The Autonomous Digital Economy Is Here

For the first time, computers are driving more than half of the internet traffic. We're moving fast, and it's all inevitable. What is it about blockchain that we're not just grabbing onto this and running? Every asset in the world has an owner. If they can't monetize it, they wanna kill it.

Most human beings fear that innovation will cost them the goods of today and will open up bads in the future. Innovation might actually solve today's problems, and it might unlock future goods we can't even imagine yet. Matthew, I'm so excited to have you on the show, man. We are, uh, about to have a conversation around a topic that I feel like I haven't had enough guests on the show a- about where we're going, but I'm so incredibly interested in, in your take on this idea of, uh, autonomous digital economy and where you and, and, um, your investment firms see the world going. I just appreciate you taking this time, my man.

Fantastic, Ryan. I'm glad to be here. I hope we can do a good job for your audience. I have absolutely no doubt that you will. So let's, let's set the stage right away.

Um, when we say this term, you s- you... This is your term, an au- autonomous digital economy. W- what exactly at a high level does that mean? And then we can start to break into the branches and the different, uh, legs of the stool, uh, as we go through our conversation. Yes, thanks, Ryan.

It's, uh, it's something that we're all in the middle of. We're sort of experiencing it every day, and yet we are a bit confused about where it's all heading. And I, I find it helps people to sort of get their heads around it if you just think about what we've already done. The last 30, 40 years, we digitalized communications and content, and we did that with the internet, and today we use it every day. Every small business, you know, relies upon it.

Uh, every, every one of us every day is using that technology and those innovations. Um, the issue is we didn't get round yet to digitalizing various other things, including, uh, value. We can't really move value natively over all of that infrastructure we just spent 30, 40 years building. And of course, decision-making, intelligence, and even work is increasingly accessible and digitalizable so that advanced computing can assist us in, in very many ways. And for us, if you converge all of that together, if you converge the internet, AI and agents, and digital finance and blockchain, if you converge it all together, and you look ahead a few years, I think you begin to see that, you know, pretty much the entire economy will be running on digital rails.

Um, a lot of the decision-making and work will probably be made by agents, and the digital infrastructure that we already have, the internet stack, will have to be upgraded so that we can run value and make transactions and keep it secure and deal with issues like identity over those rails globally. So for us, an autonomous digital economy is the future. It's one of the things that's most inevitable, and we're about halfway there. And the last thing I'll say, Ryan, is if anyone's, uh, uh, thinking this isn't gonna happen, um, Cloudflare announced last month that for the first time, computers and agents are driving about o- over half of all the world's internet traffic. So we're, we're, we're moving fast, and it's all inevitable.

I wanna start with, with blockchain as a technology, not, not getting down into coins or anything like that or tokenization yet, but just the technology in general. So my core industry that I came out of, that I built my career in, was the property casualty insurance world. Mm-hmm. And since I learned about what blockchain was and I dove deep into it to understand it, to me, it has been the most obvious technological improvement that our-- that the insurance industry could make in streamlining how transactions are done, how data is trans-- It's almost like the insurance industry was built for blockchain to understand how these transactions are made, the risk that's captured in that transaction, being able to pass that data between the... and sometimes dozens of organizations that need to touch it in order to properly underwrite, et cetera. However, very, very slow adoption, almost, almost none.

There's a few obscure, and I, and I only mean obscure because they're small, uh, startups that have played around with different, uh, uses for blockchain in that space. But it seems despite... I don't know many experts in any field who have spent any time with this blockchain technology that wouldn't say it's powerful, it has widespread application, that it can solve many of the privacy issues, many of the, um, issues with, with laundering and things that are done with. Yet it feels like s- everyone's scared of it, or it just seems, like, incredibly slow in this technology being brought into our ecosystem. Why do you think that is?

Like, what is it about blockchain that we're not just grabbing onto this and running? Yeah. So this is, um, it's interesting that you, uh, ask the question in that way, and I think embedded in your-- the way you ask the question is certain expectations you might have about how quick change occurs. Um, you know, we, we invented the internet in the '70s. Some people were using it a little bit in the '80s.

It really didn't ramp up until the '90s, where we all began to say, "Well, what's email?" Or, "What's a website?" Or, you know- Let alone can I buy something online. You know, by the zeros, we still only had less than, you know, half the US and in most other countries, substantially less than half of the people online. And here we are in the twenties, and, uh, we still only have two thirds of the world, uh, online.

And you'd be surprised. I mean, a lot of people still go shopping in shopping malls and don't buy everything at Amazon. So, um, the point I'm making there is that that's a forty, fifty-year trajectory. Mm. Uh, in the case of the digitalization of value and, and, and blockchain and running, uh, value and transactions over the internet natively, we're really only fifteen years in, and the first few years of those fifteen years, this was really not being thought of as being a technology that would apply to every business and every company.

So I, I feel we're very early. Now, having said that, the, uh, the adoption rates are ramping really fast. So there's certain areas such as stable coins in the developing world, um, digitalized funds and treasurers used in the crypto world for various purposes, and the beginnings of real world asset tokenization, where we're beginning to, you know, come on board. And I think at this point, the CEOs of every bank, asset management firm, payment company understands that this is superior technology and that they will be deploying it into their operations. Now we get to the question of insurance, and I think...

I don't... I, I have not studied insurance that closely vis-a-vis a blockchain adoption, but I think in most industries, you have to begin with the pain points that they really care about every day. And my bet is that the payment is not the biggest issue in insurance. I think it's the decision making. You know, it's the assessment of risk and return and decisions around whether or not to insure something, whether or not to, uh, uh, close insurance contracts, et cetera, and the nuance around that.

And here, there's no question in my mind that this is now really getting upgraded fast. Uh, we, uh, we know that AI can simply do better job, a better job of assessing, uh, uh, uh, potential outcomes and risks and so on in huge databases and huge data sets, um, that, you know, it... whether they be public or proprietary, that is beginning to occur. And I think you... I'd be s- very surprised if there's any ins- large insurance company in the world where o- on issues such as that, uh, assessing risk, assessing, uh, uh, potential returns and making the decisions around how to price insurance products, they're not beginning to experiment with those technologies. So I, I feel like in, in the context of the autonomous digital economy in, in a, an area like insurance, you're more likely to see decision making and risk determination being powered by the types of technologies that we invest in, and the transaction and payment portion of it is not as fundamentally important in that industry, and they can take time.

