Jeff Booth: Deflation, Bitcoin and the Price of Tomorrow

Mark Bidwell 0:39
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Mark Bidwell 2:39
My guest this week is a good friend of mine, Jeff Booth, who’s been at the forefront of technological change for over 20 years. He founded a company called BuildDirect based in Vancouver, an E-commerce platform that was well on its way to being a unicorn before he dramatically and suddenly left. Because, as he says it, his integrity was not for sale. Now, when I first heard this story, I could relate to the emotional toll this must have taken on him, having been through something very similar, albeit on a far smaller scale. But I was also struck by how quickly he bounced back, and the impact that he has had since then, be it with companies he founded, invested in or advised. Now, Jeff and I talk about the arc of his career, his book, “The Price of Tomorrow,” crypto and blockchain. Then we drop from macro into micro-topics in terms of how he’s spending his time. So I hope you enjoy this conversation with Jeff Booth.

Mark Bidwell 3:46
So Jeff, great to see you again. I think the last time we saw each other in person was two and a half years ago in Vancouver, when I was just coming off the board of TeraMera which you were chairman on, I think that’s about right, isn’t it?

Jeff Booth 3:59
Yeah, I think that’s about right, just kind of the same time that COVID was all coming up.

Mark Bidwell 4:03
Yes, it was, exactly. I think it was a little bit before that. But anyway, I remember spending a couple of great days at your house just outside Vancouver. And I see you’re sitting there, I recognise the guitars in the background. But yeah, it’s wonderful. We knew each other, or we got to know each other when you took over on the board of Terramera and then Chairman of the Board of Terramaera, and we had a number of conversations where you were talking about your book, which we’re going to talk about in a minute. But let’s start, if you’d like, a little bit about your background, how did you get into business? What was it about your upbringing that pointed you in the direction of building a career in tech?

Jeff Booth 4:42
One never knows. If you asked me where I would be today, based on what I thought I would do when I started off, I would never know. It wasn’t a straight line at all. It was a series of a whole bunch of learnings on the way to get here. Essentially, I wanted to hack school. I dropped out of university because it felt too slow, and I felt like I could move faster and learn by myself. Now, that threw me in the deep end in business, and first in real estate than a real estate company, and then a building company and a whole bunch of technology companies. But it was that leap of faith, to try to learn faster to hack my way through that, that created a career that created a whole bunch of success.

Mark Bidwell 5:22
What were you studying at university that you chose to bail out?

Jeff Booth 5:25
I chose general arts in high school, I was in an enriched class. It wasn’t a capability thing in school, I just didn’t know what I wanted to do. I felt so slow. I felt like I was killing time trying to figure out what I wanted to do, when I just wanted to go and learn the world.

Mark Bidwell 5:41
So you went into real estate to start with, right?

Jeff Booth 5:43
Yeah, I went into real estate to start with, and started at 100% place in real estate at 20 years old. And so that’s really young to go into real estate. At first I did terrible, you don’t know what you’re doing. But being in the deep end and having to figure it out, you learn really fast. And so if you care about people, and you’re a really hard worker, and you’ll learn from your mistakes, you can figure almost anything out. And so I did exceptional in that, and pretty quickly ended up co-owning a real estate company after that. That was an abysmal failure here, then started a building company and then started a technology company for building products, and a whole bunch of other technology companies.

Mark Bidwell 6:26
And so that got you into BuildDirect, which you found in, I can’t quite remember, it was like mid-90s…

Jeff Booth 6:33
In 1999.

Mark Bidwell 6:34
1999. Was it a tech company before the dotcom boom or not?

Jeff Booth 6:39
Yeah, that tech company, if you go back to that time, everybody’s talking about the internet would change the world. And you had a huge boom in technology, stocks, and then call it a dark, dark winter of 2000, modern fallout and everything, Nasdaq fell by more than half. You couldn’t raise money at all in technology. Try to be a technology company building and be pre-revenue through that time, you learn a lot about yourself and markets.

Mark Bidwell 7:06
Yeah. And you came out of it on the other side. Did you do a bit of a pivot or you’ve turned into a more of a platform company?

Jeff Booth 7:12
In that company I was for 20 years. It was quite a series of different companies; so companies where you’re trying to design product market fit, you have a thesis for what the world will look like. You build on that thesis. Most people in the beginning think you’re crazy. Your small team is up against monopolies and everything else. And then if you’re right, and you deliver a whole bunch of value to other people, your company starts to gain tons of traction. And so after two and a bit years of just fighting or small team fighting, we’re against that, no capital was going through, we turned it on, everybody said it wouldn’t work. It went from $20,000 in the first month in January 2000 to a million dollars by the end of the first year, 14 million the next year, 28 million the next year. So it was just crazy growth, and it kept growing at that rate until 2008, where the credit collapse essentially killed the company.

Mark Bidwell 8:10
Because it was heavily associated with real estate, of course, right?

Jeff Booth 8:13
Yeah, building products and everything else, but it was a credit collapse that essentially stopped people from being able to pay in advance for products, okay. And we didn’t offer credit, since nobody could pay, because all the capital went out of the market. And so our business went from a run rate of high 50 million to a run rate of 18 million overnight. You imagine what that does to a cap table and what that does to the balance sheet and everything else. When we weren’t raising money in front of that, because we didn’t need to, because we had all come from customers’ money and on a float. That was a huge lesson in what happens to entrepreneurs going through that stage, when everybody tells them that they’re crazy, and then they’re right. And I looked at that, and I said, that’s our fault, because we should have brought in different team to be able to question this earlier and everything else. It’s easy to blame a market condition, like in 2008 it was a terrible market condition. But it was really our fault because we didn’t see what was happening. Now everybody’s telling you you’re right all the time.

