Predicting Consumer Trends By Studying Global Culture

Marlon Nichols, Co-Founder & Managing Partner @ Cross; Martine Paris, Tech Reporter

Ascent Conference 2019

Martine Paris [00:00:06] Excited to be here with Marlon Nichols, Marlon is a venture capitalist and his firm has just merged. We’re here to talk about cross-cultural trends, but he’s also just had a merger with Adrian Fence’s venture capital firm. And a little bit, I guess I should introduce myself. I’m sorry. I’m Martine Paris. I’m a tech reporter. I write for a variety of outlets. I write for a fast company. And VentureBeat, I’m a contributor at Forbes and I also cover FinTech for Queens Asking the Block. I write about a lot of things. And then last week I was interviewing Steph Curry at Disrupt. So I get to do a lot of exciting things and I am very excited about speaking with Maalin because you have a special way that you invest. And so can you introduce your fun to the audience and tell them a little bit about how you incorporate cross-cultural trends into your investment thesis?

Marlon Nichols [00:01:08] Cool. So, hey, everyone, I’m Marlon. Pleasure to be here. Yeah, my I started a fund four and a half years ago called Cross-Cultural Ventures. Cross-Cultural Ventures is a fund that invested in seed stage tech and tech enabled companies with a thesis of cultural investing. And we define cultural investing as basically a look at pop culture under the guise that pop culture drives everything in our society. And so what we try to do is study human behaviors and figure out which of those behaviors are emerging and can become social norms or part of popular culture and then make investments in companies that are producing products or solutions that are poised to ride the waves of those emerging trends. And at the top of this year, we merged, as Martin was saying, with another L.A. and San Francisco based fund called M Ventures and rebranded our firm to make venture capital. And it’s a it’s an interesting endeavor because of the people that are involved. So along with with me, I have the fifth mayor of Washington, D.C., who also spent about four and a half years with Andreessen Horowitz as a special advisor to companies like Lyft and others navigating highly regulatory environments. We also have one of the top eight Hollywood agents ever and a guy named Charles King, who represented at one point Oprah Winfrey, Tyler Perry, Michael Michael B. Jordan, Ryan Coogler, Prince, et cetera. So it’s a it’s a very interesting and different team as it relates to to venture capital.

Martine Paris [00:02:59] Yeah. How exciting. And Adrian, he’s had his hand in investing in conversational A.I. Are you guys continuing with that as a theme, investing in A.I. or.

Marlon Nichols [00:03:11] Yeah, I mean, so A.I. is a technology. It’s not necessarily a behavioral theme. Yeah. So unless you count robots and their personality. Yeah. Or automation I guess would you know could, could, could, could be a theme or the future of work. So the future of work is definitely a place where we’re spending a lot of time and, and have made investments and I can play a big role there. One, for example, one of our investments is a company out of Maryland called Satellite that’s basically recruiting engineers, software engineers, not from the Stamford’s or the enmities of the world, but from community colleges and Craigslist. And they’re targeting people who have no experience coding. And what they’re doing is they’re giving them an idea of an aptitude test to determine whether or not they could be a great software engineers. And should they score high on those on those tests, they then train them for six months and then hire them, as you know, software consultants to Fortune 100 companies like Nike and et cetera. So, yeah, it’s going to be a big part of our world.

Martine Paris [00:04:28] Yeah, that’s a super hot trend. I mean, that’s triple by. So thing is that they can find talent anywhere. You don’t have to be from Stamford or be in San Francisco to become a coder and.

Marlon Nichols [00:04:37] talent is ubiquitous. Opportunity is not. And so that’s what this company is trying to change. Let’s make both of them ubiquitous.

Martine Paris [00:04:45] Fantastic. OK, well, share with us what you put out a report every quarter, is that right? On trends?

Marlon Nichols [00:04:50] We don’t really have a cadence. We do it when we kind of when we feel like you, OK, but yeah, we call them the state of technology and culture. And we’ve released three of them so far. The first one was. Kind of like an unconference, the unperfect parent. Right, so the idea that parents are not perfect, but they would like to be. And so how can technology help them in that in that journey? And out of that, we made investments in like a baby food company called Yummy, a health care digital health care company focused on prenatal and postpartum health called Mommy. And if you’re looking that up, it’s not like you think M.A HMV and then Wonder School, which is kind itself as the Airbnb of early childhood care. So just like Airbnb turned, help people turn their homes into hotel rooms, one to school is helping people turn their homes into daycare and preschool facilities. So that was one. The second one we we release was culturist currency. And that one was looking at the huge underserved black and brown communities that spend ridiculous amounts of of of capital on technology and new products, et cetera, but that have significant challenges and their own and have tremendous influence. By the way, when you think about pop popular culture. But I have a lot of challenges in those neighborhoods that haven’t been addressed. And so the thought behind that one was if you actually build solutions that fit with those challenges, if they’re spending capital or their their their money on things that aren’t necessary, imagine how much they’ll spend on the things that they actually need. And so, you know, culture is currency. And then the the most recent one we call the conscious consumer. And this is really about consumers and employees using their either their dollars or their, you know, their their attention to force bigger brands to do the things that they care about or pay attention to the social issues that they care about. And so the kind of the what we’re searching for, there are companies that can help brands and companies understand customer, consumer and employee sentiment before you lose hundreds of millions of dollars by being on the wrong side of, say, an immigration ban. So, yeah.

