Bitcoin Keeps LAPPING Every Other Asset Class

0:29Hello, everyone. We've got a lot to discuss today. ways that you can measure results of an investment. You can use internal rate of return. You can use return on investment. How about compounding your growth rate? Or there's even really esoteric things like time-weighted and money-weighted returns. Every single one of these metrics is trying to measure something slightly different. But ultimately, the goal for these metrics is to answer the question of, is this investment good or bad? It's a different calculation, but it's all trying to answer the same question. But there's one problem with these metrics.

0:55They all measure the investment return against the U.S. dollar. Why is that a problem? Well, the dollar is being debased at an accelerated rate. So most assets priced in dollars continue to trend higher simply because the loss of purchasing power. Here, take a look at this data. According to Truflation, the U.S. dollar has lost 28 % of its purchasing power since January 2020. That is an insane debasement in just half a decade. So how can you measure the success of an investment while also removing the impact of that dollar debasement? Well, one way that you could do it would be to measure the success of an investment against a finite asset that cannot be debased or can't be printed by anyone.

1:31We can call this a Bitcoin rate of return. If we apply the concept to the S &P 500, we get a very interesting story. Let's take a look. In dollar terms, the S &P 500 has appreciated approximately 100 % since 2020. But if we measure that same S &P 500 success against Bitcoin instead of the US dollar, we can see that the S &P is down 85 % since 2020 in Bitcoin terms. It's a complete destruction of stock portfolios when you actually measure the performance against a finite asset. Now, you can see the same phenomenon play out with U.S. housing. The median U.S. home has appreciated by about 50 % since 2016 when it was measured in dollar terms.

2:08But that same median home has dropped 99 % in price when it's priced in Bitcoin. The home cost about$664 Bitcoin in 2016, and now it costs less than$6 Bitcoin. And I explain it right here. Take a look. In 2016, the median home in America cost 664 Bitcoin. Today, it costs six Bitcoin. So what ends up happening is in dollar terms, we actually saw about a 50 % increase. It was like$250 ,000,$300 ,000. Now it's over$400 ,000. 40-50 % increase in dollar terms for the median home between 2016 and 2024. So eight years, 50 % increase in that home. How many people's wages went up? 50 % or more. Probably not as many.

2:45In Bitcoin terms, there was a 99 % reduction in the price of the median home in America priced in Bitcoin. Bitcoin literally made housing more affordable. And so when you think of it in those terms, what it does is it requires you to break the mold of thinking in dollars and now think in terms of Bitcoin. And so if you hold dollars, everything around you gets more expensive over time. Your coffee gets more expensive. Your house gets more expensive. The clothes that you buy, everything gets more expensive. When you hold Bitcoin over the long run, everything gets less expensive over time. Your purchasing power increases at a faster rate than the rate of inflation, and therefore literally every single good around you gets less and less expensive.

3:20So if you're measuring the appreciation of your home, which is a very large portion of many people's net worth, then you thought you were getting wealthier in dollar terms, but you were actually getting poorer in terms of a finite asset. Now, these examples are a big reason why I personally believe Bitcoin rate of return is going to become an important new metric in traditional finance. In fact, I believe this concept is so important that we've decided to change the ticker symbol for our Bitcoin native financial services company, ProCap Financial, which is going to be this public company after our proposed business combination.

3:49We've changed that ticker symbol to BRR, Bitcoin Rate of Return. Now, here's what we wrote in a recent press release about the ticker symbol change. BRR stands for Bitcoin Rate of Return, a concept that ProCap believes will emerge as a defining performance metric in the next era of finance. As traditional currencies face ongoing debasement, ProCap advocates for a shift in perspective to evaluating returns not in nominal US dollars, but in Bitcoin as one of the world's most sound and scarce monetary assets. Upon completion of the proposed business combination, the goal of this public company is to simply outperform Bitcoin by accretively acquiring more Bitcoin to grow ProCap's Bitcoin per share.

