March 27, 2024 • 1hr 20min
The Man Who Owns 1% Of ALL Bitcoin
My First Million
Key Takeaways
- Anthony Pompliano (Pomp) believes it is riskier for companies to hold large amounts of US dollar cash versus bitcoin on their balance sheets, if they have a long-term outlook and don't need the cash for day-to-day operations.
- Pomp has been investing in and building companies in various industries beyond crypto, including line striping businesses that could benefit from the rise of self-driving cars.
- Being ambitious can kill companies if misapplied - there needs to be a product-market fit for ambition. Small businesses often intentionally stay small.
- "Small businesses don't stay small on purpose." - Brent Beshore. They often dominate a local area but have trouble scaling.
- The best career path involves becoming a "ballplayer" - someone who can build things, invest, hire, manage, and fire. This takes practice.
- Someone who has built and run companies is often a better investor than someone who has only analyzed companies from afar, as they have a healthy skepticism.
- Facebook had an extremely high talent bar and intense interview process focused on practical problem-solving scenarios.
- When investing, Pomp looks for 10X reputation opportunities (e.g. OpenAI, Anthropic) and 10X economic upside opportunities (e.g. Eight Sleep, Varda Space Industries, Karat, Placer.ai). The riskiest bets are deep tech plays like Rainmaker and Galvanic.
Introduction
In this episode of My First Million, hosts Shaan Puri and Sam Parr talk with guest Anthony Pompliano (Pomp), an entrepreneur and investor. They discuss Bitcoin's price rise, Michael Saylor's huge Bitcoin bet at MicroStrategy, Pomp's investments in industries from robotics to space manufacturing, stories and lessons from working at Facebook, Andrew Tate, and more.
Hosts: Shaan Puri (@ShaanVP) and Sam Parr (@theSamParr)
Guest: Anthony Pompliano (@APompliano), entrepreneur and investor
Bitcoin's Rise & Michael Saylor's Huge Bet
Bitcoin's 4-Month Price Jump from $37K to $69K (0:40)
The approval of Bitcoin spot ETFs has driven huge inflows of money and demand, causing the quick price rise to new all-time highs in just two months since the ETFs launched.
Michael Saylor's Bitcoin Bet at MicroStrategy (7:11)
- Saylor had $500M cash on MicroStrategy's balance sheet. Believing dollars were being devalued by inflation, he wanted to invest in an asset he had long-term confidence in.
- After analyzing options like real estate and gold, he chose Bitcoin, putting 85% of the balance sheet into it.
- He kept doubling, tripling and quadrupling down, raising money via debt offerings and stock sales to buy more Bitcoin whenever he could.
- MicroStrategy now owns 130,000 BTC worth over $10B - a huge bet. "If it works, then we'll call it a genius bet. History is written by the victors. Let's see what happens." - Pomp
- Saylor pioneered this treasury strategy, but notably no other public company has followed his lead yet, despite the bet appearing to work so far. The lack of copycats may be a data point to pay attention to.
Saylor was likely motivated to make this bet because MicroStrategy's stock price had been flat for 13 years from 2007-2020. He had to do something with the cash that would cause the stock to rise, as continuing the core business wasn't being rewarded by the market.
Pomp's Weird Investments in Non-Crypto Businesses
Line Striping Businesses (21:07)
- Pomp invested in line striping businesses (that paint lines on roads) after reading how degraded road lines made it hard for self-driving Tesla's to navigate.
- He realized with the rise of self-driving cars, governments will mandate roads be painted more often for safety, making line striping businesses much more valuable.
- These businesses often do mid-7-figures in revenue with $1-1.5M in EBITDA. Owners take home $500K+ in compensation, live rich lifestyles in rural areas.
- "Small businesses don't stay small on purpose." - Brent Beshore. They dominate a local area but struggle to scale.
Other "weird" businesses Pomp has looked at include traffic cone/barricade rental companies and chemical product businesses. He noted the drastically different entrepreneurial experience and philosophy in these blue-collar industrial/manufacturing companies compared to typical Silicon Valley tech startups.
Ambition Can Kill Companies if Misapplied (31:54)
Pomp believes there needs to be a product-market fit for ambition. In some businesses, expanding too ambitiously can suck out profits and blow up an otherwise good business. But in tech, you have to be ambitious due to the power law returns.