Martine Paris [00:07:40] Fantastic. All right. Well, a lot of people in the audience might be curious just to hear about and check size stage that you’re investing in and tell us a little bit about.

Marlon Nichols [00:07:52] Sure. What you guys are doing. Yeah. So we’re seed stage investors. And for seed stage these days means a lot of things to a lot of people. For us, what it means is that a company has built a product and they’re starting to get some feedback from the marketplace. That doesn’t mean that they’ve had a full launch. It could be a beta launch, you know, it could be a partial launch or whatever. But the audience that you are targeting as a customer is reacting to that. And so in addition to how, however we may feel about what you’re building, we’re getting some data back to support or to detract from what we what we think. And then our check size, typically half a million to one point five million and with a target ownership percentage of 10 percent.

Martine Paris [00:08:43] Wow. Nice. OK. And in terms of, you know, seeing traction in the marketplace and like, are you looking for a size of the installed customer base for that size check.

Marlon Nichols [00:08:58] So it depends. Right. Some some, some companies that metric that we’re going to look at is our sales. For others, it could be, you know, viewership and or retention of our viewers, et cetera. So it’s whatever whatever the key metric for that business is, that’s the thing that we’re going to have to look at. For instance, we one of our early investments is in a company that’s focused on mixed reality for the for the enterprise. Right. So new ways to do training, new ways to to to do manufacturing remotely troubleshooting remotely for, you know, companies like Lockheed Martin and Boeing and so on. So the so we wanted to make sure that those target companies were actually spending time with them, that they were going through pilot projects with them, that they were paying for those pilots, and that there was you know, there was a direct line or something that suggests if you. Do these things properly, then this will result in a bigger commercial contract, so that’s just one example.

Martine Paris [00:10:12] So making sure they have their relationships in place, not necessarily don’t then have to have the deals closed, but certainly that.

Marlon Nichols [00:10:19] The Joint Enterprise Company, you want to make sure that they do have relationships with the their prospective customers and that those relationships are growing and that the value proposition that they’re telling us, you know, is actually about the same value proposition that the prospective customer sees.

Martine Paris [00:10:38] Very cool. Are you are you leading rounds at that size? And then at what level of involvement do you like to take within the company? It sounds like you have a lot of talent on your team in terms of even getting brand integration or a celebrity or social media influence or integration into campaigns for these companies. Can you speak to a little bit about, you know, how you see yourself helping your portfolio companies?

Marlon Nichols [00:11:06] Yeah, I mean, so the thing our relationships are really, really key, right? You’d be pretty hard pressed to find another seed stage fund that has a robust, robust and deep relationships and media and entertainment in professional sports and government and municipalities, Fortune 100, 500 companies, et cetera. We bring all those things to bear when we’re working with with our with our portfolio. And then on top of that, one of my other partners was a stand in, you know, acting CFO and CEO and CFO for a number of of companies. You know, when he worked at two of the most prominent accelerators and in L.A., which was science and amplify. OK, so there’s also operational things. You know, I was an early employee at a software company, Help Scale. That company, took it to Europe and we sold it to SAP. So, like, there are very specific things in our background that we can we can bring to bear day to day. And then our network is unmatched.

Martine Paris [00:12:17] And you have there’s a whole bunch of really exciting funds that don’t like to lead, like, for instance, Steph Curry’s funds. He has C30. They only like to go with established partners. They don’t take a lead. Are you do you have like kind of like and they just have, like, their C30 summit? Right. A lot of the venture capital firms are building out both the media platform like you have with your your reports, as well as network effects like these summits are these conferences where they can also bring in other investors like staffs, funds or other funds. Are you guys doing something similar?

Marlon Nichols [00:12:53] We do two things. So I’m one of my partners. Charles runs a media company called Macro. They actually produce films and in series and four at Sundance every year. There’s it’s kind of a party, but you invite, you know, people from all all walks of life, different professions, and you bring them all into the same room and you watch the magic happen. We also do an event called the Culture House at South by Southwest.

Martine Paris [00:13:25] Oh,.

Marlon Nichols [00:13:26] Yeah,.

Martine Paris [00:13:26] I have to cover it this year, huh. Next year.

Marlon Nichols [00:13:29]  Ben. OK. yeah.

Martine Paris [00:13:32] I’m going to cover that. He sent me an invite. Yeah.

Marlon Nichols [00:13:36] So that one’s that one’s pretty cool because we, we integrate some content. So for instance, this year I interviewed T’ai his his business partner Jason and B, Michael Cox, which is one of the most successful producers in like history about the intersection of music technology and investing. And then the other kind of conversation was with Dylan Parnell, who is one of our CEOs. He runs a company called Play Verses, which is in the E sports space, just made a lot of news because he raised 96 million in thirteen months. And yeah. So.

