2026 is a Year for Building with Mike Novogratz

14:54Mike Novogratz:Everyone's going to try to build a similar business, which is let me give you a bank and a wallet. Yeah, it's the great convergence.

15:02Alex Thorn:Yes. Do you think that that – where do you think that lands? You know, we're introducing some decentralization into the capital markets via crypto. Are we going to make the TradFi broker-dealers and RAAs and whatnot more decentralized, or are they going to make us more traditional? That's a good question.

15:25Mike Novogratz:I think it's going to be a little of both. Um, what scares me a little bit is that this idea of things being decentralized and private, uh, is going to get demoted in terms of efficiency.

15:44Alex Thorn:Uh, so you're worried we get a little, well, because listen, the suits get more control and that could what kill the soul of crypto?

15:51Mike Novogratz:We look at base as a blockchain.

15:53Alex Thorn:Yeah.

15:53Mike Novogratz:It's really convenient. It's part of, you know, Coinbase. It's not really a blockchain.

15:59Alex Thorn:It's a database. Yeah, it's like a computer in their basement is the joke I always make.

16:03Mike Novogratz:But most people are okay with that. Right. And if the world becomes okay with that, well, that makes Ethereum less important. I like to think your data is powerful. Here's an analogy. When I first went to India, I've waited like two hours in the customs line, and I filled out these freaking forms and some lady's out there and she's stamping. And there were piles of paper all over this booth. There were literally thousands and thousands of pieces of paper. And I thought, that data is worthless. It's going to be toilet paper or a bonfire later on. No one's ever used that data. So they couldn't use data.

16:40Mike Novogratz:Now you walk through customs and they just go like this. You don't even have to have a passport. Your face is your data. And it gets filed and they can use it. They can track you. I was talking to the people in Abu Dhabi. It's shocking how well they do this. They have your Emirates ticket to your passport and they know what you spend. So they know in each flight, in each Emirates flight, flights from Cambodia spend this much, flights from New York spend this much.

17:02Alex Thorn:The value of every passenger basically to their economy.

17:05Mike Novogratz:So the data is so valuable, right? And so now that data is valuable, it's also powerful. Like so if you're in Canada and you were a trucker during those COVID protests, you could get your bank account closed. if you were living in cashmere modi erased 11 million people because he didn't like them like man that kind of sucks to be erased uh right and so i think having decentralized identity systems i decentralized blockchains having some privacy but also no one owning the data

17:40Alex Thorn:is really important yeah but a lot of people don't agree with me yeah in china they don't agree

17:45Mike Novogratz:or they don't have a choice. They've always said the collective is more important than the individual. That's right. And so that battle or that debate is still to be determined. Yeah, I think you're right to flag that that principle is actually at risk

17:58Alex Thorn:with the great convergence, right? We'd love to bring that own your data, individual liberty

18:05Mike Novogratz:into the TradFi system. Don Wilson's blockchain.

18:07Alex Thorn:Yeah, Canton.

18:08Mike Novogratz:Canton is a beautifully built blockchain. It's got lots of things. It's got a lot of the Wall Street guys on it. I don't think it'll trade great because it doesn't get distributed. The little guys are what creates value in blockchains, distribution which creates value in blockchains, turning them into money, turning them into passion, community value in blockchains. But it very well might be a very well-used blockchain that just functions as a great semi-centralized database. Yeah.

18:42Alex Thorn:It's interesting, your point, though, the complaint, it's sort of complacency around what was originally like Satoshi's. One of his main goals was decentralization, a distributed peer to peer electronic cash system. Yes. Right. And that we're saying, well, you know, let's make it.

18:55Mike Novogratz:If you want to get your like revolutionary juices back, you got to just go out to my buddy Joe Lubin for another cocktail. Yes. He's a firm believer in this, how important it is to have a Satoshi like system. Yeah. But we'll see.