4:29Now, in addition, ProCap's ambition is to evolve into a full spectrum Bitcoin-native financial institution. Every dollar raised, every dollar deployed, and every dollar borrowed ultimately compounds back into more Bitcoin per share. That's done through differentiated yield generating strategies and operating cash flows that will support the Bitcoin network and its ecosystem partners. Now, given ProCap's planned strategic focus on generating a compelling Bitcoin rate of return, the transition to the ticker symbol BRR serves as a clear reflection of its long-term vision in alignment with its core objective.

5:00Pretty clear, right? Now, of course, that ticker symbol change is gonna become effective today. You're gonna hear a lot more people talking about this. Now, I share this information with you because I also am going to be talking a lot more about Bitcoin rate of return. Measuring the success of an investment against the U.S. dollar, that's easy mode. Anyone can buy an asset, wait for the government to debase dollars, and then claim victory. I mean, think about it. Even gold, a nonproductive asset, is outperforming the S &P 500 over the last 10 years. Easy mode. So now the real challenge becomes whether an investor or a company can outperform Bitcoin.

5:32Can someone generate a positive Bitcoin rate of return? This makes Bitcoin the new hurdle rate. And as I continue to tell all of you, if you can't beat it, you gotta buy it. Yesterday, Jerome Powell, the Federal Reserve, and the FOMC, they decided to keep interest rates flat. No change. Didn't raise them, didn't cut them. That's a massive problem. See, the whole thing is that the US economy, it's addicted to cheap capital. And the fact that we're living through an absolute incredible economic boom, the fact that we got a 3 % Q2 GDP growth number, it means that actually the interest rates are holding us back from even further growth.

6:08Imagine if all Americans had access to cheaper capital, they could actually afford a home. Imagine if all businesses had access to cheap capital so they could invest further in R &D for the future of their business. And imagine if every investor who was invested in the stock market was owning shares in a company who had access to cheaper capital, which would further drive stocks higher and higher. See, here's the thing. When interest rates are high, everything is harder. It's harder for us to actually make investments. It's harder for us to afford things, and it's harder for investors to make money.

6:38So the fact that we are making money with higher interest rates, that means the economy's rocking. If we were to lower that interest rate, it'd be easier to afford a home, to actually invest in the future, and to make more money in your portfolio. Lower interest rates are ultimately good for all American citizens, whether you're a regular everyday American family or you're somebody who's running a business. So Jerome Powell, he keeps the interest rate flat. I think it's a major mistake. And my guess is that we're going to see interest rate cuts before the end of the year. And if we're already booming before we get cheap capital, imagine what happens when we get that cut.

7:11All right, guys, I'm super excited about this conversation. We've got Ori Eldorov. He's the founder and CEO of OffDeal. OffDeal is the world's first AI investment bank. He's here to explain to us exactly what is he doing, how is it going to be disruptive, and why are businesses choosing to go with an AI investment bank rather than a regular one? Here's my latest conversation with Ori. All right, Ori, I thought a great place to start the conversation. is you guys are trying to build the world's first AI investment bank. What the heck does that mean? People hear AI, they hear investment bank, but describe exactly what you guys are trying to do here.

7:41Yeah. I think the easiest way to think about it is if you yourself were starting a financial institution today in 2025, you would probably do it very differently compared to how Goldman was started in 1865 or whatever. You would probably have a different work chart. You would probably have a different compensation structure. You would have a very different culture. You're probably not going to have 65-year-olds, you know, management by committee, et cetera. And you would have a brand new software, of course, right, to be more efficient. So that's what we're trying to do. We're reimagining the system from first principles and we're saying, okay, if I have this blank slate, how can I run deals most efficiently?

8:15What tools would I use? How would I set this all up? So that's in a nutshell what we're trying to do here. Got it. Now talk me through like, let's just do one deal. Like what is different about what you guys are doing and how does one deal actually get through the pipeline and ultimately get consummated? Right. So I guess the first question is, how do we find businesses that we want to work with, the business owners that want to sell their business, right? So we built our own proprietary data layer with two and a half million businesses in the United States. And we have something like 250 data fields of each business.