Mark Bidwell 9:19
And you were CEO at this point, right?

Jeff Booth 9:22
I was the CEO at that time. And so at that time, to save the company, we sold our family home, and we had three kids under five. So we were all in and we just barely saved that company, created a different company that went from about $18 million a year, in the next four years went to over $120 million a year for a different model. It was a massive success again, and then I realized that that business couldn’t keep scaling. It was too reliant on advertising on Google. We had to create a platform company, so we tried to make a transition from what it was, just something that looked way more like Amazon without the balance sheet to be able to do that. So the company is still alive today, but I left the company.

Mark Bidwell 10:05
Yeah, I think we talked, I remember going back to Vancouver, you were telling you about the story, which we won’t get into here. One of the things that struck me about that story that led up to you leaving was, things go wrong, and there’s an opportunity, and in those moments, how you respond to those things always define you as a person.

Jeff Booth 10:22
In that case, I came to a pretty clear conclusion that my integrity isn’t for sale for any price. And looking back, even though that time was tremendously hard as a family, we’d lost everything. The house that we had, everything that was good was gone. If I look at what happened since that, because of just staying principled, it’s staggering how fast everything came back.

Mark Bidwell 10:47
If I’m correct, you took the model, or part of the model and duplicated it in the Far East with pretty spectacular results as an advisor, right? Is that one element of that?

Jeff Booth 10:57
Yeah, so I’m a co-founder of a company called NocNoc in Southeast Asia, that is, I think it has doubled that BuildDirect ever was and growing faster, and everything else. That’s just one of the things I’m involved in.

Mark Bidwell 11:12
Okay, super. And then another one, of course, is Terramera, which is the Ag-tech company that we are on the board of. Let’s come back to the rest of the portfolio later on. Because the next thing I’d love to talk about is the book, “The Price of Tomorrow,” which I remember you said to me, before I started moving house, and we finally managed to get to do this, but maybe you can just talk about who the book is for and what’s the central thesis?

Jeff Booth 11:34
The book is for all of us, because for my kids, your kids. The central thesis is, this is a book that I didn’t want to write. It was something I felt compelled to write, because everything I was doing was essentially using technology to create more value for other people. When you do that, and you’re right, prices come down and people celebrate the value you’re creating by prices coming down, then getting more for less. So your iPhone is a really good example. The reason why you use the iPhone or a smartphone is because everything on it is effectively free. And that’s replaced a whole bunch of industries. We don’t buy cameras anymore, yet we get an abundance of photos. Music looks totally different today, so things turn into information, information becomes free, or trends towards free. So everywhere I was looking, everywhere where I was creating value, in all businesses, pricing came down a lot. Labor came down too overall, but because you automate to bring more value. And so that was happening everywhere, in every single company, and I could project what was happening with artificial intelligence, and I was on all these boards and seeing right at the front edge of what was coming on the technology, and the rate of technology moving. And I could not understand, for 10 years I could not understand why it was that prices all over the world were moving up when they should be coming down. And so, as I investigated that, I got more and more mad honestly. I got more and more mad because I looked over the future that my kids would grow up in and think, oh, my, this is going to turn into a very dystopian world under current conditions, realizing that we’ve always lived in a monetary world where prices are designed to go up through inflation. And technology is changing those rules. And so the collision of those two forces, one trying to essentially save our time have prices fall, yet the one we’re in, needs prices to go up to remain stable, had some pretty disastrous consequences on the world. And so we can go into some of those, but that was the main thesis that drove me to do an investigation. I realized that what should be happening at a faster and faster rate, essentially, our time being saved, and us needing to work less, because prices were falling due to do that? Yeah, it was exactly the opposite because of the monetary system, and then when I looked at the data, because if you believe that thesis, if you buy into that thesis and technology is moving faster exponentially, then there must be a smoking gun on the other side of the ledger trying to prevent. And so when I looked at global debt, overall global debt at the time when I wrote the book, was $250 trillion to run an $80 trillion global economy. And that might think, okay, could you grow out of that? Unlikely, especially when growth today is actually negative GDP, because productivity games, like your camera and all the photos reduce it. So unlikely that you could grow out of it. But then when I further investigated that, I realized $185 trillion of the debt came in the last 20 years to grow economyis by $46 trillion. So you had an ever and ever amount of growing debt to try to push prices up, to try to retain stability of a system that was going to fail spectacularly, because technology provided a better way. So I explored that whole path in the book and what would happen predictably around the world as a result of that fight? And what we’re seeing play out is exactly that happening.

Mark Bidwell 15:33
So let’s get into that in a minute. But maybe it’d be quite helpful, because most of the businesses that you’re exposed to are tech businesses, right? And so you are exposed to Moore’s law in action, you’re exposed to machine learning, you’re exposed to a number of these big trends, juggernaut new technologies, which are accelerating, their impact is accelerating and that deployment is accelerating. And we’ll get to this, so maybe we can just talk a little bit about the exponential effects going on here. One of the big things that you talked about is that people have real difficulty understanding or getting their mind around exponential effects, right? It’s an unnatural force of nature, in the same way as compounding is an unnatural force of nature, right?