Uh, it's not sort of like their Visa or Mastercard, and they've got to handle billions of transactions and do it in very efficient ways. Um, a- a- and clearly Visa or Mastercard have already committed to using blockchain. So it's a long answer, Ryan, but, um, I think all of this is coming to insurance, but it's just not, it's not the first industry, uh, uh, that's getting impacted. And, and if you go back to the internet, it's the same thing. I mean, if you remember, we, we... industries fell in, in sequence, and they didn't all embrace electronic commerce at the same time.

And, and in fact, there are some industries which still are mostly mortar with very little click activity occurring around them. Um, and I think you should expect the same in this, in this, uh, uh, next phase. I think that's a really, uh, good and interesting take that I maybe, maybe my, uh, my ambition sometimes outweighs my logic on the fact that I would li- I, my, my hope would be things would move faster than reality and history would teach us that they do. That's probably what that is, uh, an aspirational wish for, for these things. But...

And I use-- You know, I, I, I don't solely operate in the insurance industry anymore, but I always kinda use it as a bellwether because they tend to be a laggard, right, um, in, in, in the adoption. But I think your take on w- where their priority is, is, is correct. I, you know, it's, it's... They're making their money off their determination on whether or not someone's house is gonna burn down, not in their ability to transact business faster via payment from insured to carrier. So, uh, that makes, that actually makes a lot of sense.

Now, you used a term in there that I think maybe for you and I, we understand pretty well, but I think some people in the audience may not, which is this idea of, of tokenization. And they may have, uh, even heard, some of the audience may have heard, like, tokenizing hard assets. And one example that I'll give and then, uh, I'll pass it over to you is I was looking at a platform recently, just, just doing some research 'cause I was interested, that takes, uh, rental properties and the owners essentially tokenize the equity, and then you can buy... You know, they had their own coin that they were using just inside the platform as a way to, to capture that value. But you could buy tokens into a property, and then as distributions came out of that property, you got your percentage of value.

Um- Yeah ... like, maybe just define tokenization in general, and then I'd love to maybe just dig into where you see, um- Yeah ... this happening and some of its use cases. As you were talking, it did occur to me that I Literally talked, uh, the last question I focused on property and casualty insurance, but obviously prediction markets, we could talk more broadly about risk and, and how these technologies can help offset risk. But now going on to this new topic of, uh, tokenization. So I, I find that for most small business folks and entrepreneurs, the best way to, to begin this conversation is the following: every asset in the world has an owner, and the, the challenge is the proof of ownership is very fragmented and in often cases, you know, oftentimes it's paper or, uh, uh, uh, close to paper. Um, uh, so obviously in something like public equities, we digitalized the share certificate, uh, uh, uh, quite a long time ago with the Big Bang.

But if you, uh, invest in a fund, if you invest in a company, if you buy something of value, a watch or, you know, something like a Krugerrand, um, you know, almost certainly your only proof of ownership is gonna be some paper, and, uh, uh, that's not very efficient. By the time you get to things like real estate, the proof of ownership and the title may require many, many days or weeks to, to sort out, and there'll be a lot of paper shuffling, a lot of notarization of documents, et cetera, et cetera. The problem with that is it makes it very high friction for us to move the value, i.e., exchange the asset value, uh, quickly, cheaply, and easily, um, over the internet. Um, if you wanna sell a building, uh, typically it's gonna take you forty-five to sixty days just to do all the documentation and, and, and for the, the asset to change hands. We already know that if we digitalize the proof of ownership, we can make it run over the internet, and the technology we use to do that is tokenization, and it sits on blockchain rails.

Uh, it's essentially the technology, the innovation that Satoshi Nakamoto created in order to be able to move, uh, uh, peer-to-peer cash over the internet, which became Bitcoin. Um, so it's the same technology, but now we're applying it to traditional assets. And so dollars, you can take a dollar, you can tokenize that dollar, and now that dollar can tra-- uh, move as quickly as an email or a message over the internet, and we call those stable coins, and they have names like Tether and Circle. You can d-do the same with commodities. You can take an ounce of gold and the ownership of that ounce of gold sitting in a vault somewhere, and now with that, you can tokenize and, and, and record the ownership on a blockchain.

And now that token, that gold-backed token can move to anyone in the world in real time at almost no cost. And now we're gonna get to r-what we're calling real world assets. Actually, I, I, I view gold as a, a real world asset, but don't worry about that. Now let's talk about real estate. Conceptually, it's the same thing.

I could take the title that says, "This is the title for a building in San Francisco." I could record that title and the ownership of that title on a blockchain, issue a token, and that token can be used to move, transfer, exchange that value. Now, that already is a very big idea because this dramatically speeds up, reduces the cost, and simplifies the markets for those assets. Okay? But it also unlocks some other things which are also really important.

One is it allows the arrival of high frequency trading, which in the world of public equities really was only unlocked when we digitalized public equities share certificates. So you get high frequency trading, which in turn means you get much more liquidity potentially. It doesn't guarantee that anyone wants your asset, but conceptually, more people can choose to trade the asset. Thirdly, you do... you get better price discovery, which is really important in real estate, and we can come back to that. And then there's some other things like fractional ownership that get unlocked.

So, so that's where we're heading. We are going to tokenize and digitalize the ownership certificate for every asset in the world over time. But some assets are more, uh, easy than others. So a dollar is easy, right? 'Cause with a... it's actually very easy because with a dollar, there's no corporate actions. You know, there's no dividends.

There's no splits. There's no, uh, mergers and acquisition activity. By the time you get to real estate, it's really complicated, right? Because with real estate, you know, you gotta make sure the janitor actually goes and cleans the building, and if the HVAC breaks, someone's gotta fix it, and how does the ownership of the token equate to all those costs and expenses and activities? And, and obviously you wouldn't wanna own a token in a building, a fractional ownership of a big building, the Salesforce Tower, without you knowing whether everything else that needs to be done to Salesforce Tower occurs.