19:11Alex Thorn:We will see. I do think there are good policy reasons. You make a great case, I think, on the privacy of data, owning your data. Another one I think is like credit risk, right? Like we do – we have an enormous risk management team at Galaxy and they're really good. And we do real-time monitoring of all the venues that Galaxy trades on and adjusts every time, including the decentralized ones. And we actually give a higher rating in some instances when a system has no central point of control. It actually makes it more creditworthy in our mind, less risky. So there's a policy reason for wanting decentralization.

19:48Alex Thorn:I feel like we've got to tell that story to TradFi, to Wall Street, that like, sure, we're going to wear suits a little bit more and join you guys, but you should take some of our things.

19:57Mike Novogratz:I think the one thing that everyone should take note of, right, you're down in D.C. right now discussing this market structure bill, which unfortunately got pundited until January. one of the big issues is around DeFi and lo and behold, guess who shows up? The king of freaking, you know, basically the JP Morgan of our time, Ken Griffin. Yeah. He is fiercely smart, fiercely tough. And he was like, no, no, that's unfair. Yeah. I don't want DeFi. I like centralized exchanges because I own them all.

20:27Alex Thorn:Yeah.

20:28Mike Novogratz:That's true. I own the liquidity. I get the order flow. I don't want hyperliquid. Yeah. Hyperliquid is anathema to Ken Griffin.

20:34Alex Thorn:That's right.

20:34Mike Novogratz:And so he's going to fight it. Yeah. And just like casinos and sports betting platforms, they kind of got caught flat-footed with prediction markets. But don't think they're not fighting. They're fighting at the state level. They're trying to change the rules federally. Yep. Because they say, that's unfair.

20:56Alex Thorn:Yeah.

20:57Mike Novogratz:I say, well, tough luck. That's how innovation happens. That's right. God, I wish I was in those prediction markets.

21:02Alex Thorn:I mean, the fact that they, it is quite a development. Shout out to Calci and Polymarket. Shane and Taroq, I think, from Calci. I think the fact that they got the CFTC on their side here too.

21:20Mike Novogratz:Every once in a while something happens that doesn't make sense to your rational way of thinking, like the way you've always been thinking. But it happens, you're like, oh, there's new rules. Yeah, there's new. Let's pivot. We need to work hard at Galaxy to figure out our role in prediction markets. So, I mean, it would be crazy that our Galaxy 1 app doesn't have a prediction market portal. It will in time. Like I'm screaming like time should be yesterday. But it takes a while to build this shit in. We need to be market makers. We need to figure out all the ways we're going to participate. And trust me, the elves are working on it.

21:53Mike Novogratz:But I think every shop like ours, and you've seen a lot of announcements already, is doing the same thing.

21:57Alex Thorn:Yeah. It was a very old idea, right? what was that what was it called in 17 Augur Augur Augur was the first I remember yeah and it was such a good idea Joey Krug yeah Joey Krug and it didn't Joey Krug Pantera shout out yeah shout out to Joey and Dan at Pantera and others he it didn't work at the time though but now it was sort of like gradually and Consensus had one too it was called Gnosis yes and it was gradually nothing really happened good idea didn't really work and then all of a sudden it was like bam right like But kind of like last year's presidential election. And, you know, those guys were ballsy.

22:34Alex Thorn:They were like, ah, screw it. We're doing it. Yeah. I mean, Polymarket had been forced out of the U.S.

22:39Mike Novogratz:You know what is interesting? Like, and this is where you got to give Shane some credit. He's a charismatic guy and he's kind of funny. I wish I had invested with him, but I just thought he was a little too out there and I didn't invest with him. And big mistake. Yeah. I remember when I had lunch with Travis Kalashnik.

22:56Alex Thorn:Yeah.

22:57Mike Novogratz:From Uber. and I had been pitching decentralized Uber. And after I had lunch with Travis, I was like, that would have never worked. He needed to break rules to get Uber done. And he wasn't scared of them. He shattered rules.

23:13Alex Thorn:Yeah.

23:14Mike Novogratz:He scoffed at them.

23:15Alex Thorn:Well, because they gave such a good product to the consumers. No municipality was going to ban their people from using it.

23:21Mike Novogratz:He was paying fines for drivers, paying fines for users. And he basically willed that into existence. And sometimes you've got to be willing to break glass.