Jeff Booth 16:14
Yeah. And we don’t change our minds very fast. Our minds are fixed. We don’t question our beliefs very often. So if we don’t leave inflation as required for a productive economy, we’ll build a whole bunch on top of that foundation of belief, which is really just saying, I believe that there should be a fraud in the base layer of money. I believe that there should be a theft in the base layer of money that transfers wealth from the middle class and poor to the rich, as a result.

Mark Bidwell 16:45
And that has to do with printing money, that’s part of it?

Jeff Booth 16:49
Yeah, exactly. Because you don’t vote to have your money debased. Nobody votes to have their money lose value every year. And so it shouldn’t matter at what rate, 2%, 5%, 10%. The money is stolen from you and given to somebody else, and while it’s given to somebody else if you own assets, those assets move up in price. And your wages or savings, they move down, it’s the opposite side of the coin. But nobody questions that because it’s built into your mental model. And then on top of that mental model, you build everything else. So you just believe the mental model, and it’s really hard to change. Because a change would require a whole bunch of beliefs that you have on top of that, that would also change. Now technology is imposing a different set of not beliefs, but truths. Technology is moving exponentially, and I use it as an example, and I’ve used this example all over the world, I just spoke at the Austrian Central Bank, same example. Bifold a piece of paper, and I folded piece of paper on itself 50 times. I fold it about four or five times and I asked the people how thick with this piece of paper be on 50 folds, and piece of paper on four or five folds is about this thick. And on 50 folds, it reaches the sun, if it could fold 50 times. 99.99999% of the people, tens of thousands, maybe hundreds of thousands of people answer, 2 inches. It’s a very different calculation than the sun. Now that people on your podcast have heard that trick, they’ll think oh, now I know, so I know it everywhere. And the reason I tell that example is not to say it’s a parlor trick. It’s the reason I tell that example is how easily we are fooled from exponential patterns. And the same thing applies to technology. If you take any technology on that pattern, and it’s doubling it 18 months to two years at that rate of growth, then, in the early folds, there will be an exuberation of people saying, wow, this is going to change the world. And it folds and it does nothing for that hype cycle. And in the latter folds, it’ll be exactly the opposite.

Mark Bidwell 19:05
It’s staggering what will happen, exactly. There was a great example, I remember, when the first self-driving competition in the Nevada desert happened in 2007. All these journalists were lined up looking at all these guys with their self-driving vehicles. And they were so excited. And the winner went for miles and then exploded. And all the journalists said, this is never going to happen, maybe my grandkids. They went home and didn’t write about it again. And suddenly, 10 years later, you’ve got Tesla and everything. It’s that same thing that you overestimate what you can achieve in the short term and you underestimate what’s possible in the long term.

Jeff Booth 19:42
Do the same thing, have people on your podcast go and type in Boston Robotics in 2010, so ten years ago, and look at what it looked like. And now look at it looks like doing backflips and everything else. And so if you couldn’t predict where it’d be now 10 years ago, and it’s virtually impossible to, and now looking, you’ll have a mental state of these robot dogs, you’ll take that mental state and you project that forward, we predict our present forward, instead of where that technology takes us with artificial intelligence, miniaturization in the form of that robot, which is now in Ukraine. You’ll carry forward, it won’t look anything like that. And so if you understand, if you’re so deep on technology, as you know I am, and you’re seeing this from all of the different patterns, industry after industry after industry, and you’re able to use this technology to create and deliver value. And people, we’re all rational actors, we try to vote with our money to get more value. Why do you think you use Amazon? Why are we on Zoom right now? It’s what we do. So you have everybody voting for more time, and voting for a free market, which is reliant on technology giving them more value, and if you have a system that’s diametrically opposed to that, what would happen to society? And so that’s what’s happening. But at that rate, most of the deflation, the natural deflation of a market driven by technology in the free market, most of the deflation is not behind us. It’s in front of us exponentially so. So there is no way the existing monetary policy of the world, monetary standard of the world, can coexist with that without concentrating all power into very few hands and destroying the free market. And if you look through history, when that happens, and you look what ends up happening and people’s belief in turning against each other, you can see through some of the next steps, which is a really frightening notion, if there wasn’t a path forward through a different type of monetary standard. So we need to make a change, that change is impossible to make from the system, and the system is the one we measure everything against. So it’s very unlikely we’re going to see it, it’s really hard to see.

Mark Bidwell 22:05
And before we get to that, a couple of other things that struck me. As you say, you’re deep in technology, and not in one element of technology, but multiple elements of technology. And it seems to me that, the last time in the industrial revolution, we had railways, we had electricity, and we had telephones or telegrams all coming together. So you had three big things that interacted with one another and created this kind of Cambrian explosion of technology and wealth and innovation. But none of those are exponential technologies. None of those are digital technologies. But today, you’ve got far more technologies bumping up against each other at the same time. So you got S-curve upon S-curve upon S-curve. And that feels to me enormously exciting, but obviously, as you said, it brings with it enormous consequences as well to the downside.

Jeff Booth 22:52
And it could be enormous consequences to it to the upside. But again, most people believe that their money must be worthless to build a productive society. And while that belief persists, then what we’re talking about can’t happen. So these forces are fighting against each other, and all of the subsequent damage to society is really scary. Here’s a better way to say it: where we are moving with technology requires a digitally native currency that allows for deflation, period. And the only way that that didn’t have to happen to be able to run society is to concentrate all power in a very few number of hands through control. And we see what that looks like through history, and if you do that, you also destroy the free market by doing it.