8:47We know exactly what they do, what their business model is, who their end customers are. We have certain proprietary intense triggers that we give us a prediction that these guys are a high likelihood of a seller. Maybe they're running multiple businesses. Maybe their kids are out of college. Maybe they're nearing retirement age, et cetera. And so this allows us to first identify a universe of sellers or potential sellers. And then we reach out to them. And these guys hear from private equity firms all the time. They hear the same exact pitch. They're like, hey, I want to buy your business. You build something special, et cetera, et cetera.

9:19So we wanted to know, well, how do we cut through the noise? And if I think about my Wall Street days, when we wanted to win someone's business. We would win it with just sheer work and effort. We would create a beautiful deck with 30 pages and slides and charts and comps and who are the buyers and all these things. And so we do the exact same thing with these business owners. So imagine you're a roofer down the street and you connect with off-deal. And we come to the first meeting and we have exactly the 35 private equity firms we would take you to. We know exactly what your business is going to do work.

9:47We know what the multiples are. We know what the comps are, what the PE guys like and don't like about your company. and you're just completely blown away. But the thing is, you can't really do that for every bob the roofer down the street because these decks usually take weeks to do. I mean, if you ever worked in investment making, you know how many turns of iterations on the deck you do. Well, we've built an AI that allows us to create these Wall Street grade decks for every small business owner. So when they come to us and they see that level of effort on the first day, you better believe that they want to meet with us for the second and third and fourth time.

10:19See, we're launching the deal. Finding buyers is actually not trivial, right? If you're selling a$5 billion asset, there's probably like seven buyers that would be able to buy this company. You probably had lunch, dinner, you played golf with them, right? If you're a managing director at Goldman Sachs. But if you're selling a pest control business, there could be hundreds, if not thousands of potential buyers. It could be strategic. It could be PE. It could be other pest control businesses. How do we actually identify them? So we build an agent that we can run overnight that scans through our massive data set one by one verifies whether a company would be a good strategic fit, identifies points of contact, identifies their confirmation, drafts the preliminary message for the personalized outreach, and then the banker comes in the next day in the morning and just goes, yes, yes, yes, this looks good, sends the message.

11:05And so this is like the new paradigm, right? Where we are used to thinking about software, you press the button and the thing happens right away. Now we have these very complex workflows that would have required a human maybe several weeks to complete. Now the AI can do that just overnight. And it very much does feel like you have a digital co-worker in many ways, right? Because you give them a task, they go away and do it for a pretty extended period of time. And they just come in in the morning and you can check their work. The same way you would have checked their work frozen animals that hold on all night.

11:36So these are just some examples, right? But of course, it doesn't stop with the buyer outreach, right? You do NDA management, that's so much brain damage. Imagine you have 100 PE firms, They're all trying to mark up NDAs. You have to chase people. Oh, who signed what? Are they in the data room yet? We've built AI to manage that as well, right? And then when the offers come in, that's where the human element, this human judgment comes into play. Which deal is the better deal? Who is more culturally aligned with the owner, et cetera, et cetera. So I know I've sprinted through this, but those are some of the examples where you use our AI to really drive that productivity.

12:12It makes a ton of sense. Now, I think a lot of people will say, okay, hold on a second here. I get that this is better for you. You can generate materials faster. You can be kind of more impressive. You can win kind of more mandates. What is the benefit to the actual seller or the buyer in this deal? Are they getting better pricing, more efficient capital? Is there a lower cost of fee? Just walk me through kind of how you guys pitch the fact that you're using this stuff to both the buyer and the seller. We actually don't really talk much about AI. Frankly, the business owner down the street doesn't really care whether we use AI.

12:43We have 100 analysts or we have a whole team in India doing the work. What they care about ultimately is, will the deal happen? Do I trust these guys? Am I going to get good terms? And actually, this is where private equity firms have been doing great marketing for us. Because if you're a business owner in America and you make over a million dollars of cash flow, your phone is ringing off the hook with private equity firms trying to acquire your business. But guess what? An average private equity firm will be looking at 100 deals before they pull the trigger on one. So that creates a pretty bad user experience from the seller.