So, so tokenizing real estate ownership is much more complicated, I think, than tokenizing dollars or ounces of gold. So I'll stop there, Ryan. I mean, if you wanna double click on real estate, I'm happy to, and I don't really know if... where your audience is most interested. But what I can tell you with certainty is as part of the autonomous digital future that we're describing- We will digitalize the ownership, proof of ownership of every asset, and that that will mo- allow most assets, most asset classes to be traded quicker, cheaper, and easier over the rails that we just spent fifty years building Yeah. I, I think of something like the title to your home and the fact that there's an entire cottage industry built around it called title insurance, and the title search process, which is an entire, what- Right ... three week... takes three weeks for them to figure out, and then because the system is so, you know, kind of paper driven in some cases, like, um, the, you know, the home that I own was built in 1960.

Well, there's been three owners. Well, you have to go verify the three owners, verify that the transaction was done properly from each one of those owners, and then you have to buy insurance against the title to make sure that that research wasn't done improperly and somehow someone doesn't have a claim sitting cl... You think about all those pieces where if that, if the title ownership is sitting on the blockchain and you can just reference that in a finger snap, you know exactly what's there, what's been applied, what hasn't, and follow essentially, and, and let me know if I'm using this word wrong, but a chain of custody over time as to each one of those owners you can see that and it's, it's just there at your fingertips versus having to send somebody to local county clerk's office and do FOIA request to figure out, you know, who actually owned this and if anyone's ever put a lien against it. Is that kind of the idea in how we compact these things? It, it is.

It is, Ryan. And, and I'm gonna interject a thought here for your audience because it's a little baffling to me. Um, you know, five and four and three years ago, there were a lot of people who were trying to kill blockchain, in America especially, and they were very powerful people, including our administration, the heads of some of our federal agencies, and a lot of senators and other folks. And I never really understood it because the example you just gave, the average American, the biggest asset they'll ever own is their home, the apartment or the house, and most Americans don't have a lot of money, so it turns out that the average apartment in Ha- or, or the average, uh, uh, owned residence in America by an American citizen has a value of somewhere between two hundred and two hundred and fifty thousand dollars, maybe a little bit more now. I, uh, my data might be a little bit out of date, but let's say two hundred and fifty thousand.

Each time they try and, and buy and sell their own house, it takes them forty-five to sixty days minimum in the closing process. But this is the shocker. It costs them an average of twenty thousand dollars to trade a two hundred and fifty thousand dollar property. They lose ten percent of the value of their home each time they try or, and buy and sell it. And you would think that the, the, the government players who are there to protect the average American would understand that if we can take that twenty thousand down to two thousand, and if we can make the sixty days be five to ten days maybe, that would be an enormous benefit to every American.

It would be amazing. And then, and to your point, if we could eliminate the title insurance altogether, which frankly we should be able to do because the government by now should have the information about the title digitalized, and they should have issues like liens or rights of way digitalized. In fact, they probably do, but it's not necessarily very accessible. But, but this is sort of a consumer... This is a fundamental right of every American citizen in my mind to be able to have innovators improve their lives, stop burdening them with excess cost and work and time.

And so it's obvious. It should have been... Everyone should have been so excited that these new innovations and technologies were gonna unlock this. But for whatever reason, the anti-crypto army decided to try and choke down on the industry illegally, and, um, we're now coming out of that phase. So that's a little bit going back to your earlier point, Ryan, about the speed of adoption.

Well, just to be clear, of the last fifteen years since blockchain was invented, there's at least five years in there when America was trying to kill the industry for some reason none of us really understand. Not to go conspiracy theory on you, but I think you have the false assumption that our politicians and elite business owners are actually operating in the best interest of the consuming public. I think that would be one, uh, one assumption I would question. Um- Right ... oftentimes it feels like if they can't monetize it, they wanna kill it, and I think, uh, our da- the fight against AI, the fact that we now have politicians who are advocating the seizure and ownership transfer of public or private companies, uh, as public good in the fight against, um, these data centers, which, which I understand some of the concerns, but the irrationality of most of the argument against data centers to me, it, it to me sh- signals that there's some unseen incentive or conversation happening that is forcing the negativity, right? It doesn't seem warranted that, you know, you can put a similar size building for a Walmart or, uh, sorry, an Amazon warehouse out here.

You know, I live in Upstate New York. There's plenty of empty land. They just put a huge Amazon building that looks like its own city, you know, about twenty minutes from where I'm sitting No, no upheaval. They did the environmental report, off it goes, building built, jobs created, everything's good. Data center, essentially the same size, you have people picketing, you have people, you know, protesting, you have, you know, these signature campaigns going out to different politicians to fight these things, and I-- it-- the argument feels very irrational to me, and maybe just taking a broad stroke over all these technologies and the, the f- we've always been the innovative...

We've, we've been the coun-country, and really how we established ourselves in the world and the place that we currently sit is because we were so, so pro-innovation, so pro-technology, so pro, you know, pushing forward into the unknown. Yet, you know, in this case, we're just blockchain, AI, and the-- and we'll just say the data centers supporting the infrastructure that we need to push all this, there are major campaigns to derail this growth. And I, you know, I find it intriguing to say the least. Yeah, so I'm not a politician, I'm not a lobbyist, I'm not a government affairs person. So in a way, I'm just an investor, and we'll talk more about that in a minute.

But just to wrap this point up, I mean, if your audience are small business owners and entrepreneurs, I think, you know, you, you should be thoughtful about this question. Um, if we took away the internet from you today, would that be good for your business? And would that be good for your life? And I think a few people would say yes, right? And the Pennsylvania Dutch and the Amish, you know, would say, "Yes, we, we don't want the internet.

We don't want cell phones. We don't want messaging. You know, we, we prefer the U- the, uh, United States Postal Service and receiving letters and parcels at home." And that's okay, but I don't think most people feel that way. And, and so I think what you need to do is, is try and connect innovation and the discussion to what's important in your own life.