Martine Paris [00:14:18] What’s the franchise really to do like Yeah.

Marlon Nichols [00:14:22] Well seems so, so it’s a lot of them. Yeah. Basically every, every important game and that’s out there now. Anthony Yeah. Targeted at high schools and amateurs. So we had a conversation about, about that, the formation of that company and where we see the EA Sports world going. But in addition to that, I mean, it’s a day long networking and event and party filled with all the people from those different groups that I mentioned. So great opportunity for startups to, you know, to meet potential partners and potential other investors.

Martine Paris [00:14:57] Yeah, I was going to ask you so about deal sourcing. How do you you know, how how are you finding your best deals? Are you affiliated with, like, YRC or any of the other? You mentioned two accelerators out of L.A. and tell us a little bit about your sourcing strategy.

Marlon Nichols [00:15:11] Yes. So the our best deals come from within our network. We’re a little bit different than most venture firms in the sense that we actually read and investigate at some level every single deal that sent in to us from our website. Not many venture firms can can, you know, do that. So if it’s so if it’s interesting and it fits what we’re doing, you will hear from us. Well, you’ll hear from us one way or the other in 14 days. There is not a good fit or we want to continue the conversation. Unfortunately, we haven’t sourced a great deal from that platform yet, but I’m hopeful that it will happen one of these days. But our best deals come from our network. The very best deals come from entrepreneurs that we’ve worked with in the past. So, you know, we just we just close a deal recently with a group that I had invested in their first company, Crosscourt, which got acquired by another one of our portfolio companies fare. And so they did their their earn out with fare and they left to start a new company, which is still in stealth mode. But we were one of the first calls that they made and we invested in that. Another example of that is we’re early investors in Thrive Market, which is like an online grocer, and Ganar Lovelace, who was one of the co-founders and co CEOs, left his his gave up his CEO role and created another company called Good Money, which is creating a new bank. So we’re in that one kind of like Time Square, and that’s different.

Martine Paris [00:16:51] A new bank.

Marlon Nichols [00:16:51] A new bank we’re going back to the old days where if you bank with them, you have ownership within the within the company. You own a portion of the bank. So everyone’s and everyone’s incentives are aligned. The union like a credit union. Kind of. Kind of. Yeah. Just taking it a step step further. And then they’re they’re entrepreneurs. The entrepreneurs have friends that are entrepreneurs and they all kind of roll together. And so they have a great experience with us. And, you know, a friend is is building a company. They’re going to communicate to their friend that we’re an investor, that they should they should speak to. So those are our top kind of sources for deals. Then there are accelerators and and other venture firms that we’ve worked with in the past and like working with. So so they’ll refer or refer things. You want to mention some of those. I mean, so Science Amplify Founders Fund, Andreessen Horowitz, G.V., which is Google Ventures. It is a lot of them. And yeah. So that’s that’s primarily where we get our deals from.

Martine Paris [00:18:00] OK, so two things. Tell us the URL that they should go to to to send their pitches in and how they can best contact you and and then also tell us what you’re looking for in the pitch. Like what? What are the three most important things that you’re looking for when they send it in?

Marlon Nichols [00:18:17] So we’re easy just Mack MASC, Venture Capital, Dotcom, and you can there’s on the contact page, there’s a form, you just fill it out, submit your deck and we’ll be with you most of the question.

Martine Paris [00:18:31] And what are the like the three top things that they should pay attention to when they send in their debt?

Marlon Nichols [00:18:35] Yeah, the other way to get in touch with me on Twitter. So Marlon’s see Nichols’ at Wannsee, Nuckols and I. Tend to respond to almost anyone that reaches out, but the things that matter for us, the market opportunity, so we’re looking for really huge markets, right? So multibillions trillion dollar markets. And that’s important because if you only get a certain percentage of that market, we want to know that you can still become a billion dollar business and just kind of, you know, digging into that a little bit deeper, you have some old or mature markets that aren’t that are huge, that aren’t necessarily growing anymore. We’re not so focused on those. We’re focused on really large markets that continue to grow year over year. Then it’s, you know, what’s novel about what you’re what you’re doing. How are you different from other solutions in the in the space? And can you can you defend that space, you know, far into the far into the future and then probably the most important things. Who are you and why? You know, why should we back you? What what’s unique, what makes you uniquely qualified, makes you uniquely qualified to go after this opportunity and build it out. That’s probably the number one thing along with the kind of the aptitude and, I don’t know, personality of the of the founder. So are you adaptable? You know, are you are you coachable? Do you listen to the marketplace? And as you listen to the marketplace, are you flexible enough to move where you see the marketplace moving to things like that?

Martine Paris [00:20:21] That’s really helpful. You know, you’re leading these rounds white and you’re investing at seed stage. What timeline are you looking for? For exit? You share with us some of your strategy and you that it could be like five to 15 years or whatever. But what do you like what is your sense when you go in?