Mark Bidwell 23:41
If you play that out, that’s not in the hands of the likes of Elon Musk, that’s in the hands of someone controlling most of the world. It’s almost like a super governmental body that’s actually controlling that.

Jeff Booth 23:56
Or multiple trying to fight for what’s happening with China and US. And there’s China, Russia, US and Europe, and everything else right now, is these powers are trying to do the same thing through force, and through control. And so it’s likely not a super government, because no government could agree on all the rules, so it breaks down. What typically happens in that type of environment is to get elected, you have to create an enemy within your borders. And it’s easy to create an enemy in the borders, because you’ve essentially transferred all of the wealth of the middle class and poor to the rich through inflation, and you’ve expanded government powers to do so. So new governments get elected by turning to the populace, who think it’s a free market problem, and it’s exactly the opposite. It’s a manipulation of money problem, but the populace thinks it’s a free market problem, and they will vote for dictators to go take that back through force, and so to create an enemy within the borders. And because that’s not enough, there is no way to tax to fix the problem. Because that’s not enough, to stay elected, you have to take more control, you have to remove individual rights and freedoms more, and you have to create a bigger enemy outside of your borders. If you look through the long arc of history, because you go through monetary failures, it always looks the same. What people are doing right now is they think housing always goes up without asking, would housing go up without $185 trillion of stimulus? And so they’re actually creating more and more risk by locking up assets inside a country that you can’t move. If you looked at Lebanon today, or if you looked at what’s happening in Turkey today, if you looked at Venezuela, what you can see, you can see this breaking down everywhere. And if you’re locked up into a single currency, into a set of borders that you can’t move, when revolution comes it’s a really frightening spot for you.

Mark Bidwell 25:59
Yeah, preparing for this conversation, I took a book off my bookshelf called “SWAG” which I bought in the Lehman crisis anyway, I don’t know if you ever come across it, SWAG stands for silver, wine, art and gold. So it’s an alternative investment for the coming decades. Now, it doesn’t talk about blockchain and Bitcoin specifically, it talks about, to your point, having mobile assets that you can pick up and run with. Having things that are not related to any currencies, having things that don’t have any debt associated with them. Clearly a house is the worst possible thing, you can tax it, you can’t take it with you. But what was interesting was, they didn’t mention digital currency, it was written in 2007, but it was very, very predictive, I guess, or certainly some of the asset classes people rushed into to protect themselves from the 2008 crisis, which is where we went pretty close to the brink, of course.

Jeff Booth 26:49
We were actually at the brink, we talked a little bit about BuildDirect at that time. We had global trade at that time, and we had millions and millions of dollars in our bank account. And for three days, nobody would accept our letters of credit across the globe for containers. And why is because they didn’t trust our bank, that interest money was there. And because the money actually wasn’t there, if you’d allow it to unwind, because the money is actually just a credit based system that must have more and more credit. So if you allow deflation to happen against that system, the credit just unwinds, and there’s nothing there. There’s no hard money backing it, there’s nothing, it’s just empty and unwinding to the ground. And every institution is built on top of that credit stack, which must continue to expand. So it cannot allow deflation or that whole thing unwinds. So I knew that the government was going to come in and essentially save the system and destroy capitalism in the process. Because they created such a problem that they couldn’t do anything else. Now, fast forward to today, that problem is exponentially worse than it was then, and with bigger ramifications around the world, because technology is moving one way, and printing and offsetting has to move the other way. So that’s unfortunately where we are in the world today. And by the way, if everything you measure every year, health, your family, your house asset, every single thing, your money in the bank, everything you measure is out of that system and that system is increasingly fragile, you might want to have an insurance policy.

Mark Bidwell 26:54
Well, it gets worse because they fired most of the bullets post 2008. They fired a whole load more. Central bankers, there aren’t many tools that they got left in their toolkit to use, right?

Jeff Booth 27:59
What ends up happening is, again, if you have misinformation and money, and the thing about what money is, all it is, is a trade of our time. You don’t actually want more money, we want more time or things that we think money will get us, whether that’s time, other people will admire us more if we have more money, we can do vacations. We want more time, we don’t necessarily want more money, money is a proxy for our time. And so if you misrepresent money at the base layer, you’re in misinformation in time. And what that means is, there’s a whole bunch of people confused by that all over the world, and that misinformation must keep expanding. And it’s based on a lie. I wish I didn’t have to say, but it’s based on, I have a money printer, and I can press a button and I can destroy 40 years of your savings overnight. So you better put your savings in hard assets in my country. And the cost of that is social revolution for more control. But if you pull the thread on that, there is no way out of this. You’re dealing with most people caught in the system that they’re measuring from the system. And that lie has to keep expanding. And that’s why mathematically, it has to equal more control, otherwise it’s a system failure.

Mark Bidwell 29:54
And there’s two things. I think that underlying principle of growth is being questioned now because of the externalities associated that are being exhibited, as we said at the beginning of the call in Vancouver, in climate change, in all of that which are externalities associated with growth, which no one’s ever accounted for. Those chickens are coming home to roost now, right?