And that's why I gave the example of the average American and how much they lose of the value of their biggest asset each time they try and buy and sell it, because there's, you know, four hundred million Americans, two hundred million households or something like this, and they're all suffering from this reality. And if we can make it better, it's good for all of them. So if you're gonna be abstract and sort of say, "Well, I don't want tokenized, you know, property, uh, uh, titles. I want it still to be paper-based," understand what you're doing is you're hurting every American. And so, so when we come to AI, it's sort of the same thing, which is, you know, I understand the fear of AI's going to hurt me and my job, and my job is gonna change, or my business is gonna change.

But the other side of that coin is we have benefited enormously from data-driven decision-making in finance and in insurance and, and, um, retailers have leveraged electronic commerce to make more products available to us from more places around the world. And, and all of that has been riding on big data and big data analytics and algorithmic decision-making for a long, long time, you know, thirty, forty years. You just didn't know it, and we didn't call it AI, and it's sort of like spellcheck, you know? It's sort of like if you wanna lose the spellcheck on your email writing software, it's okay. You know, you can just, uh, check a dictionary each time you come up with a word that you're not sure how to spell.

The reality is we all benefit from spellcheck, and spellcheck is a, is a, is a, in a subtle way, artificial intelligence. So, so I'm, I am, um, I'm very much of the opinion that before you get too macro, just think about your business and the, the pros and cons. And it is possible, it is possible that you should be fearful about the impact of innovation and technology on your business. But I think in most cases, small businesses can benefit, and certainly tech entrepreneurs should be all over this. Yeah.

I mean, some of the, some of my friends who run non-tech businesses have, I've s- have seen the largest increases in productivity and, and top-line revenue growth by implementing AI into those businesses. Like, I have a buddy that owns a landscaping firm, and he had, uh, a, a guy create a simple, uh, CRM that fit his business specifically for him and, you know, it's all AI driven, and his guys have it as a little custom app on their phone, and it's cut, he said it, it's cut... What did he say? Two hours of every week out of every one of his sales guys who go out in the field, which he has five of, he got ten hours back of their time. So two hours for each guy simply by using this AI tool that he said cost him, like, three grand to have, you know, somebody spin up and build for him 'cause he, he just didn't wanna take the time, or he may have tried vibe coding it.

But, like, the idea is y- even if you're not a tech business, I mean, this is, I'm talking to the audience now, not necessarily you, but, like, even if you're not a tech business, and in, in some cases, the non-tech businesses by, by leveraging some of this technology that's now at your fingertips and has become so readily available, you can see massive improvements in streamlining in places where before they were literally having to write up proposals on sheets of paper on a clipboard, and then they'd have five of them in their truck, and then they'd have to remember to bring them in and get them approved. And, like, just that amount of time back is, what, one or two more appointments a day for five guys. Now all of a sudden, you know, if you're closing half of those, you just put five more deals on the board that you couldn't have done before simply 'cause you didn't have the time with a fairly simple AI tool investment. So I, I look at these things and I'm very AI optimist, uh, just 100% AI optimist. I probably spend too much time on LinkedIn, uh, commenting, "Yeah, but humans make mistakes too."

Um, that's, you know what I mean? Like, my little probably sarcastic response that I shouldn't put out there as much as I do. But, like, every time someone bangs on AI, I'm like Yeah, but the reason the data's terrible is 'cause humans put it in. You're just mad at the AI because it's reading the terrible data that the humans put in and now can't regurgitate the perfect answer. Like, I feel like we hold some of these technologies, especially early on, and, and it's probably just adoption curve, as you said, which I think was m-maybe a fairly, um, uh, uh, logical, but I think something that was really important to be said is that just an adoption curve standpoint, we're, we're still holding the technology to too high of a standard versus what we would assume the humans are.

We're, we're thinking it has to be perfect or it's broke, and that doesn't- Yeah ... seem like the right way to, to think about this. Yeah. But, um, th-that's great, Ryan, but I just wanna, again, highlight my point of you, you, you brought up landscaping. Yeah. So you think...

I do think it's worth, you know, whoever you are listening to this, bring it back down to real businesses and real activities, and then think it through. So just give an example. You know, if you play golf, you know how they used to cut the grass. And up until recently, and in fact still probably on most golf courses, people sit on equipment in the hot sun, and they have to go around and around and around the golf course cutting the grass. And, you know, it's polluting.

Uh, it's not good for the environment. It's expensive, and the drivers have to cover up or they get skin cancer and it's, it's... You know, there's a lot of issues. Mm-hmm. Today, there's plenty of golf courses that have satellite-driven robotic lawn grass cutters c-cutting the grass, and not every golf course has implemented that, but many have.

Um, they tend to still do, as you know, the greens and the tees by hand, but the fairways, they'll have this equipment. So, so it-- That's AI. That's AI driven. It's satellite and AI driven, and it's part of what we call the autonomous digital future. Those autonomous, semi-au-autonomous robotic grass cutting devices are there already, right?

This is not theoretical. And so then as a small business owner, you can see that as a threat or an opportunity. Obviously, if you're John Deere, it's, it was a threat to the manually operated glass, uh, g- g- grass cutting equipment you used to sell. And it was your choice, John Deere, whether you embraced this new world. Husqvarna did, and so they sell lots of Husqvarna equipment.

I don't even know who owns H- Husqvarna, but did John Deere do it? I don't know. It was a choice. You know, embrace the future or try and avoid embracing it. At the level of the guy that sits on the tractor, I think they've been reallocated.

Um, so they're probably still working on the golf course. They're doing something else. Hopefully, they're making the greens and tees even better. But some of them may have lost their jobs. Um, uh, that is a real societal issue that we have to think through, uh, because obviously if we're reducing human work everywhere, then, you know, we have to figure out a lot of issues and, and concerns, legitimately so.