Marlon Nichols [00:20:37] Yeah, it you know, it tends to be longer, right. Scott Cooper at Andreessen Horowitz said recently in his in his book, Like Lemons Ripen Early. Right. So we don’t we don’t necessarily want our portfolio companies to be exiting too quickly. You know, we were in the early investors and Gimblett media that sold to Spotify and that was a sizable exit for us. But had they had it been a little bit longer, it would have been an even larger exit. So I don’t know on we’re probably looking at, you know, for really a home run type exits, six, seven years, hopefully before ten years, because that’s when the fund expires. But what if.

Martine Paris [00:21:23] How large is the fund? Oh, okay.

Marlon Nichols [00:21:28] What I would say is that right? What I will say is we invest, we target to invest and about 40 companies, which is exactly what we did, and cross culture. And again, you can kind of do math, but it’s you know, the check sizes range from half a billion to one point five. And then we reserve anywhere between 20 and 30 percent to follow on in our top 25 percent of our investments.

Martine Paris [00:21:56] Well, it’s such an exciting time for your fund. Is there anything else? We’re at a time. Is there anything else you’d like to share with the audience?

Marlon Nichols [00:22:02] No. I mean, if you have questions, happy to take them, but. Yeah.

Martine Paris [00:22:05]  Great, and Marlin’s heading on to I think we have to go off stage. But we can we can we’re going to step off stage after and take questions. Marlon’s heading on to Web summit, so if anybody’s heading there, it’s next time you can catch him speaking? Speakers are good.

Marlon Nichols [00:22:20] Yeah.

Martine Paris [00:22:20] And thanks, everybody so much. Thank you.

Speakers

From VOIP to MOIP

Alex Mashinsky, Founder & CEO @ Celsius Network

Ascent Conference 2019

[00:00:05] How many you heard about voice of IP or using voice of IP? Yeah, what’s that right? Yeah, everybody is right. Well, I’m here to share with you also money over IP. Did you hear about money over IP? Few people did. Right. OK, go tell it to all the people who are not in the room. We’re not going to learn anything today. So we all basically live in this pyramid. You see a pyramid on the right side or your left side. And we all basically wake up every morning, right, we work, we go to work, we create value, we create earnings for our bosses who create earnings for their bosses and so on. So the one percent can basically maintain the one percent. Right. Today, if you look at America, half of Americans don’t have four hundred dollars to pay for an emergency bill. Half of Americans are in less than fifteen dollars an hour. Right. So the system and I’m I’m an immigrant. I came to this country 30 years ago from a communist country. Right. So obviously, capitalism works much better than socialism, but or communism. But it’s not working for ninety nine percent of Americans. And what we have now is this new system, decentralization. You want to think hard about decentralization? One, two, three. Anybody else? For. So decentralization is a new concept, right? It’s like a fifth system, right? We had communism, socialism, capitalism and all kinds of other Buddhism. Right. And now we have you like that, right? Buddhism and now we have decentralization. Right. It’s a way of thinking. And it basically says, instead of thinking of yourself as to what is your ability to earn capital or earn profit, how about we measure you based on your contribution to society? How many of you would vote for that? As a way of living. OK, so it’s a movement, you either belong to the left side and you probably work on Wall Street or you’re on the right side and something inside of you, your your your soul is saying, hey, you’ve got to do better than this. You can do something else. So what we’re what we’re trying to revolutionize is really money.

[00:02:27] If you think about money and you go back all the way to the Roman Empire, you would see money has not changed in almost five thousand years. We went from coins to bills to notes to digital money, right, but nothing has changed, right? The money’s always concentrated today. Again, wealth in the United States is more concentrated than any time in the history of mankind. OK, more concentrated wealth is more concentrated than any time in history, right? If you look at these different currencies or different empires beside, if you exclude the Roman Empire, almost every other empire with dominant currency only lasted about 100 years. So I’m here to argue that we’re at the end of the cycle for the U.S. dollar and something else is going to come and replace the U.S. dollar because of social unrest. How many of you heard about the block chain? So a lot of you heard about it. What does it look like when you when I say block chain? What what what image comes to your mind?

[00:03:31] Anyone? Ledger, yes, what else?

[00:03:38] Stamp, very good, but but I think it’s actually a tank. And the reason I think it’s a tank is because it’s only good for one thing, I know we have all this excitement and people saying all ledger, the block chain is going to cure cancer and it’s going to take care of all of our problems and. Right. Does three thousand companies trying to do everything with the block chain. But really, it’s an amazing open ledger that allows us to do something we couldn’t do before and that something is to replace money with something that eliminates the middleman, eliminates the toll collector. Right. We’ve eliminated the Internet, the limited toll collectors everywhere. Right. We don’t we basically barely go to the mall anymore. We order everything. Everything is delivered instantly. But we have not been able to find a way to replace money. And what the blocking allows us to do is to basically get ourselves in the tank and transact with anybody in the world safely without us getting attacked or stolen and our assets being stolen or having to use a toll collector that is really not acting in our best interest. Talking about not acting in our best interests, so this is a chart of all the banks since 1990. This will we ended up today we have about four dominant banks in the states. And the great thing in the background is the interest that these banks pay. Anyone in the room earns more than two and a half percent on their money.