Jeff Booth 30:17
Well, you know I’m on a whole bunch of boards that take advantage, do help the environment by providing value to others and do it in a different way, so supply chain, total change of a supply chain, and farming that brings abundance of food and localizes it and removes the whole entire industry. And once that technology hits a point, that’s lower cost than the existing supply chain, it’s lower cost. That’s actually what makes it move. It drives up deflation. So that’s competing against an inflationary monetary policy that must drive prices up forever. And what people can’t do, because they’re living in the system, and they’re connecting, they can’t put these things together and realize that climate change is caused by inflation. If you overlaid the mass of carbon and the climate, and you said, when did inflationary monetary policies start? And what’s the rate of growth in money printing, it’s almost an exact match, but people can’t see it because they’re measuring a system from the system. So we just had COP26, Bill Gates talking about it all the time, we have all these people talking about it all the time, that are unable to connect the dots, that climate change or environmental problems cannot be solved on a finite planet by manipulating money, because you’re pushing it. So why did coal just become more needed in the market? Because we created imbalances by printing money and creating scarcity everywhere else. So now coal is profitable again. It’s crazy. And you have a whole bunch of people that now need two jobs, three jobs, everything else to work harder and harder to keep up with a system that is expanding faster than they can expand, two cars, two of everything, when it’s actually the exact opposite of what would happen. There is no fix to the climate through an inflationary monetary policy.

Mark Bidwell 32:18
You touched on one of the solutions, or at least one of the ways out of this, which was a thing, I guess, it was out there when you were writing a book, but it’s become far more common currency in the world today, which is a digital currency, as being one of the potential paths forward.

Jeff Booth 32:38
And I want to be careful with digital currency in general or blockchain in general, because I’m very deep on this. And I’ve looked at it, this was a puzzle for me, right? For 10 years this has been a puzzle, trying to figure out how we could move from one system that ended in the world burning, through war or climate change, that had to end in a different solution than the one that had brought about this. How could that happen when the existing system couldn’t allow the change? And you know me, when I get curious about something, I want to go down to it and back up and everything. So I was looking for a solution, and I was trying to find that solution through government, through anything else, through advocacy about this changing system. But I realized that the system’s too powerful, not because of bad people, but because of the incentives and structure and everything else, and it couldn’t happen. And then Bitcoin is an open, decentralized system that is designed through proof of work to remove that power from governments and allow for a transition from one system to another. In other words, what we would see if you own Bitcoin, is the free market. And I gotta be careful about the free market, because today, if you’re manipulating money, some of that money is going into Bitcoin, too. But what we would see as prices coming down in Bitcoin terms, forever. So you would see everything that I’m talking about, but we measure the world in FIAT terms, so we can’t see it. And why proof of work is the thing that environmentalists are against on Bitcoin, is the thing that saves the climate, because no government is going to give up their ability to print money. And so proof of work is actually the security of the network that keeps it decentralized out of the hands of control of a few people. And at a way higher level, it is actually the only thing I believe that can save climate, it’s the only thing. So then, if you understand that concept and how important that concept is for where we’re going, then, on top of that, remember, people project the present forward, they don’t project technology. So if you were on the internet, if you were looking at the Internet 1996, and you couldn’t download a cat video, you would never imagine what you could do today on the internet. Similar to Bitcoin, what people don’t realize is the innovation that’s happening on top of it, through layer two, and it’s going to turn into a transaction medium and everything else and move. They’re not measuring the network effect. It’s building more and more power to that network all the time. It’s getting better and better, it’s an emergent network that hopefully avoids a complete system collapse of one system as the new network takes more value.

Mark Bidwell 35:33
I think you touched on something. You can look at Bitcoin through multiple lenses, right, you can look at it through the lens of speculation, the Gamestop retail momentum traders, you can look at it through that lens, you can look at it through the lens of the Metaverse, you can look at it through the lens of the people who’ve lost trust in their institutions and are now trying to create a new type of sovereignty, essentially, a transnational community of interest or purpose. And then of course, you’ve also got the building on the different layers of Web03 piece of blockchain and Bitcoin. How do you see beyond the currency side, and the hedge, some of the trends you’re talking about, what else are you seeing that could be of interest to the broader world of business?

Jeff Booth 36:26
It’s staggering. It’s such a staggering opportunity. It reminds me of where the internet was in 1996. Whether people believe in Bitcoin or not, I would encourage you to, if anyone that’s listening to this to get off zero on Bitcoin, even as an insurance policy and of everything that happened. But how many people, when Amazon came, how many people held Amazon from $5 or $3, to what the price today? And you can see out of that is the same thing we’re talking about. Oh, it’s just a bookseller online. Why would I buy books online, when I can buy them in a store? And a network transfer of one to another over time, and that’s very volatile, just like Bitcoin is today. But as it takes more of the transfer, it gets less and less volatile over time, as more people transact on top of it. That’s what’s happening. Now, who goes first in a system like that? Do the people with access to Walmart shelves or list on Amazon? No. What happens in technology is by lowering the access costs by a radical amount through technology, the monopoly is at risk, because it empowers all of those people blocked by the monopoly. So for every person on Walmart shelves, there were hundreds of other manufacturers that wanted to access the market that couldn’t get access to the market, that Amazon through a new network, because it was a lower cost network, gave access to the market. And as the many outweigh the few, things change. They start moving more and more, and they build that network effect. It gets stronger and stronger and stronger, and they build a new kind of lane of commerce, the change of monopoly, they unwind a monopoly, not from the field.

Mark Bidwell 38:20
It’s interesting, this is what I’m hearing or reading about, are people moving to Substack, where you can actually take your data from Substack somewhere else, versus people who are locked into Twitter. I’m thinking about the creater economy, it’s a very small part of the economy. Beyond that, Jeff, I’m interested in, if you’re not a creator, you see Web3 with the potential to break some of these monopolies, break the Facebook monopoly, the Google monopoly, the Amazon monopoly, where else could this end up? Because clearly, you have a very broad view of technology, b2b, b2c, I’m just interested in how you’re seeing this.