23:32Alex Thorn:You're saying it needed that centralized force to someone to break the glass.

23:36Mike Novogratz:Now I think you could have a decentralized rideshare system to actually show up now that the idea is so taken. But I'm not sure it could have worked without him breaking the glass.

23:45Alex Thorn:I saw you post it. So we are recording this on December 17th ahead of Christmas, just even though if you're watching, it probably is Christmas. I saw the other day you posted that it was so cold in New York that Ubers, even just to go a mile, were really expensive. I was like, I'm on a walk. I'm not paying that$48.

24:02Mike Novogratz:And then my hands were freezing.

24:04Alex Thorn:I was like, I should have brought gloves. Yeah, you had a blizzard in New York a couple days ago. $48, one mile. Wow. And Bitcoin went down on that day. It did. It was a double whammy. Yeah, it's never good. Some people were in your replies, though, saying, what about Duber? Surely there's a decentralized Uber about to emerge to help you with this problem. Hasn't yet. Yeah, and it still seems like a pretty good use case, even though you're right. You probably needed Travis to smash all those rules. It's – another thing I want to ask you about, Mike, is just AI in general. Obviously, this is a – we're kind of like – it is sort of the definition of the wall of worry, right?

24:37Alex Thorn:Like we've been climbing up all year on AI.

24:40Mike Novogratz:There was an actor –

24:41Alex Thorn:But people are so anxious about it.

24:42Mike Novogratz:There was an actor who was tongue-in-cheek but serious, a famous actor. I'm trying to remember who it was, who said, I want to just go below it all up. The AI? Because it's happening so fast and he's so worried about what happens. Listen, it is the question of our lifetime on how this will play out. There is a non-zero probability that it plays out really poorly. Even if you ask Elon, he was like, 25 % and it ends humanity. We're like, what? Yeah, and he's saying that's pretty low though. Don't worry. It's only 25. I flip a coin. You're like, that's pretty high. There are no guardrails. It is going fast.

25:21Mike Novogratz:and it's going to eat up jobs. And so there will be a political backlash coming. It's going to be a big issue in the 2026 midterms and certainly in the 2028 election.

25:38Mike Novogratz:And we don't know yet. I know from talking to our investors who've been talking to the guys that run the biggest companies in the world, right? Microsoft's and that the productivity gains they're seeing are breathtaking. Wow. You know, one story was that with$100 ,000 for the Blackwell chips, an engineer can create 11 million lines of code in a year. And 11 million lines of code is what all the windows was. So each engineer can do a windows in a year. Like the productivity increases. It's spectacular. and you're starting to see all kinds of businesses. And so how that plays into economics, into inflation, is it the great deflator?

26:30Mike Novogratz:But politics is where it's going to show first.

26:35Mike Novogratz:And my guess is it's another factor in the rise of populism. So we're trying to get, I'm trying to get us away from far left and far right, but it's going to be harder and harder to get away from far left and far right. You think AI is an enhancer for this same dynamic, not a... AI is just going to make some people richer and richer. Like, here's a perfect case. We share an office with Jane Street. Jane Street might now be the most profitable company in the world, pound for pound. If you look at their returns, their profits over the last 12 months, 24 months, breathtaking. It's 3 ,000 people, two partners, making more than the biggest investment banks.

27:22Why?

27:22Mike Novogratz:They're at the tip of the spear in technology. There's Hudson River Trading. There are all these companies that are making fives of billions, tens of billions. When you put them together, I actually added like eight of them up. It was$50 billion a share with about 12 ,000 employees. That's more than like five of the biggest banks with 3 million employees. And what are they doing? They're taking advantage of these market inefficiencies, often created by this young generation of people that want to trade same-day options or trade crypto or, right, who are more speculating or gambling than long-term investing.