But I don't think it's bad that the person isn't gonna sit in the baking sun and get a lot of skin cancers. Um, you know, uh, that job isn't that great a job, uh, in my opinion. Now, obviously, some people may love cutting grass all day on a tractor, and, and they would disagree with me. But I think societally, um, we have to ask, are the jobs that we are eliminating the right jobs for humans to be doing? And it's, it's like the old...

And I'll finish here, but it's like the old story of the chimney sweep. It's all like, you know, little boys used to have to go up chimneys to clean the chimney, and they all got black lung, and they all died at very early ages. And we eliminated coal-fired fireplaces, and that meant all those little boys were out of work, and we had to find other things for them to do, and the chimney sweeps were probably very angry about it. But at the end of the day, black lung, uh, amongst chimney sweeps went to zero, and I think that was a good thing societally. So it's a challenge.

This is, this is not easy stuff. But if you're a small business person, bring it back home. You know, if you have a landscaping business, how do you power up? And conversely, what should you stop doing? And maybe there are entire industries you should be, as a small business owner, you should be actively getting out of, uh, because they won't be necessary in the future, like chimney sweeping.

Yeah. I, I, I think you... That's a wonderful point. Um, I know we don't know each other that well. We're, we just met here today.

But, you know, my work in working with companies, and particularly mid and, and smaller sized companies, is I teach something called a, a human optimized model, which is why I'm so incredibly interested in AI, right? My, my belief is that in general, humans can do three things better than machines or, or AI, which is relationship building, solving complex problems, and, and selling things based on trust. I know you can do D2C and that's growing but, you know, some, a lot of transactions were still very trust-based. And, you know, what I try to, to help these business owners understand is that, to your point, right, that guy who was spending eight hours a day on a tractor cutting a lawn, well, now he can go get his hands in the sprinkler system that's broke, and he can spend time on the projects that are detail driven and, and very, like, human expertise driven and take true, like, breakdown problem solving at the point of failure and spend time on these real actual issues that you need someone to do, right? That guy, like you said, I th-- I'm much more op- in the, in the camp of of we're reallocating and redefining what these roles are.

I, I don't see... I think jobs will be lost, but we can't think of them as the humans losing the job, just that function is lost. The human is still gonna have plenty of places to go where their expertise, mechanically or otherwise, I think still can be used and be con- actually used for the things that they probably should've been doing more of to begin with, where the, where the real labor and real work is versus just sitting on a tractor and driving in straight lines for eight hours a day. So I, I think that's a, a really wonderful point. Um, I'd like to transition a little bit to, um, uh, to, to the investment piece, and I'm just interested, maybe start as broad as you want, but, um, this seems like an incredibly dynamic time to be investing in companies in particular.

And before we went live, you had talked about, um, this explosion of, of value in the economy, and we just saw SpaceX and, you know, Elon becoming a trillionaire and everything. Like, w- one maybe, is this a, a, a fairly unique and interesting time in general? Like, is that a proper characterization? And, and then, you know, regardless if it is or it isn't, you know, where are you starting to, where are you starting to look? I mean, I know you have your thesis, but, like, what, what's really got your attention?

Where, where do you... what do you see coming down the pipe that's got you tuned up? All right. So we, we started talking, trying to help the audience understand some inevitable things about the future, the direction we're heading. Uh, we talked about things like what's tokenization and how do we digitalize value. We then went down a, a slightly different path, which is an important path, which is, you know, how... what's the role of government?

How does government embrace innovation? And then societally, what are some of the pros and cons and some of the issues of which there are many? Um, I think it is a good idea to bring it back to sort of investing and wealth creation and value creation. So I'm glad you just did that. And we're investors, so ultimately the way we think about this, Ryan, and, and I'm, I'm, I'm really now first gonna answer conceptually, and then I'll, I'll answer empirically.

You know, conceptually, what we are doing as investors, as venture investors, 'cause we're venture investors, is we're trying to get a view, a 10-year view of some inevitable changes to the economic landscape that will unlock a lot of wealth creation, a lot of value. And we typically are thinking about a 10-year timeframe as VCs. Some things happen quicker, some things take longer, but 10 years is sort of about right. And once we have clarity on some things that we're absolutely sure are gonna be happening, then the next thing is you look up today and you try and figure out what's most broken, uh, where a lot of value is gonna start shifting around. You know, it's gonna go from the old to the new.

Um, and then once you have the clarity on those two things, then you look for great entrepreneurs who are really passionate and understand how they can stand up a new business or a new opportunity, a new project, um, that is gonna move us forward because they're gonna have enormous tailwinds behind them, and they're gonna be the beneficiaries of all this moving value. Now, it doesn't mean that established businesses, uh, can't do everything I just said. I mean, they could do the same thing. The problem is, and it's, it always is true, established businesses have a lot of legacy activities, people, processes, im- uh, you know, sunk costs, uh, that make it very hard for them to change. And so it tends to be true that if you can see something inevitable about the future, and if it's gonna dramatically impact a huge profit pool or source of value of today, most of the shift, most of the value is gonna be captured by disruptive new players, and that's what we invest in.

All right? So, so that's sort of the way to think about it. Now, obviously, if you're an entrepreneur, you're loving what I'm saying 'cause you wanna be the one that gets backed and builds the new business. Obviously, if you're a small business owner, this is ch- a challenge because you, you, you've gotta make choices like, should I move, and if so, when? And conversely, I can't abandon what I am already doing, and I don't have a lot of capabilities and resources left over to do new things.

So it's very challenging for established businesses and in particular for established small businesses. All right, so that's the concept. So practically speaking, where are we investing today? Well, I think we've already covered it. We're investing heavily in what we call AI and the agentic revolution, the upgrading of global decision-making and the, uh, digitalization and computerization of work, um, and embedded in their intelligence.

This is just huge. It's, it's, it's not new. It's 40, 50 years in the making, but it's, it's time has come, and we're digitalizing intelligence and work as we speak. So the companies that are at the leading edge of that are very, very, I think, investable, though their valuations are going sky high incredibly quickly, um, and maybe too high. Um, the second big thrust for us is we've already talked about, is the digitalization of global financial rails and infrastructure and, uh, and it's, it's necessary both so that the traditional financial companies, banks, payment companies, asset managers, insurance companies, trading exchanges and so on can upgrade themselves But it, it's also opening up the opportunity for new to the world players, many of which we're investors in with names like Coinbase and Kraken and Uphold and Anchorage and Robinhood and so on to, to grow and scale very quickly.