Jeff Booth 38:58
It’s literally everywhere. Let’s use a big industry right now. Education. There’s a belief in the world today that education keeps on getting higher and higher and higher in price. And essentially, the same thing that’s driving education, privileged access, because I sit at the top of the ladder and other people that have a negative feedback system, they can never get into those universities and everything else. But it is all based on a belief system, we’ll get a higher paying job out of that education. Our generation has because it’s always been true. So we try it on our kids and you and I, we have lots of capital and everything else, we could get our kids into whatever schools we want and everything else and that belief system persists. But that belief system is already wrong. Education is already free. Certification is not free, but education is already free. So what do you think will happen to that entire industry as more people understand? You know, I’ve hired 1000s of people, and I now prefer somebody who is constantly learning and hungry and everything else, rather than somebody who says, okay, I have this degree, so it means I’ve made it. And that changes, everything changes and an entire stack of an industry falls apart. There is so much opportunity right now in the world, for people to understand the new rails of where this is going, just like the internet changed everything, to be able to deliver more value to people. I can’t keep up with it.

Mark Bidwell 40:37
And the new rails are, is Web03 that bucket?

Jeff Booth 40:46
I don’t like calling it Web03, because Web03 is designed around a venture capital model to be able to try to make more money out of alternative, not Bitcoin, alternative currencies and everything else. Because if you can control those on those layouts, you control the stack. I prefer to, when I say what’s happening on Bitcoin, layer 1 is the proof of work, and then layer 2 and everything else. That ecosystem removes that power. That ecosystem transfers more of the abundance gained from technology through the natural market, to the most people.

Mark Bidwell 41:29
So it’s almost like Uber controlled by the drivers essentially.

Jeff Booth 41:34
Let’s use an example. So today, in the creator economy, what drives YouTube’s value is not what people think. They think it’s the user of YouTube, but the user of YouTube only comes to YouTube because of the content created on YouTube. So early on in monopolies, it’s designing a way for the user to come and show their content, the best content, and then attracting way more users, until you get 98% of the profits, and you give the users 2%, and most of those users have zero views. It’s a constant battle. And by the way, same thing, TikTok, same thing Spotify, same thing Google same thing all. Yeah, there’s this long tail of everybody trying to compete to get onto the top results. And the competition of those results equals better search for you to find what you want. You could go to page 404,442 on Google, but you never trust the results. So it’s creating value for the content producers to be able to do this. And all of these look the same, whether it’s Amazon, everything else, yeah. So today, let’s use YouTube, to be able to pay the content producers, pay your own staff, you have to put advertising off and sell advertising on top, essentially to say, to pay for this person matters. And you’ll pay the highest rate advertiser to be able to sit through that filter, to be able to run that business. And that’s because the original web, that was the way you created value, it was the only way to create value. With the new rails of what’s happening on Bitcoin and everything else, you could invert that, instead of taking 98% to you, you could give 98% to the creators. What would that do? Now, it would start slowly, because there wouldn’t be a lot of creators. But as creators realized, wow, I could create way more value on this new platform, and I could always have it, forever. And I don’t need advertising to be able to do it. I go around with a different model to be able to do it, where the rules are based into the code, and this person is saying, yeah, I need to run a company, I need to pay for servers and everything else, but I’m going to give you the majority of it. If content creators move, where will the users go? Again, that’s more deflation in the macro sense, but it also provides a huge opportunity in countless industries to create tons of value.

Mark Bidwell 44:11
And it’s beginning to chip away at the inequality, which is just getting worse and worse, because of the consolidation of power in these areas.

Jeff Booth 44:21
There is no way to solve inequality through an inflationary monetary system. Inflationary monetary system is inequality.

Mark Bidwell 44:28
Yeah. So, where do we go from here? I think we’ve touched a little bit on it, and I’m also mindful of time, maybe we can switch, and this was probably the segue, we talked a lot about macro things, right? We talked about macro trends. And as Charlie Munger says, micro-economics is what we do in macro-economics is what we put up with. So that we’re putting up with the macro-environment, but we’re also doing stuff. You’re deep into understanding these new rails. What else are you up to? What else beyond the things that I’m aware of, obviously, where we sat on the same board together? What other areas are you focusing on? I guess what’s behind that question is, you wrote the book for your kids, you talk a lot about the importance of your integrity not being for sales. How are you walking the talk, Jeff, is my question, and modeling what you think is important for your kids to pick up?

Jeff Booth 45:34
In an 18-month period, I think I was asked to join 250 boards. And so you can imagine how much deal flow or opportunities I see on boards, I run out of time. So I try to invest my time where it’ll make the biggest difference. The book can make a big difference, because a whole bunch of people can see it and carry it forward. Some of the companies that I’m involved in can make a big difference, they might not at all make it. I tend to three rules – technology that can deliver extraordinary results to people, to really help people; a founder or team that I love, and when I say that, because when you’re going through the war with those people, you have to be there, and you know this, you have to be there when they make mistakes. And you have to be able to tell them anything, the mistakes that they’re about to make. I went through a bunch of those, and it was mostly trading mistakes, I didn’t see it either. You can’t run from an ego, you have to really care about them. And then in an area that I think I’m uniquely qualified to help a lot through relationships, or content and everything else, and even then I run out a lot of time. But I’m involved in a whole bunch of companies in climate area, or agricultural area, Cubic Farms is a really interesting company, that could grow a lot in solving this. I’m involved in a company called Addy, which is essentially democratizing real estate by allowing anybody to invest tiny amounts into real estate and create income streams from that. And some of the why for me on those are, if you can use technology to help people most hurt by the existing system, so that they have at least a chance to be able to play, and then hopefully you can solve some of the problems caused by more and more inequality out of this, and you can help some people off this, knowing that the macro, if we’re all fighting in this environment, and Bitcoin is a really important solve for the macro, but underneath that, what can you do to help along the way through. And there’s so many opportunities, it’s just crazy.