13:11Imagine some Wall Street guy comes to you and says, I think you've built something special. I really want to buy your business. You go through two or three months of pouring over financials. You share all this confidential data. And then right before it's time to kiss the bride, the PE firm walks away because of something happened in 2021 and they saw a line item on your P &L or another deal popped the bride by. You do this a couple of times. You're pretty disgruntled, right? So the user experience is pretty horrible. So the pitch is very easy. We tell them, hey, instead of being one of the owners, one of the 100 owners that these PE firms look at, let's put 100 PE firms to compete with one another.

13:45And that message has been really, really resonating with our clients, right? But in terms of the actual outcomes, right, we are able to identify every potential buyer for their business, because AI can do more work, right? We can look in tangentially relevant sectors that maybe a human wouldn't have looked because it's too much work, it's much effort, right? We can reach out to five or six different points of contact in each company, right? Maybe you would have reached out only to one. So the The whole idea is that AI is an enabler to do more work and deliver results faster. We're actually not cheaper than our competition.

14:18We're a premium service. But the way we position this to our clients is we say, hey, with us, you're going to sell for a higher price. You're going to have a much higher deal certainty, and the results are going to come in fast. And that's been resonating very much with our clients. Now, when you end up having so many more people looking at a deal, I'm imagining that there's kind of this auction mechanism that could lead to a higher price. Do you have any data that suggests that you guys are actually able to get kind of higher outcomes for these business owners? So, you know, at the heart of it is what we're creating is price discovery, right?

14:46Like small businesses are the last multi-trillion dollar private asset class that has a very, very wide bid-ass spread. And actually, that's what's happening. Why private equity firms have been spending so much money on doing this, what's called proprietary deal sourcing and outreach, because you can come in and you can lowball an owner and you can buy their business for cheap. Data shows that in general and market as a whole for businesses, some$10 million of EBITDA, more than half of business owners do the transaction completely on the wrong. Maybe their wife is helping them, you know, at home, but with the looking over the materials, but they're doing it all on the wrong.

15:17And when that happens, you have on average one to two terms of EBITDA less in terms of multiple that you receive for your business. Now it might sound, might not sound like much, but if you're running a three or$4 million EBITDA business, and you're receiving one term less at exit, you're getting$4 million less. And by the way, these business owners, they don't have a 401k, right? Their entire net worth is concentrated in their business. So when they're trying to retire, every dollar counts. And so when we come in and create this competitive tension, the prices do go up. I'll give you one example.

15:46We recently sold a private school in Arizona. The final offer was 40 % higher than the first offer that came in, right? 40%, that is life-changing money. And that's what it's about, right? Think about this. private equity firms always fire bankers to tell their portfolio companies. Why is that? It's because they create competitive tension. It's because they know they're going to get the best terms. We're trying to deliver the same thing for the small businesses in America. Okay. Now there's going to be a bunch of people that are going to listen to this interview. They're going to see your launch video.

16:13They're going to see some of the success that you're having. They run investment banks. They've got lots of bankers. They've got technologists. They've got engineers. They've got money. And they say, well, look at this genius. Watch this. We're going to press a button and we're going to copy what he's doing. How hard would it be for them to come in and compete, given a lot of the advantages that they have in terms of size, scale, experience, and kind of human labor? Yeah, well, first of all, I'll say that the most likely outcome is the large banks like Evercore, Goldman Sachs, et cetera. They're not going to build their own tools, but they're going to probably procure software that is made by other founders.

16:44And I do think there's probably a market there for that. There are some good products out there that help you summarize the SIM or do this or that, right, with AI. And that's totally fine. But to really take advantage of what this technology, artificial intelligence, brings to you as a human, right? You need to think through first principles. You probably need a different work choice, for example, right? The traditional investment banks, they have the analysts and the associate, the VP, the director, the managing director. And it goes through this waterfall project management style thing where you have hundreds and hundreds of iterations with every single deliverable before it gets to see the client, right?

17:17Are they going to reinvent themselves there? Maybe, maybe not. The cost of getting it wrong to them is very obvious, right? Because if they get it wrong, the bankers are going to go to their competitor. They're going to go to Morgan Stanley. They're going to go to Molas. They're going to go to Bizarro. But if they get this right, I don't know. What is the upside? Because right now, the machine works. That's the thing. It's a classic innovator's dilemma. What about compensation structure? The analysts and associates are pulling 80-hour work weeks. They're basically making minimum wage. Yeah, so they're doing it for the optionality of going to the buy side or maybe making it big one day.