So that's the second big thrust. And then the third that I would talk a little bit about is the continuing evolution and upgrading of internet companies themselves. Uh, you know, you, you could... If you had a name like Revolut, you're not actually a new company. You've been around for a long time.

You're an internet-based fintech company. But now you're upgrading yourselves, you're embracing blockchain, you're embracing crypto, you're probably deploying AI tools, and you're also migrating towards this future. So, so for us, those are the big threes- three thrusts. AI and the digitalization of intelligence and work. Secondly, digital finance, including blockchain-enabled digital infrastructure.

And thirdly, the, uh, if you will, the upgrading of the internet players. Um, and you know, it's sort of like Inc. to me was destroyed by Google. MySpace was destroyed by Facebook. I don't think we should presume that today's internet companies won't have new competitors, but they'll be autonomous digital players, not only internet players, if you see what I'm saying. I do.

I do. Uh, one of my, uh, least favorite mental blocks is the idea that the way the world looks today is the way it's gonna look tomorrow. And when you find people making decisions based on that thesis, it's, uh, very hard to argue with or argue, argue against. Uh, it tends to be tho- it tends to be very entrenched idea, but seemingly it, the world never works out that way. We're always-- It's always turning and spinning, just like you said.

We could go through a million examples all the way back through the Industrial Revolution of, of the company that kicked things off, ends up getting innovated upon, and you have a new player, and then the same thing happens again and again. And I think it's a, uh, I think it's a really important point just to drill into, which is why I'm spending just this extra second here on it, that we, we can't take a snapshot of the way the world is today, guys, and, and believe that this is the way the world is always gonna be, right? And I love that you said that you're looking out 10 years. I think that's a wonderful timeline. And, you know, specifically, I'd like to drill into where you see agentic AI and, and agents in general going, um, maybe both from just your personal opinion or, or your, uh, company's opinion on the space in general and the technology in general, and then maybe at, from an investment, putting the investment hat on.

You know, are you looking at, uh, established companies that are integrating agentic AI and, and, and using it as a way to improve, uh, operations consumers are already aware of, but maybe in a more efficient way? Or do you think there's even more opportunity and new functionality in that space? Yes. Fantastic, Ryan. So, so the answer is all of, but before, you know, the short answer.

But before I get there, I mean, many of the tasks that we do today that are part of our economy or the businesses that are listening in, those tasks are complex tasks, and the human form factor is not necessarily engineered to be really good at those tasks. And I think, I think you have to start there. You know, in, in your business, you probably have human beings doing things that they are not actually very good at doing. A great example would be to ex- uh, abstract vast amounts of financial data, crunch it in real time, and come up with financials and accounts and, and so on. You know, it's sort of like our brains are pretty good, but that actually isn't something many of us are really designed for.

And in fact, as we all know, the average American child is not very good at mental mathematics, even if you ask them something simple like what's, you know, eight times 11, which is shouldn't be too difficult. Um, by the time you ask them to, you know, look at a business in real time and crunch all the data of the P&L for this month and, and build a P&L and a balance sheet, it's not something most of us can do in our heads. And that's... And what I just said is obvious, right? So, you know, we, we instrumented that a long time ago, and we created a calculator...

Well, we created abacuses and then calculators and then VisiCalc and Lotus 1-2-3 and spreadsheets. And by now, you know, most businesses probably have some sort of a, you know, advanced computing device doing a lot of their books and their financials. They may still use accountants to do the, the audit and to balance the books and sign off on them. Even that, you know, humans are not very good at. You know, we know that.

Accounting firms are paid a lot of money, but they're not very good at what they do, uh, is the truth. It takes them a long time and, uh, a lot of cost, etc. So, so just continue that thought process. What other things do you have humans doing, uh, human beings doing in your business that we're not actually very well designed to do? And what devices and workarounds do you have in place to help them do those things?

So in your warehouse, you have people moving heavy pallets, and you have to give them tools to help, right? They, they need a reach, uh, a reach, uh, or, or, you know, a loading, a loading... I don't even know all the names. But, you know, they, they have a bunch of equipment because human beings are not very good at lifting pallets, you know- 30 feet up and stacking them in warehouses, right? So, so then you sort of say, "Well, why did you want-- why do you need the human there at all?"

Right? If, if the task is to unload a truck, bring out all the pallets, move them around a warehouse, and store them away, the human form factor is not good at any of that. And even the l- the, the decision of which pallet goes where is really not something humans are very good at. I mean, we can't, with our eyes, scan a barcode, so we need a device for that, and, and the same with the, the, the location in the, in the warehouse. And so, so you shouldn't be surprised if we're deploying robotics and equipment in warehouses, and we're displacing human beings because the human form factor isn't ideal for many of the tasks that grew up in the Industrial Revolution.

And in fact, many of the jobs we created in the Industrial Revolution were not really very nice jobs for humans to do, right? It's sort of we know that. We, we had them on- at some time, you know, doing manual labor on massive scale in mills and in factories and, and other things that were really bad for the health of the humans, and we, we had labor movements, and we had to have working condition decisions. And then eventually, we got rid of the mills and the people that had to work in them and all got, you know, tissue in their lungs, just like the miners got all the black lung from the coal dust. So- Mm.

So, so why am I starting here? Because I, I think that's the way to think about it. You know, we can get more precise if you wish and talk very specifically, as you did, about do I see companies using advanced AI agents to drive top-line growth? Well, of course. You know, it's sort of like because are humans very good at trying to identify which of the 400 million Americans are most likely to want to buy the product?

No, because we can't get our head around 400 million, let alone build profiles for 400 million people and try and identify the signals that would have us know if th- these 10 million of the 400 million are the right ones to take this offer. If you see what I'm saying. And it's not a new thought because MBNA and Capital One were trying to figure out how to do better credit card solicitations with database technology and algorithms, you know, 40 years ago. Um, so the, the big difference is this. Number one, clearly the LLMs have made big data analysis and algori- algorithmic decision-making and machine learning ready for prime time on a scale we could not have imagined.

