor for the value because
people won't just sell out of it so easily as
they would sell out of let's say a she Bu
or whatever she but you know, whatever the hell does
skyrocket yesterday. There's always a new coin every week, So
look at it this way. So you know, perfect example,
what you just said, let's piggyback off that so big
there are crypto it's part, it's a feature, not a

(38:26):
bug for these to be extremely volatile, right, because we're
still settling on what the true the true value of
them is. So but in every rise, all these alt
coins rise with Bitcoin and ethereum, but every crash, Bitcoin
and ethereum tend to rise again. But there are new
alt coins. So that should give you some understanding as
to which one that globally is being seen is kind

(38:47):
of more stable. It looks like so far bitcoin and ethereum,
and then there are new all coins. Where are the
crazy margins you could potentially make are in the alt
coins because they're such shitty place right you can dump
if you if you put a hundreds d K or
a million one of these, it could be worth twenty,
it could be ten extra hundred x of that value
three days later and it's gonna crash. Just get out

(39:08):
in time. But timing the markets. As an investor, you
shouldn't try to do that. But if you want to
play a little bit, you figure out what's safe for you.
I'm not a financial advice so I have an alternative
view on this as well. So I think that digital
currency is the future. But the government doesn't like competition.
So I think that the digital dollar, the digital euro,

(39:30):
the digital you want will really come to be the
cryptocurrency of the future. I really don't think that the
government is going to be like, hey, this is fine.
I think we are overdue for reckoning with crypto, specifically
in regulation. And you can't blame the government in a
certain way, you know, especially with with all these all
coins that are basically, you know, pump and dump schemes.

(39:51):
They have to wade into the conversation. These are financial instruments.
Hopefully the government doesn't regulate it with too much of
a heavy hand, because that's a problem as well. But
I think a lot of as my brother would say,
that's already been priced in, but I don't think it has.
I don't think what has been pricing what has been
pricing in his opinion, you know, the government regulating cryptocurrency,

(40:13):
I don't, okay, uh maybe so here. So when China
shut down operations, they were the largest bitcoin miners by
far right, and then they shut down just recently this year.
Who inherited I mean, well it went on New York,
New York City and Austin, uh specifically those two regions.
These two cities inherited a lot of the new mining.

(40:34):
So then that feeds into the local economies you want.
It's a draw and energy, but that you know, that's it.
But then you can have low WiFi band if you
can set up on a farm and or in the woods,
and as long as you have WiFi, you can continue
running these things. Right, So it's it's a detriment to
the government that wants to overregulate because then they'll just
go to another shore and then n l feed into

(40:54):
their local economy. Right, So you kind of want to
have them. But then I get why they want to regulate.
If you want to play devils, I get it because
they want to still be were the premier currency and
everyone has to kind of at the end of the
day kind of do as we say, right, now, and
that's what you want. So if you're saying there's just
a digital version of everything, I believe that's going to happen.
But then we still need for America to kind of

(41:15):
not to remain the premier priority and the competitiveness and
not gett complacent. We still need everything to be pegged
to the US digital dollar so we remain relevant. And
it's just a decentralized currency is just philosophically so appealing
on many levels, but it's also scary because in eras

(41:36):
of inflation or deflation, there are very few instruments that
can control these currencies. I mean, I understand that, you know,
we're supposed to have a free market, but sometimes you
need government intervention to put the horse back in the barn.
But you know, it's just you're you're completely on point
right the because the scary thing. Let's say, if you
lose four k five k in in for eld trade,

(42:01):
you make a call. It's f D I c ensured, right,
something will get figured out if there was some hacking
or whatever that if something, If you lose that much
in crypto, who do you call? There's no one to call.
Is deregulated it's gone, right, so that that kind of
proves your point, is why you like, that's happened several
and cybercriminals and just empty out. You know, your your

(42:24):
account and you lose your crypto forever, or if you
lose your password, you're done. Are you in? Are you in?
Are you playing at all? In crypto? So I am
the weirdest guy on earth. I am pro crypto. I
own no crypto, so that I get called the lot
to quote for quotes, I get interviewed a lot about
crypto because I think I'm the only one in the
world right, because most of the time, when you're pro crypto,
you're all in. I am not a believer, but I

(42:48):
am not a crypto atheist either, So I am somewhere
in between, which seems to be a rarity in this world. Okay,
I fought it in two thousand seventeen, and I have
friends that just make fun of me. Now I said,
what the hell are you talking about? Right? And then
now I'm kind of on board, and I know I
do feel some of them are majority them will fall
off of Some of these projects are pretty impressive. Oh,
I think it's the wave of the future. I'm incredibly

(43:09):
bullish on it. It's just I'm not quite there in
terms of, you know, putting in my own savings, and
maybe I'll come to regret it, maybe I won't. I
guess we'll all see about that. So, speaking of investment,
before this is over, I want to talk about that
because you you are someone who looks at startups, you know,
and I think it's a poorly kept secret right now
that everything is overvalued. Right, so big money people their