[00:05:08] Anyone, anyone remembers when used to earn eight or nine percent of your money.

[00:05:14] So why is that why did we why did why are we earning so little on our money? Why isn’t our money working for us while we are working for our money?

[00:05:23] Do you ask yourself the question?

[00:05:26] If you do, you will find out that it has nothing to do with the economy or the Fed or anything else it has to do with this, with the consolidation of the banking business. You see, what banks do as toll collectors is they take your deposit, you get paid every two weeks, let’s say. Right. And they lend it to the woman behind you on her credit card. They pay you one and a half percent. They charge her twenty four percent, twenty four point seven. Actually, that’s the average in the United States, twenty four point seven, one point six trillion dollars worth of debt on credit cards. Right. So it’s six hundred billion dollars worth of interest that we all pay. We all Americans, just American pay to whom?

[00:06:05] Not to ourselves. Interest doesn’t come to us. It goes to the shareholders of these banks. Right. So. What we decided to do, Celsius decided to say, wait a second, why don’t we take 80 percent of the profit instead of giving it to the shareholders? Why don’t we just give it to the depositors? Isn’t that a simple concept? Right. This is exactly the same thing banks do, but instead of taking that money and taking all the fees and all the the top four banks charged the poorest Americans. Thirty six billion dollars in just overdraft fees last year. The people that cannot finish the month that when one dollar over their account balance had to pay a 30 dollar fine and that’s what they live on, that’s where all these profits come from. So I don’t think that’s a fair system. So if you look at the fees that all of the banks charge, you can do everything the bank does on a block chain, basically for free. And we charge nothing for that service. All right, so again, you deposit, you get one percent. The bank lends it and they charge twenty four percent. Now, where’s all the profit going? Why can’t we replace it with a system where the depositor earned seven percent and the borrowers pay nine percent? Isn’t that a more fair system? Give back 80 percent back to the depositor. Who would vote for that, anyone here would say, hey, I think that’s a fair system. So, you know, how many laws exist against this prevent you from doing this in every state in the United States? There are hundreds of laws, you know, Sarbanes-Oxley. Sixty thousand pages. Of regulation that guarantees that those four banks don’t get any competition. That’s all they did 2008, remember 2008, all we got out of 2008 is a guarantee, a warranty that no one will be able to compete or do anything like this for you or act in your best interest. So Anyone here heard about the Bitcoin, anyone has Bitcoin? So what does a bitcoin do, the bitcoin is a new set of rails. It’s a completely separate highway that does not go and use the system that the banks use. Right, to deliver the same service. It bypasses all the toll collectors. Now, I know some people say, oh, it’s very risky, it goes up and down, forget about the price action, look at the technology, look at the functionality of what it delivers. It allows any person to transact with any person on the planet without any intermediary, without any middleman. OK, now what what do you know in your daily interaction, you can do the same thing. What else can you do, what you can transact with anybody else or interact with anybody else? Without any toll collectors. Cash, well, cash, there is usually either an ATM to get it out or somebody else, you know, Western Union or somebody you want to move money overseas. Thirty dollars at least, right? I mean, so. I’m talking about voice of IP, right, anyone here used voice over IP. Do you remember before voice IP or to basically use your phone company to charge you two or three dollars a minute?

[00:09:45] Fifty cents for local calls. 9X, remember NYNEX, Bell Atlantic? All those guys, they were toll collectors, they were the Monopoly’s that decided how much to charge us to call our uncle overseas or our son was in the military or whatever. Right. They basically did exactly what banks do today. So how did we get rid of all those guys?

[00:10:14] They made most of their money from International Settlements that AT&T 1990. It was the most profitable company in America, most dominant company in America, made most of its profit from just the fact they charge us three dollars to call Japan or Korea or any other country. So what happened? How did we get rid of those guys? Did they lower their prices? Did they come to you with amazing saving plans? No, we created a technology called Voice of IP. I was involved with the original patents 1994. You don’t I know you don’t believe me. You can Google. You can Google that.

[00:10:50] So I wrote the original patents I came to, people said, hey, look, you don’t have to pay NYNEX, you don’t have to pay Bell Atlantic.

[00:10:57] Here is a server that bypasses a new set of rails using TCP IP UDP that bypasses these toll collectors. Today, four and a half billion people use that service for free. Right. I don’t know why the other three billion still pay the phone company. I’m still baffled by that. Right. All you have to do is download an app, one out of 100 that are available out there, so. What we have right now on the block chain is a fight fight between centralization and decentralization between the banks and the people, the rebels like me who are coming the second time. Right. The phone company already hate me. Now the banks are going to hate me, right? I mean, my gut living in New York and having the banks hate you, that’s like, you know, I can’t do anything. But the good news is you cannot walk into a bank and find any young people there. You’re not going to find any young people in banks. You know, they did a survey.

[00:11:52] They found out that the worst thing after worse than going to a doctor for a teenager or for a millennial is to go to a bank branch and interact with the bank. That’s what the that’s what we found out. That’s how painful that experiences.