Mark Bidwell 48:01
Within the book, you talk about the loss of jobs, and particularly the loss of high paying jobs. And there are lots of, listening on the radio today in the UK, there’s a huge amount of open positions, but many of them are what they used to say max jobs in the past. These are not real jobs per se, they’re sort of zero hours contracts. How are you advising, for example, your kids, or thinking about helping your kids make the right kind of choices, so they’re not finding themselves stranded from a career point of view, or from an asset point of view, but certainly from a career point of view. How are you thinking about that, Jeff?

Jeff Booth 48:40
We talked about this all the time. So I just gave some hints on this show about where I would tell my kids to go. Go to where the market’s moving, understand why the market’s moving there, why people who think one thing today are likely to think a different thing tomorrow, if the market’s moving there, and understand why it’s growing so fast. So if I said Bitcoin and Lightning Network and everything, understand it, understand how you could create value there, understand what it means to people to essentially lower the friction costs, the barrier costs, so a mass amount of new people could be entering into a market and they’re not blocked by an existing market. That’s why it’s so important, because the entrepreneurial process, really great entrepreneurs, that’s what they do. They create the future by realizing the existing world we live in under the existing way of doing things. There’s something that could be much, much better. And again, we see it all around us, but we definitely underestimate that. So if you look at that phone, and you know this, maybe some people on your call are younger, but if you ask a question about that phone 15 years ago, people would say no, I want a phone with more buttons on it. Like a Blackberry, right, and they would have never seen this coming. All it is, is an idea of a different way that you could create value. And when you’re right on that idea, you create a whole bunch of value for people. But it’s hard to see from the existing system, because you’re measuring the existing system. And so that prediction or that ability to say, okay, what could this look like with new technology? What could this look like, and how could I deliver more value is at the heart of what all entrepreneurs do. And so that makes me really hopeful, because if you change the rails of society, and you open up a whole bunch more minds to be able to create value on top of that, then that is likely to flow to way more people.

Mark Bidwell 50:44
Let’s make it explicit, does that mean entrepreneurship?

Jeff Booth 50:49
It does for me, but I don’t want to presuppose what my kids want to do. So I care that they’re constantly learning, curious. I had no idea what I wanted to do. I’d look back at that person then, and that person, I could think it looks like the same person you’re talking to right now. That person was a very different person, and the odds of that person being here, I don’t know.

Mark Bidwell 51:19
It makes me wonder, projecting forward, what does that person look like in 10 years time, right? That’s interesting.

Jeff Booth 51:25
So curiosity, accountability, we’ll go into some of those when we get into the question. In a world that is changing really fast, the advantage goes to people that are open to learning faster. And that’s a really important concept. And also, we get stuck in our own beliefs, and we believe it’s the world conspiring against us when it’s mostly us conspiring against the world. So those two things are diametrically opposed. And so that openness to learning where you could have been wrong to be able to fix that, especially in a world that’s changing really fast is, you’re likely to be, if you’re actually open to that, you’ll learn at a faster rate than anybody else.

Mark Bidwell 52:13
I heard it, I think it was Adam Grant was talking about, because he’s big into science, he’s into the scientific method, the data, and he was talking about the connection between entrepreneurs and science. And good entrepreneurs, they just set up experiments to test a hypothesis, and you do it very, very quickly. Some other people have talked about it in terms of the MVP and lean startup, but if you take the view that I have a hypothesis, I’m going to test it as quickly and as cheaply as possible, and if I’m wrong, then I’ll move on to the next thing, wwhich is learning and iterating. But it’s a very different mindset versus the alternative, almost like the myth of the entrepreneur, relentlessly pursuing until they have a breakthrough. It’s a completely different mindset. But I found that idea of experimentation with learning and curiosity being quite empowering. It’s okay to be wrong. In fact, you want to be wrong, because that drives the learning of course.

Jeff Booth 53:11
That humility to be wrong and to be open is what creates the learning. It’s a crazy advantage.

Mark Bidwell 53:20
Talking about being wrong, the book was very prescient. Is there anything that hasn’t turned out the way you expected it?

Jeff Booth 53:29
Nothing yet. And again, if you look at those two patterns moving away from each other faster and faster, in one of the chapters I’ve forecast how much more debt is required to pretend we live in the system, and the consequences of that changing belief systems of it’s people causing problems and the essentially the division of society as a result of that belief, instead of a system creating this. You can see it all playing out. I wish it wasn’t. And I only in that book, even though I was in Bitcoin before, there’s one paragraph on Bitcoin at the end. And because at the time of the book, I was open to anything, with Bitcoin being one of those possibilities, and as I’ve seen an existing system flailing and getting more and more fragile all the time, and I’ve come to the conclusion there is no way out of the existing system without something like Bitcoin. It’ll persist and it’ll get worse. If anything, I’d become not closed to, could it be something else, but more, if I looked at the probabilities, or at least the probabilities that I would hope for for my kids, I would be way stronger on Bitcoin today.