(43:32):
play is to invest in startups because that's how really
wealth is created in this country these days. You find
someone smart, they have a good idea, they're solving a problem,
right that big companies can't even play in that sandbox
anymore because they're too big and they resemble governments these days.
So really, and then the big guys want to buy
startups as well, because you know, that's how they get innovation,

(43:54):
that's how they grow their market. So what do you
look for in a startup when you when you want
to us? So, so we're our focus is tech plays
in entertainment, so broadly playing broad broad stroke is in
then the singularly it would be sports and media content
type of the sports plays. So we're we're looking. We're

(44:15):
doing some things with the NBA right now. So tech
plays that enable athletes to perform better, let's just keep
it in that rain without me getting too specific. Or
other media content plays that makes sense, apps that deliver
certain types of content, or or development of apps. I've
wanted to dial into that more because I think there's
a huge a audience and be capital capital capturing moment

(44:38):
right now where every streaming advice devices overpaying for content
right now because they need to get eyeballs on their
platforms and retain them. So that's happening, and I think
we have a three year window before we realize, oh ship,
we don't need this must content right Uh some people
realize that, for the majority of the people have not.
Um we look for when I'm investing in something, So
we're a We're gonna look in our lane, our focus.

(44:59):
It's not me to benefit you by anyone pitching healthcare
to me, because I know I worked in it when
I was a techie, but I'm not that guy. I
don't invest in it a biotech. It's not my space,
although I believe there's phenomenal things happening there. So get
your audience, your your venture person, your venture investor. Right,
pitch to the right person. We look for idea, idea, yes,

(45:21):
in the product or service you're offering, but more so
the person, the founder, because we need to know that
you are in it. It's a business marriage, right, it's
five to seven years of us together. I've had relationship
where we invest in companies and are it outlasts their
real marriage often and it's just it's an unfortunate thing
because six of them end up that way in America.

(45:41):
But so we are going to be working and we
don't have to be dear friends. We just have to
be friendly and we know that we can push each
other to get the best outcome for your product or service.
So hey, that's we look for the are you willing
to pivot with an idea? As a founder, I want
to say I want to invest in a founder that
I have this thing. I call it your patent is
because it's it's dumb though it's arbitrary. I call it

(46:02):
the bullpen or the bullpit battle. If you're a founder
have a new product of service, I drop you into
a bullpit and there's a marketer, a financer, accountant, a
branding person, whatever, they've never heard of you, but you say,
and the only way to get out of that room
is you convince them that your product or solution or
service is the only way that something can be solved,
and you're the right person to do it. I'm on board.

(46:23):
Most people don't have that kind of tenacity, right. It's
hard to find that. And often when we invest in
a company, then we invest because we have kind of
well quote unquote extratise in that arena, uh you know,
and then so our rolodex is also in that arena.
We can help you with distribution and scaling. The money
part is the smallest portion of it, in my opinion,
so we want the idea will pivot over time. Often

(46:46):
we see, Okay, you're thinking x X and are that's
what you do, but it's actually x X and D
Y that you should actually follow that path. Then I'll
get you more scale, an opportunity to capture margins. Answer question, Yeah,
does I interview entrepreneurs for a living? I guess the
only trepidation behind your model that I have. It sounds
incredibly intelligent, and ultimately, we invest in people and their

(47:08):
ideas and it's always a person who comes with that
I guess I find I've interviewed, you know, everyone from
Mark Cuban down to someone who doesn't even have a
business plan, and I guess sometimes people don't present well.
And I use this, you know when I hire people
that they don't have that ability to think quick on
their feet in that bullpen that you were talking about.
But that doesn't mean they're bad entrepreneurs. I feel like

(47:30):
we overvalue the pitch and overvalue like clear presentation skills
fair and you don't want to just rely on the
pitch of the presentation. You want to rely on that person.
Can they think I want to throw topics at you
and can you figure out how to resolve them? And
then we can kind of apply that to the market
trajectory and see if that will work. So I'm I

(47:50):
agree with you. It's not just resolving on how they pitch.
They might get nervous, they may not say the right things.
It's way beyond that. It's like, how do you think
what's your thought process around this channel? Lengch because we're
gonna hit a lot of challenges and we're gonna lose
some money. Probably eight D two eighty five percent of
startups fail and I'm being conservative with that number. I think, yeah,
that's right. I think it's more. Yeah, I think it

(48:13):
might be ninety, right, And and I look at the
failures like, let's say, if you could have gotten a
job making two k year for five years as a
young person, you would have made a million dollars. But
if you get into this other lot of startup instead
and you get up to five hunder k, and that
that to me is a fail Is that a wrong
way of looking at it? But you could have just
gone and done something else and then invested that into
public markets and done better. Right, So I you know,

(48:34):
it's unless you're gonna change the world type of thing,
so to safeguard, to say, and we we invest knowing
that one or two couples every VC invest. Let's say,
if you're a fifty million fun like we are, you're
you're gonna invest in twenty companies, and I can walk
you through the quick metrics of it, if you please,
one or two of those is going to return the
entirety of the fund. You're gonna lose on the others,