[00:12:08] So in the crypto space, right, we went through these cycles, pricing cycles and these price cycles basically are just handing off the baton every time we grow the community and we go from anarchists to libertarians for libertarians to speculators.

[00:12:25] That’s where we are right now. Right. We drop the baton and when we drop the baton, the prices go down 60, 70, 80 percent. Because you’re changing the community, right? You’re disrupting who is actually carrying us forward. But I can tell you, voice over IP again, twenty five years later, right? Only half of the population in the world has adopted it. Now, what is harder convincing you to switch your phone company or convince you to deposit your money somewhere else? So this is going to take time. But this revolution is here to stay. Anyone who thinks that this block chain or cryptocurrency or whatever is just a fad doesn’t understand what they’re talking about. OK, I’ve seen this movie before. I know exactly how it ends. And I’m here to share with you that if you’re not getting involved in this, you’re going to miss the next big thing. So, again, on the VoIP side, you know, we went from twenty five to frame relay the big technology that everybody was betting on, all the phone companies were betting on was ATM.

[00:13:31] And the reason VoIP became such a big thing and such a surprise to everybody is because it was based on something completely different. It was based on a network that was back in ninety for an experimental network. So when I built the first gateway VoIP Gateway that ran on TV, IP people laughed at me and they said, Alex, you don’t understand. You’re not smart enough. You you’re only twenty five years old. You don’t understand. The entire Internet runs on the phone network. How is the phone network, how how can you run the entire phone network on the Internet if the entire Internet is a dial up thing that runs on the phone network, you need some you know, why don’t you go back to college or something and learn a little bit more and come back and, you know, but really what happened was that the entire phone network just became an application on the Internet. Right. Skype, WhatsApp is just an application on the Internet. So what if the entire Internet? I know this is going to shock people. They’re going to leave the room in about two minutes. What if the entire Internet is just an application on the block chain?

[00:14:39] Anyone with me here?

[00:14:42] What if we can’t trust anything in the news, everything is fake news, you don’t know who’s telling the truth, who’s not. And the only way to tell the truth, not just to transfer money, but actually have real information about who is the originator who wrote something when it was published. Is it real? Is this image fabricated or not? Is if we use a timestamp Leggio that tells us who is the creator, who is the owner and so on. And if that’s true, the entire Internet is going to have to migrate to the block chain. OK, so are you are you part of that or are you missing all of that? You’re busy doing some SAS or whatever, right? Right, squeezing the last drop out of an industry that’s already is fully built, right. They’re going to kick me out of here or not invite me to the next conference talking like this. So so what is the opportunity? The opportunity is to combine. They secure an immutable block chain. We’re talking economics, right, these are the incentives, the beauty of the Bitcoin is that it gives beautiful incentives to the mining guys, to the people who use the network, which the dollar doesn’t do. Right. The dollar does not give the right incentives to people. Do you know the Fed printed two hundred, the New York Fed printed two hundred and eighty five billion dollars in the last two weeks. While you were busy doing and all kinds of other stuff. There’s 230 million Americans, did you get your share? Did you get a check? Each one of you should have gotten a thousand dollars or more. What happened? Where did all that money go? Oh, you don’t know about it. Well, that’s what happened last two weeks. There was some disaster in the repo market. And guess what? The Fed injected half of all the money that was injected in 2008. While we were busy with our little whatever, you know, so there was an earthquake last week right here in New York, no one noticed, so.

[00:16:49] We cannot continue printing money and have no consequences. OK, so again, to summarize this, I put a little really simple formula for you to remember. Equals empty square, the value of Krypto is the fact that it’s a community based right. And let’s go back to VoIP, right. VoIP to Tomoya, the most valuable company in VoIP is what’s up? How much did WhatsApp charge in revenues? How much your revenues did it have when it sold to Facebook for twenty two billion dollars? Zero. So how can a company with zero revenue be worth twenty two billion, the most valuable VoIP company in history? Right. It’s the size of the community they have right now. They have a billion and a half users. So the future empires are not going to be the companies that make the most profits. It’s the companies that have the highest the biggest membership. The biggest network. Right. The most one of the most valuable companies in the world. Facebook. Right. Why did they pay that price? Because they want to maintain their dominance as the largest network outages. So you want to know what’s going to work, find a large network that has a lot of members and a lot of credit. Right. I’ll skip a few slides because we’re running out of money to think of crypto is like a Pakman that is just going to eat all the asset classes. Or the hype curve, right way past the hype curve. We went through the top and we’re now going towards mass adoption. This is the Gartner hype curve, right? So to get to mass adoption, to cross the chasm, you got to go beyond Bitcoin or beyond Ethereum. Those are the Bitcoin age, right? What’s right now we all struggling to figure out, OK, what is that killer app distributed application? What is that that’s going to get us to mass adoption is going to be security tokens. Is it going to be Libra? Anyone here, fans of Leba giving Facebook even more power? Come on, guys. Let’s let’s let’s help them out. Come on. Right. Or is it going to be stable? Coins, table coins are variants of fiat currencies. Right? It’s like a digital representation of a dollar or yen or euro. And it’s like a baby step towards. Digital currencies, right, it’s if you if you don’t understand all of this and you want to jump on something that at least halfway that safe, go buy some stable coins, you can always get your money back. It’s not going to lose half of its value and so on. So what Celsius did, what my company did is basically enables people to get cheap loans and we give 80 percent of that back to our depositors, but we can only do that inside the digital world. We cannot do it with dollars because of all these all these rules out there that prevent us from giving our customers, uh, acting in the best interest of our customers. Right. These are what the rules prevent us from doing to make sure that the banks can continue extracting. You know, JP Morgan by itself is made 30 billion dollars in profit last year.