17:47But why is it that in 2025, you have to crunch logos on page 72 for six years before you get to speak to a client. At Obdeal, our bankers start talking to clients day one. They're developing very important skills. So all this to say, it's not just about the software. It's not all about the data. You have to work with the whole work. You have to have an AI-first culture. And that's why startups historically have always had a shot at displacing incumbents. Let's talk about how you guys make money in these deals. Walk me through kind of an example deal in terms of how much is the business sold for, how much do you guys make, and then how much does off deal the corporation make versus the bankers that are working at the company?

18:24Right. And this is where we actually did model this somewhat after the large guys, right? The markets or these business brokers that are the most typical way to sell a business if you're not doing it on your own, they will charge you 50 to 100 take commission. And then there's some success fee on top of that. That created very bad incentives because as a broker, you want to get that mandate. You want to get that deal, right? You want to get that client. So you can infrate their valuation expectations, get the non-refundable 50 to 100K fee, and then just list the business online on some marketplace and wait for the offer to come in.

18:58And that's, again, a very bad user experience. We've talked to ourselves, whatever we wanted to put our money where our mouth's set, right? And so let's go success only. So we charge 5 % of enterprise value, right? We charge it only on a success basis. that means that when the owner gets the offers, if they don't accept any of them, because we didn't do a good enough job, or we miscalibrated their valuation expectations, they don't pay us a fee, right? It's as aligned as it gets. So you get 5 % of the economic snap. What did the average deal look like? Right now, most of our fees are between 500k to a million.

19:30We have a few sell side mandates where the fee is$2 or$3 million. But let's say a million dollar fee. On that million dollar fee, the banker that works in the deal is getting 20%. That's$200 ,000 cash. And then you've got to think about, okay, well, how many deals does the banker do? Well, if they do 10 deals a year, they can make$2 million bonus. That's pretty attractive. And by the way, if you're 28 or 29 and you're coming from Goldman Sachs, there's a hell of a warrant that you're going to make here and much more entrepreneurial than you would at a traditional bank. Now, if we also take a look in terms of where this is all going, what is the org structure for what you guys have?

20:08How many people do you have that are non-bankers? how many engineers, right? Like it just feels like you talked earlier about everything is changing. And if you're having these quote unquote digital employees, I got to imagine that you don't have that many actual humans that are working on this. We don't have that many humans relative to the amount of deals that we're doing. But we're in the early stages still. Remember, we only started this company basically a year ago. So we're investing heavily into R &D. So the foreseeable future, we're probably going to have a one-to-one ratio of bankers to engineers.

20:39And there's some magic in that because these engineers are sitting five feet away from the bankers. So imagine something great. You tell the engineer gets fixed right away. You need a new feature request. The engineer is right there next to you. You notice that some manual workflow is taking way too long. You go to the engineers and say, hey, can we automate this? So that feedback loop has such a high ROI, but we're investing heavily into hiring more and more engineers. Now, at some point, of course, that one to one relationship between bankers and engineers is probably going to break. But that's what allows us to really crank on the efficiency and the throughput.

21:12Now, what's interesting, though, is on the banking side itself, we've changed this apprenticeship model of, you know, analyst, associate, et cetera, to something different. We have a former BVD banker. They're a junior person. They want to be a dealmaker. They're interested in finance. They have good people skills. We put them in front of clients right away. They help us source deals. We put them in front of buyer engagements. So if we have a deal that we want to get in front of 100 private equity firms, they're going to be reaching out to them. They use our AI tools to help create the SINs, the teasers, the pitch decks.

21:44So the AI, in this case, is very pedagogical because they get to learn how to do these things. We'll put them through the financial modeling course, et cetera. After a year or a year and a half, they can become a deal maker. They're probably going to be doing slightly smaller deals to start with the supervision of the banker. But if you compare it to a traditional investment bank, even as an associate at a bank, four or five years into your job, you might not be speaking to clients, right? You might attend the meeting if you're lucky, but you're not speaking to clients. But at our firm, you're a firm of clients right away.