The second is the agents, which are basically just software, the agents are able to do work better and better, and they're beginning to be better than us at more and more of the work that we do. And I think the third is we're beginning to figure out how to use software combined with hardware to come up with better form factors than the human to do tasks that humans are not actually very good at anyhow. And you put all of that together and, and I don't think there are too many functions in any business that are not gonna be levered up and improved quicker, cheaper, easier. Um, and even small businesses can start experimenting. That's the last point, Ryan, which is this is not something that requires any more billions of dollars to get started.

Um, I remember in the '90s, I was always shocked by, you know, we were beginning to build websites, and Cyent and Razorfish would show up with a single page, and they said, "We'll build you a website for $40 million." And today you can build that website for, like, nothing. You know, it's a website for nothing. You know that. Um- I, I coded my website for a couple hundred bucks on CloudCode.

Yeah, exactly. Exactly. So, so that's what I would want the small business listener to, to, to, to reflect upon, which is the cost of accessing these tools is coming down really, really fast, such that a small businessperson can, in fact, leverage AI into their business if they're willing to experiment and give it a go. That the hard part is actually, uh, having people to help you do it. You know, I think, I think if you're the founder or CEO of a small business, you've got the hardest job in the world already, and many of you are struggling to make ends meet every day already, and now someone's gonna drop this whole new thing on top of you, and it's, it's, it's just, it's, it's, it's hard.

And so, you know, Ryan, if that's what you help small business people do, then I think that's really, really a valuable thing. Um, and if I was a small business owner right now, I would not... I think you do have a choice of when to move, so if you're a small business owner, you don't necessarily need to change anything this year. But I wouldn't wait five years. Um, and for some of you, if you move fast, you'll be a big business, not a small business.

So there are, there are good reasons to move quickly, but you have to look at yourself honestly and sort of say, "Am I up for this? Do I have the capability? Can my, uh, some of my people need to get, uh, on top of this, and do we have the, the bandwidth, and do we have the resources?" And, and so on. But the point is, the cost of using an agent in a small business today is very inexpensive.

Yeah. It's not no longer $40 million just to build a website. Yeah. I, I mean, I, I've talked to the audience about this before, but, um- You know, one of the things that I highly advocate is even if you're not gonna make any changes in your business, and, and I think you're right, I, I don't think anyone should rush into this if it's not their nature, right? If it's not your nature, I don't think rushing in is the right way.

However, I do highly advocate for people to be playing around, right? At least have a paid ChatGPT or a paid Claude or, you know, like when, when these tools, like when, um, four point- Opus 4.5 hit, I built like three apps that I have since just destroyed. You know, I just deleted them. But I built them to just see, like, what's possible, how does it work? I've heard this term MCP.

What is that? Like, like, and then do I even need to know that in my work? Like, you know what I mean? So just, just playing around because there's a new vocabulary that is gonna become more and more part of daily discussions, I think regardless of where you are, from solopreneur to small business to middle market all the way up to enterprise. And while I c- I completely and utterly agree that rushing in is, is, is not the appropriate move, and it isn't like you have to do something today or you're gonna go out of business, I do think it, it is important to start to at least understand the nomenclature, the, the, the some of the use cases, or at least what's possible, because when these decisions do become more pressing and, and you are kind of in a position where you need to make a move one way or the other, I feel like if that's when you start to spin up your knowledge on this stuff, you're gonna be so far behind, and- Right ... it's almost like you're gonna be s-speaking to someone who is talk- is, is speaking a different language to you.

And I think that's where a lot of people got in trouble with the internet in the early days, right? You had these, you know, internet marketers and website builders who would come to you and tell you a website that should've cost a couple grand cost 10 grand, and a lot of small business owners didn't know the difference, and they didn't understand because they didn't know what it took, and they didn't know the time. And I do think we can learn from the two thou- the early 2000s and the mid-2000s and the both, you know, digital and kind of internet revolution that at least it's a good FAFO moment. Like play around a little bit. Like get in there and, and at least see what it does, right?

I mean, we need to have this at our fingertips to at least be able to speak the language even if we're not using it today. I agree with e-everything you just said, and I... At this point, I want to talk a little bit about mindset. Um, but before I go there, um, I'm agreeing with your point, which is, you know, we're 40 or 50 years into using the internet, and pretty much everyone listening in is an ac-actually an expert. Um, you know, you all know how to use, uh, do emails.

You all know how to send messages. You all know how to use Spotify. You all use the internet every day across your businesses in many, many ways. You're all experts. But if I asked any of you to explain the coding of TCP/IP or HTML or Frame Relay and how they work, my bet is almost 90-something percent of you probably don't even know those terms, or if you've heard them, you couldn't actually explain them.

And that's really important to hang on to. You can be an expert at leveraging the internet without actually understanding how it works. And so you can be an expert at use-- applying digital finance in your business and using stable coins without actually needing to understand what a Merkle root is or what a hash rate is in blockchain. And the same thing is true in AI. You can begin to work with agents without understanding the software that sits underneath an agent and, uh, that you're gonna leverage and use in your business.

So it comes to mindset. And so here, I'm actually gonna steal a concept that our AI partner and my daughter, Talulla Lemel, has put into her new book. But I think it's very simple, and, and I wanna spend just one second on it, Ryan. It's very simple. It's a little matrix.

On one side is goods v. bads, and on the other side is today v. the future. And now you've got four cells, right? You've got the goods and bads of today and the goods and bads of the future. Most human beings fear that innovation will cost them the goods of today and will open up bads in the future, okay? And because of that, they live on the, on an axis fe- of fear.

They're living fearfully. They are fearing that innovation is gonna destroy my business today, and innovation is gonna do things in the future that I don't want, like cost me my job, right? Now, the other axis is very interesting 'cause the other axis is that innovation might actually solve today's problems, the bads, and it might unlock future goods we can't even imagine yet, right? And that axis is an optimistic asset, uh, a-a-axis. It's actually the innovator's axis, uh, uh, uh, axis.