[00:19:50] Did you get a check from them? A dividend. Thank you.

[00:19:56] So that’s what we’re here to replace, and we did two point two billion in loans, we have people gave us over four hundred million dollars in deposits in one year. Right. And it’s all community driven, right? It’s all community. Fifty thousand people from 150 countries. And again, so we. We act on behalf of depositors in the best interest of the community and banks obviously act in the bank, in the behalf of shareholders in the best interests of the company. This slide says it all. And you decide, all of you, just like you stop giving your phone, your service to the phone company and you you moved over to an app, you can decide to stop making deposits in banks and empowering them and giving your empowering somebody else is acting in your best interest. It’s up to you. You have to make that decision every day. Thank you very much. I’ll be outside. I’m happy to answer questions.

Speakers

Future of The Tech Industry Within The Scope of AI

Falon Fatemi, Founder & CEO @ Node

Ascent Conference 2019

[00:00:06] My name is Falon Fatemi. I’m the founder and CEO of an air company called Node. I also have a column in Forbes where I talk about how I is impacting the future of work. Today, we’re going to talk a little bit about what the future holds with artificial intelligence, what it means. We’ll use my company a little bit as an example and then talk a little bit about how it might affect all of you. So A.I. is affecting how we live, what we watch, how we travel, sleep. Work and lead, and it’s not just a flash in the pan trend, it’s absolutely here to stay. Some numbers, seven point four billion invested as of Q2. That’s a lot of dough. 18 companies in twenty eighteen valued at over a billion. And this is compared to two in twenty sixteen. So it’s really starting to accelerate. But even with that, we’re still scratching the surface. There’s a ton of opportunity and we are really in the inception of this entire evolution.

[00:01:10] And in terms of the opportunities, there’s definitely like there is going to be as pervasive as electricity, so being able to apply it from consumer use cases, deleveraging A.I. for drug discovery, for brain diseases, a real companies doing that. There are applications everywhere in terms of the big companies, the big behemoths. The innovation is not just reserved to them. There are a massive amount of what some might view as mundane solutions that are actually big market opportunities. For example, I just came across a company the other week who’s using A.I. to help with importing CVS into any application and being able to automatically cleanse the information and adjust it. I mean, that sounds like a small problem, but it’s actually a massive one and a huge market opportunity. And then also it’s important to understand the context of how is being leveraged for certain problem spaces, especially where there’s a lot of regulation and, you know, legal considerations, for example, in the financial services industry or in the insurance industry or the regulators have not caught up with cutting edge. I they still require explain ability of models and making decisions. And so leveraging cutting edge techniques like deep learning isn’t going to be the right approach yet. So if we can all agree that A.I. is here to stay, well, then why hasn’t every organization adopted it yet? Well, the reality is it’s hard. And why is it hard? The dirty little secret in AI is that it’s not about the algorithms, it’s all about the data. So you hire these data scientists that are super expensive in which there’s never enough of. And what they end up doing is spending the millions in years acquiring data, normalizing data cleansing data, setting up data architecture. So by that point, your millions and years into finally being able to start to experiment, if you get it right the first time, it’s it’s not technically feasible or risk from a risk perspective feasible for many companies. And what we’re seeing is it’s absolutely accelerating the pace of innovation, but as a result, it’s totally declining the rate for businesses that frankly can’t keep up. And some stats here, in the last 20 years, over 50 percent of the Fortune 500 have disappeared and life expectancy has decreased from 75 years in 1950, five to 15 years in 2015 and 2015. We’re not even talking about guy playing a part. So imagine where we’re going to be in 20, 25. A.I. is going to be a wrecking ball to the enterprises that don’t adopt it. And this is where actually, from my point of view, I think the next wave of transformation is not going to come from consumer applications that are here today and gone tomorrow. It’s going to come from the enterprise because we are literally in a situation where we have to innovate or die. And when we talk about A.I., it’s important that we really understand what it means because there’s a lot of marketing out there. I talked to CEO last week who said, yeah, we don’t have any AI in our product, even though it’s all over their website. So when most people are saying I on the left side, what they’re doing is kind of an older approach to A.I. It’s taking a complex problem, like I want to find more customers like my best customers, where best is extremely hard to codify and articulate into a set of rules. And what you end up with is actually fancy data analysis that’s called A.I. that ultimately might actually limit the possibilities and the markets that you could go after it based on what we as humans can see in terms of patterns in the data.