(48:55):
and one or two companies going to return all the
capital that your LPs, and you too, make sure you
can supersize at McDonald's. I don't eat that ship, but
you can. You know you can. Uh, I'm sorry if
you have a brand endorsement deal with them, but uh,
one or two companies are going to return the entirety
of capital that you if you return to all your
your limited partners. You want me a week walk you

(49:16):
through a quick fifty million dollar model, and I can
do it. So here's here's the you're fifty million. That means,
it doesn't mean you're fifty million to invest right away.
So every venture group last ten years. Let's say so
if you take a two percent ADMIN fee and I
say that's to pay for a rent, legal transactions, all
all all those kind of things take away, that's two
percent per year, you're down ten millions. You're forty million

(49:37):
left to be investable. Right of that forty million, what
we'll do is we'll take twenty million and park it
for year three four twenty million. We go out and
play right now day one. So we go and invest
at first twenty million, and we're gonna put it in
a let's say a third of those companies that we investment,
we're gonna lose money on not gonna go anywhere a
third will break even that's a loss in my opinion.
One third we'll see, Okay, there's potential here, let's dial down.

(49:57):
So then three or four years down the road, we
take that second twenty million tronje and apply it to
that one third that we think is going to scale
and work. And that's kind of how a fund works.
And with that, so if you want to a successful
venture group, you want to get two and a half
three times the size of the initial funds, So you
want to get to like a hundred mill to return,
and you're basing it on just like a you know,

(50:18):
one third of the companies that kind of worked early
on in a sense, if that kind of makes sense
in a nutshell, that's very generalized terms. Yeah, I don't
think people understand how many of them fail and then
like how there's there's like different different levels what you
were saying, because the second third like kind of muddles
along and then you kind of have to cut them
off and really invest in the strong. Yeah. Absolutely, So

(50:40):
what do you what do you think? If we're out
of time here, but I want to know if if
you if you have an idea and an angel investor
comes and it's like, I'm willing to throw money at you.
What do you what is the first rule of thumb
that you would impart on our audience. That's good one.
Make sure it's a great idea and it's solve something

(51:01):
a for you. It's solving a problem we actually have
in the market that needs to be solved and you're
the right person to execute. Yeah, that's it, man. So
it all stands because it seems like every time you
get into venture capital and the way they invest in
terms and caps and pro rata and there's all this
like language that has been invented around this space and

(51:23):
it's it's kind of hard to follow for a lot
of people. Sure, sure, yeah, And you think about it
this way. There's something that needs to be in the market,
and there's a there's a there's a huge challenge or
hurdle that you're facing. You know a ton of people
are facing. Solve that problem and find out how to
make margins on it. That's it. That's really it. At
the end of day, it's easier said than done. I agree,
but that's it. You know what's really funny, and I'll

(51:45):
end on this. I met this guy many years ago her.
He's a hair magnate. He runs one of the most
famous hair brands in America. He's the founder of Cheat.
I'm sure your wife knows what that is, right. And
he gave me the best advice that anyone's ever given me.
He's this, you know, just high energy Palestinian guy who
came and just made it here. And he told me, David,
life is not complicated. And every time I interview people

(52:08):
like you a tool, I remember that life is not complicated.
I have a good idea. Can you make money? Okay,
that's a good investment. Are you able to communicate why
it's a good investment? Perfect? Love it? That's it? That's it. Well,
where do we follow you? So this is the chance
for you. You you're also the host with your with
your friends. You guys are just way cooler than me

(52:30):
on Whiskey Hue. I've been a guest on there. You'll
come back against we do that, I do, we do
the podcast. I'm launching a couple other ones. Um. I'm
actually going to be teaching in a second year level
NBA how to invest financing new media ventures starting afford them.
I'm trying to shop that class around to to Columbia
and print and I've been talking to them. That's one
thing I'm doing and I'll be I'm releasing a ton

(52:50):
of content, a fuel, prossure dot com, a t U
l Chard dot com, p R, A s h R,
a lot of that, and all the events and all
the things that we do. Step from there. We have
start off showcases. Is that a pretty high profile Attend
one of those and get involved. We do a lot
of things around there, So just look me up. Well cool, Well,
thank you as always, and I'll be following you as
I always do. Thanks so much, David, You're awesome. So

(53:21):
thanks to all of you for joining me as we
all followed the profit a really spirited conversation with a
lot of really important stuff that you need to know
to understand the economy around you. I'd like to thank
a Tool. He's a busy man, so you know, thanks
for giving us so much time, and of course my
fabulous team of producers Rob Scott, Cheyenne and so many
more that make this podcast a reality. I'd also like

(53:43):
to thank our executive producers New ging Rich and Debbie Meyers.
Thanks for supporting us as we try to educate young
people and the wider audience about how to understand the
world around them. I'm your host, David Grasso. If you
haven't notice by now, if you're enjoying the show, please
give us five ours and leave us a review so
we can understand what we can do better in future shows.

(54:05):
Follow The Profit is a production of gingwig S and
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