Um, entrepreneurs operate on that axis. They believe that they can solve the problems of today, and as Steve Jobs famously said, they're crazy enough to believe that they can change the future in a positive direction. And that's the axis of innovation and positive change, and it's a choice. And, and the reality is that your brain is engineered to make you fearful of uncertainty. Uh, and, and it's, it's, it's, it's a defensive mechanism.

We, we all have it in our brains that if we're not sure about something, we should be fe-fearful. That's called the amygdala, in fact. But the other axis is the axis that opens up opportunity. And so as a small business owner or an entrepreneur, the, the most important thing right now Is to get into that mindset. You know, believe this webinar.

Believe that we're gonna live in a digital autonomous future whether you want it or not today, and that it will unlock a lot of new to the world opportunities we can't even imagine. But it will also solve a lot of the businesses you struggle with every day in your business if you're willing to give it a go. And if you're an entrepreneur, you'll probably spend most of your time using these technologies to build new businesses we can't even imagine. If you're a current small business or, or for that matter, large business CEO or board director, you'll probably use these technologies first and foremost to solve the biggest problems in your business. And so just like I, I said, you know, uh, black lung in chimney, in chim-- uh, chimney sweeps was the biggest single issue for the little boys of London who had to go up the chimneys.

They all died. So solving that problem with innovation was a good thing. It wasn't a bad thing. Well, in your business, I don't know what your biggest pain points are. It could be we can't find new customers, or it might be we can't, uh... we, we forget to, uh, revisit the customers who bought in the past to get them to buy again.

Or it might be it just costs too much to run the warehouse with all the people that we have in the warehouse. I don't know what the issues are for you. My bet is the innovations that we're funding and that are here already can actually help you, uh, against most of your core b- uh, business challenges. Um, but it's a mindset issue because if you're gonna be fearful, uh, you're not gonna get anything positive done. And most of the world, unfortunately, sits in that mindset until they don't have a choice.

I think that is a wonderful, uh, place to wrap up our conversation because I could not agree with you more. Um, to your warehouse example, one of the things I think is funny about, uh, the people who protest the-- losing these warehouse jobs, it... You know, so coming out of the property casualty insurance space and workers' compensation, warehouse jobs are one of the most frequently injured positions in all of our workforce. I mean, these are people who are constantly injured, oftentimes with, um, le-- uh, issues that last throughout their lives with back-related things, knee-related, shoulder-related. And ultimately, they, uh, you know, they're, they're, they're taking pain meds, and they're on these things for long periods of time because, as you said, this is work that we're, we're not designed to lift these heavy things, so now we have, now we have to have a forklift, or we have to have a crane, and these things fall and people drop st- And it's like, okay, I get that that is a job, right?

And p- and, and, and someone, a man or woman, makes their money doing that thing. But I think to your point, could that person be reallocated to a position where their, their human skills can be used to, to higher value and not have them have boxes fall on their head, uh, once a year, and they have to be on workers' comp for a month? Like, you know, these are, these are some of the places where when I think we, to your point, like, when we start thinking optimistically about the future, it-- the world opens up in a way that I-- y- you, you've used the word a couple times. It's unimaginable, and I just-- I, I couldn't agree with you more. Um, with that being said, I know my audience is gonna wanna go deeper into your world.

Where are the places that they can follow along with what you-- your thoughts, your work, and, and ultimately, uh, uh, go deeper into what you do? Yeah. So, so remembering that we're an investment firm, and we are primarily, uh, you know, venture investors, um, that isn't for everyone who's listening in. Um, if you, if you are an investor, and you want to learn more about us, you just go to fifthera.com, um, and we ha- share a lot of information. There is information that we share that I think is interesting for everyone, uh, to take a look at.

We do newsletters, podcasts, and so on. You can access them through fifthera.com as well. But I would not say by any measure that we are the world's leading thought leaders, uh, uh, uh, around how this impacts small businesses. Uh, we are-- You know, we're backing disruptive, fast-growing AI, digital finance, and blockchain companies. So, so for if-- depending upon who your audience is, we may not be the right people to follow.

Uh, we have written some books. You can find them on Amazon and on Apple. Uh, I think they're good general... There are books about the coming fifth era and what that m-may look like. Um, you're very welcome to take a look and see if they're good for you.

Um, you know, Ryan, uh, I mean, I-- if your audience has a lot of small business people, my bet is you're more valuable to them than I am because it's not so much that they need a vision of the future. It's they need help just getting started, and that is a very pragmatic exercise. So I'll stop there. Um, it's not that I don't want people to follow us, take our newsletter, listen to our-- buy our books. It's just we're an investment firm, and we're designed for investors.

Uh, we're not necessarily the best people to hang out with if you're, uh, operating a small business and you're trying to fig-figure out how to scale up with these technologies. Well, I, I appreciate your humility. I will say we have plenty of people that do do, uh, a lot of investing in, in the, in the audience. But I also think, if for nothing else, I think an optimistic view on what's coming is just as powerful and a message of optimism and, and where the world is going is just as powerful as the tactics of getting there. Because- Right ... if you're, to your point, i-in, in the matrix that you described, if you're living on the fear, uh, a-axis, it, it doesn't matter what tactics you use.

You're, you're gonna always be behind the eight ball. You're always gonna be finding new obstacles where the, the optimistic view of what's coming... I just don't see a better operating system, right? I don't think scarcity mindset, fearful mindset, I don't, I don't think this is the time for that. This is-- It's the opposite.

So I just appreciate the conversation. I appreciate your time very much. I have enjoyed it and learned a ton and appreciate you. Thank you. And I know the audience will as well.

Uh, I wish you nothing but the best. And guys, we'll have links to both the books, um, 'cause I did go through a couple of the books and, uh, to the, to the website and stuff, so just scroll down while you're watching on YouTube, listen wherever you do. Uh, Matthew, this has been an absolute phenomenal conversation for me personally. I appreciate your time, and thank you so much. Thank you very much, Ryan.