[00:04:45] Now, deep learning, how many people know deep learning? Raise your hand.

[00:04:50] Great, I can’t wait till next year, everyone’s hands up so deep learning, it has found a lot of success in the field of computer vision and self-driving cars. And the power of this technology is that it can learn from the data and interactions themselves and identify signals both implicit and explicit, that we could never as humans dimensional lies, but are extremely important signals for driving true intuitive predictions.

[00:05:16] And from my perspective, deep learning is absolutely the future for these complex business problems.

[00:05:25] So using my company as an example, this is actually the problem that we’re set up to solve. We’re focused on using cutting edge, deep learning to enable organizations and frankly, any developer, not just data scientists, to be able to, within a matter of seconds, put the power of prediction into their applications or apply it to solve the most critical business problems. The technology that we’ve invented is what we call artificial intuition, and this is defined as a proprietary, deep learning platform that analyzes people and company data and turns it into use case specific predictions that help organizations be able to identify which prospects will become customers, which customers are likely to leave before they leave, or which key talent is likely to leave before they leave. And we have customers that use our technology as the prediction infrastructure within their applications. And then we also have companies that are leveraging this directly. Now, here are examples of how technology, like deep learning can transform an application, a workflow application that we use daily as an example of connecting cell, which is a dialing solution, they enable sales, sales reps to frankly cold call all of us. And but with Noad, it can be smarter and more personalized and actually adjust strategy on the fly based on what’s working and what’s not working personalized to every sales rep, which not only leads to the ultimate outcomes that this entire application is aiming towards, which is more meetings booked, but actually helps uncover entire new markets of opportunity that were previously untapped through these more deterministic based approaches. Another example is a company called Guess Where he tracks a lot of email interactions between sales reps and prospects. Now, based on the first three email interactions, our system can accurately predict the likelihood that a prospect will become a customer or not become a customer, which is going to increase win rates for the client base by 10 to 15 percent.

[00:07:15] Imagine knowing that in the first three emails where to spend your time. Think how many dollars you’re going to save and make.

[00:07:22] And then analytics, big analytics company tracking billions of YNAB interactions. Imagine that with 80 percent accuracy. You can know based on how people are using your application and having a better understanding of who they are, whether they’re going to basically become promotors and evangelize your product or actually churn and be able to do something about that and build a better product as a result. And the system here is able to do this not by analyzing traditional risk factors, but it’s able to do this by actually learning which signals actually drive towards a product working better for certain types of customers, which is pretty powerful. With a model like this, you could actually apply it to a new market. You’re thinking about going into and see into the future in terms of a longevity of future customers in that market. So what’s the future going to look like for all of us individuals that are operating in the tech space with A.I.? Well, it’s going to be extremely important that we become even more specialized in terms of our skills. And again, a lot of the focus around A.I. Everyone loves the sexy algorithms. It’s not about the algorithms. It’s all about the data and making sure that you have strong domain expertize around the right data that you eliminate biases where you can’t. This is absolutely critical to be able to enable a human centered world of AI in terms of A.I. thinkers and innovators. I mean, this is where we really need to be looking at gaps and opportunities in applying A.I. in ways that we haven’t even thought of. In terms of trends in the bigger picture, I mean, there’s also the negative aspects of how many people in the audience know about Deep Fixx. Yeah, so if you don’t know what you will buy the 2020 election, it’s my prediction, but basically the fix is deep learning technology that’s used to create fake content, both visual as well as written, that frankly, we as humans cannot identify is fake or real. And the genie is out of the bottle. The Internet’s already I mean, I already assume everything I read is fake. Now, I think it’s turning the Internet into a magazine stand. But this kind of technology, this is where we really need to understand where is are these are are these types of technologies being applied in ways that are not constructive to society? And what can we do to actually combat these kinds of bad actors? Because power, this technology, it’s can be used for good, but also for evil. Now, in terms of automating what needs to be automated, so the power of prediction in a variety of of markets will actually completely change business models. So today, Amazon, you shop and then they ship. They’re only added maybe in the near future. There’s a book called Prediction Machines actually talks about this where in the future they’re going to actually ship to you because they already know what you’re likely to want and then you’re going to purchase it.

[00:10:10] I mean, that’s a crazy world. No more shopping required. It just comes to you.

[00:10:16] That world is here, another example is as we start to look at actually connecting our operational infrastructure in cities and communities, a world with no traffic is absolutely possible, especially with self-driving cars.

[00:10:31] Think about that, the future is near as well.

[00:10:36] And a lot of people freak out thinking that A is going to take our jobs or Elon Musk says that robots are going to save us all. I don’t believe in any of that. I think the big opportunity here is it’s going to actually shift all of our roles from manual work and research to decision making and judgment and actually focus humans on the types of tasks that we are really good at, building relationships or making decisions in terms of, you know, being empowered by these types of, you know, predictions and technology.

[00:11:06] Thanks, everyone.

Speakers