Mark Bidwell 54:51
Yeah, growing conviction and more pessimistic.

Jeff Booth 54:54
And more pessimistic about the existing system. They’re moving to hope or moving to fear, but when you have a large majority of the population living hand to mouth, why they’re not taking those jobs is because they can’t pay for their daily needs, right? And you’re creating an entire population that out of fear will turn to other people who will turn them against other people to capitalize on that fear. So very rarely do people move from fear to more fear. I’ve said this in a number of podcasts, I hate even using it as an example, but it is important. When I think about what happened in Nazi Germany and Hitler, I don’t actually think about Hitler. I think about how it’s possible that the entire population could do that to other people, and very few people stood up against it? Because of what we’re talking about, and our belief and how malleable our brains are to believe that power, that that’s okay. And then, what in our human biology has changed in 60 years, 70 years. That kind of brings you pause to realize how powerful that pull over us is to create enemies and it’s their fault, and how susceptible we are, and how very few people will stand up against that type of power. And that’s what’s happening in the world today. So when you remove a whole bunch of inability for people to play a fair game, they rise up and play a different game. And I fear that without something like Bitcoin, that’s where the world goes.

Mark Bidwell 56:37
I haven’t got the book to hand, but a couple of things come to mind. There’s a wonderful book, which I was given, I was recommended by David Allen, the GTD guy the other day, who I was talking to, and he suggested I read. And oddly enough, I came home and my wife put up a book by the bed and said, I was given this by a friend of ours, and it’s the same book. I think it’s called “The Good Human” or something, I’m going to get the reference wrong. But it is actually a book turning on its head, a number of the myths about humans being inherently bad. And it’s actually making the case and I haven’t finished it yet, although if I waved it in front of you, there’s probably 1000 tabs sticking out of all the pages. It’s digging into the Milgram experiments, for instance, digging into the experiment that you talked about, what it’s called, it’s somewhere in here, the kids in a camp, it’s digging into the whole Lord of the Flies and the psychological experiments around that kind of social experiments that were proven to show that man is inherently evil. And it’s actually overturning them all. And actually the place where I’m at at the moment where he says, okay, let’s get to the elephant in the room, and he’s getting into the Holocaust, he’s getting into those topics you talk about. But so far, it’s a remarkably positive and uplifting book as a counter position to what you just touched on.

Jeff Booth 57:59
Yeah, so actually, keep in mind, I am not in that position. I’m in that position, if you create an economic incentive to cheat, and you have a system that’s designed to be able to do that, that’s what happens to society. I believe that in our biology, there’s an evolutionary biology component to cooperate. It might be just stronger than the one that, because we have both of these in our minds, right, so we want our house to go up forever, our own house to go up forever, yet, we want to get cheaper things everywhere else. We can’t put together that these are incongruent.

Mark Bidwell 58:00
Yeah, but we’ll protect our family, and will protect ourselves.

Jeff Booth 58:42
We’ll protect ourselves first, then our family, then our country, then everything else. And it ladders, and you have an incentive system based on that. So if you have an incentive system based on a theft, then you can predictably make that worse and worse and worse and worse. And if you have an incentive system based on the truth, then I believe that there’s, and that’s actually why I strongly advocate Bitcoin, incentive system that can’t be changed by rulers, that is set by code, then that incentive system incentivizes cooperation. I actually believe that in this, even from our human nature, if you look at “The Hero’s Journey,” right? “The Hero’s Journey,” I think, is actually an evolutionary biology signal that we all, when we watch a movie, it’s based on the Hero’s Journey, just about every movie is based on the Hero’s Journey, if somebody’s going up against a system, and either dying or surviving and coming out of there as a changed person. Every major religion is based on a Hero’s Journey. What we celebrate in that Hero’s Journey is actually what we’re talking about. Because most of those heroes get killed by the system, and the ones that actually don’t, we celebrate and we can feel it. We can feel why we cry at movies like that, because we can feel it. I think it’s actually telling us a signal of what we know is right and wrong, but not enough people will actually do it. So only very few people will do it, and I think what ends up happening is, we need to have a system based on those rules, so more people are incentivized towards that system.

Mark Bidwell 1:00:23
Fascinating, Jeff, I knew this was going to be great. Thank you very much. So where can people get in touch with you?

Jeff Booth 1:00:28
Probably best is just at @JeffBooth on Twitter. I have a website JeffreyBooth.com, but it just talks about some of the businesses I’m involved in, but probably best on Twitter.

Mark Bidwell 1:00:41
Great. Well, look forward to seeing you again in person soon. But thanks for your time. And yeah, this has been great.

Jeff Booth 1:00:47
Yeah, it’s been really good, really good to see you.

Mark Bidwell 1:00:49
Thanks, Jeff. See you.

Mark Bidwell 1:00:56
This podcast is produced by outside lens, a business that brings you fresh and diverse perspectives that help you navigate the world we live in. For more information, go to www dot outside lens.com where you can find details on this and many more podcasts that I’ve done with remarkable leaders over the years. If you found this episode particularly valuable, please share it on social media. I hope you enjoy my work. And feel free to let me know what you think. Either contacting me on LinkedIn or emailing me at Mark at outside lens.com