"I think that there's this element of, like, ambition can kill companies if you're in the wrong business...if you're running a tech company, like, you have to be ambitious. The whole point is the power law. But if you're running some of these other businesses, like, yeah, maybe you don't want to make more than $800,000, because in order to do that, you've got to double the team size, your profit margin goes down, your stress level explodes, and, like, the odds of success don't actually line up with how much money you could make." - Pomp
Becoming a Ballplayer: The Best Career Path
Good Businesspeople Can Be Good Investors and Vice Versa (17:54)
Pomp uses the analogy that in entrepreneurship, the most coveted position is to become a "ballplayer" - someone who can build things, invest, hire, manage, and fire. This takes practice, but the skills transfer across domains.
A great quote illustrates this: "I'm a better investor because I was a businessman. I'm a better businessman because I'm an investor." - Warren Buffett
Someone who has built and run companies is often a better investor than someone who has only analyzed companies from a spreadsheet, as they have a healthy skepticism and understand how hard certain things are to do. They don't overreact to short-term news.
Intense Interviews and High Talent Bar at Facebook (38:06)
Pomp and Shaan discuss the extremely high talent level of employees at Facebook and the intense interview process, which focused heavily on practical problem-solving questions rather than brainteasers or generic "tell me about a time" prompts.
Pomp describes Facebook's PM interviews having 3 different evaluation tracks, with the most insightful being asking candidates to troubleshoot realistic product issue scenarios on the spot. Seeing how they approach problems revealed if they had the necessary experience and lessons learned.
Even relatively unknown/unheralded employees Shaan met while interviewing were unbelievably impressive, having accomplished incredible business results: "Holy s**t. The level of talent at this place is insane, dude." - Shaan
Pomp's Criteria for Investments: 10X Reputation or Economic Upside
10X Reputation, Not Necessarily 10X Returns (40:48)
- OpenAI and Anthropic - may provide "only" 2-5X returns at their current huge valuations, but getting a job there provides a 10X reputation boost on your resume as they are seen as the premier AI companies
10X Economic Upside Potential (51:36)
- Eight Sleep - great operators, profitable despite selling hardware, strong health optimization mission
- Varda Space Industries - manufacturing drugs in zero gravity, then returning to earth. Huge if they can make it cheaper than earthbound manufacturing. Mission of using space to benefit earth.
- Figure AI - building humanoid robots to solve labor shortages. Founder "picked a fight" with Elon Musk.
- Karat - marketplace for companies to hire reliable manual labor. Already at $100M ARR.
- Placer.ai - using anonymized location data from mobile phones to provide retail foot traffic analytics. Useful for real estate and finance.
Riskiest Bets - Deep Tech Moonshots (1:43:47)
- Rainmaker - using drones to "seed" clouds with chemicals to induce rain. Potential to fight droughts, maybe even steer hurricanes eventually.
- Galvanic - providing cybersecurity for public infrastructure (power plants, water treatment, etc). Founded by former NSC official who saw a need. Huge potential demand but very early.
Other Discussion Topics
Pomp's Solana Trade (1:05:39)
Pomp describes in detail a successful Solana trade he made, including his thesis (it would outperform Bitcoin and Ethereum in the short term bull market) and how he scaled into the position on dips. He doesn't think he'll hold it long term like he does Bitcoin though.
Interview with Andrew Tate (1:12:14)
Pomp interviewed the controversial media personality Andrew Tate back in 2021 before he was widely known. He found Tate to be highly intelligent and internet-savvy in delivering his viral messaging, even if he disagreed with much of what Tate said.
Key lessons were 1) People don't become viral successes without intelligence and 2) Be careful of becoming "the main character" if you're not prepared for the downsides of notoriety.
Conclusion
This wide-ranging conversation covered many topics around investing, company building, career strategies, and the guests' personal experiences. The through-lines were thinking long-term, developing deep competence across domains, and identifying 10X upside opportunities while managing risk.
While Bitcoin and crypto investing were discussed, Pomp showcased the breadth of his interests, from unglamorous industrial businesses that could benefit from new technologies to futuristic plays in AI, robotics, space manufacturing and geoengineering.
The career advice to become a "ballplayer" capable of building, investing, managing and more was memorable, as were the stories of Facebook's elite talent and intense interviews.
Finally, the Tate discussion, while only a small part of the episode, highlighted Pomp's willingness to engage with controversial figures and ideas, always with an eye to understand and learn even from those he may disagree with. An instructive approach for anyone navigating a complex world.