28:06Mike Novogratz:And these guys are taking all the money at one point someone is going to say is that good for society that these guys make all the money and they're taking it from retail elizabeth thorold's going to say let's put on a transaction tax and if it gets crazy enough rational people are going to say

28:26Alex Thorn:yeah i mean yeah why should you be able to trade a million times a second without paying money right like they might start asking that but you know listen the argument has always been we

28:35Mike Novogratz:we provide liquidity to markets. Well, fuck liquidity at one point when one group is making all the money. Yeah, at some point. And so populism comes when it just feels, even if it's not unfair by traditional rules, it feels unfair. And when people make that much money, it starts to feel unfair. And so I think that's just one symbol of what AI is gonna do in every industry. We used to have, you know, whatever those, like plateaus, then it became like the pyramid, and now it's like the space needle.

29:02Alex Thorn:It is.

29:02Mike Novogratz:Like all the money and this inequality and – listen, I'm a wealthy guy and so like I don't want to be like the rich guy claiming, oh, those other rich guys. Yeah, yeah, yeah, yeah. Galaxies benefited. I benefited from it. But this push to the very tip top is terrible for society and there's going to be a backlash.

29:22Alex Thorn:I think you've been speaking very eloquently about this problem. So have other big macro thinkers. you know Anthony Scaramucci your friend Paul Tudor Jones has spoken about this Ray Dalio has spoken a lot about this it's actually the the wealth inequality not even income inequality which is more of a question about the structure of the job market yeah both but really just the stratification is getting so out of hand that even if you're if you like it you should you need to be aware that it's going to create a significant yes intractable political problem

29:54Mike Novogratz:Let's just use SpaceX as one example. Yeah. And where I bought SpaceX in 2013 or 14 because I had capital and I had the access. Valor, Antonio de Grasso had set up a fund. You got to pay him$2.20, but he bought the SpaceX cheap. He bought it from employees. Elon gave him the permission too. They were friends. And so only way I could get into SpaceX. I would tell you that almost every single person I would have spoken to at the time, every person listening to this podcast, yourself, if I had said, hey, I got to wait for you to put some money in SpaceX, would have said, I got$10 ,000, I got$5. You put whatever you could have in SpaceX.

30:37Mike Novogratz:It was a great story. They had government contracts. Elon had already done well with Tesla. And so it wasn't like a great, oh, no, you were so smart to have bought it. You were fortunate to have money and access. That's what Piketty, the guy who wrote about data quality, said. So rich guys put it in. that trade is going to be one of the great trades of my life. Right.

30:57Alex Thorn:Five million bucks. I saw people even talking about the amount that Fidelity had put in at like in 2016. Yeah. Will be one of their great trades.

31:04Mike Novogratz:Five million bucks, if you had sold none of it, even paying the carry at this$800 million valuation is like$330 million. At the$1.5 billion, that's$660 million.

31:14Alex Thorn:Yeah.

31:15Mike Novogratz:So you put five million in, you're 100 extra money.

31:17Alex Thorn:It's crazy. Almost nobody had access to it.

31:19Mike Novogratz:Nobody had access to it. But rich guys did.

31:21Alex Thorn:Right.

31:22Mike Novogratz:Almost every rich guy I know has some SpaceX. and they didn't all buy it early they bought it oh yeah i mean like that's a that's legacy wealth

31:30Alex Thorn:on a on a yo bet and that's a good example in a bunch of ways one of which is that that's a private company in the past that would have been a public available equity right but it very well

31:42Mike Novogratz:could have been like i the funny part was i remember when we're thinking of a tokenization in 17 i had space i said i should tokenize my spacex and sell it out and but i didn't because That's worth a couple of$300 million. Yeah. But, you know, you're going to see tokenized privates. And the good thing is you're going to allow people access. I've always believed that people should all have equal access to investments. But I don't think everyone should be an investor. Well, I don't think everyone should be a trader. Trading takes a discipline and a skill and a knowledge that most people don't have.

32:17Mike Novogratz:And you can't do it part time. Right. You're going to lose. And so you can be a longer-term investor as an individual or you can find the smartest guy in your community. And give them the money to do it for you. And give them the money to do it for you.

32:31Alex Thorn:And you become a doctor or whatever you want to do.

32:33Mike Novogratz:But this idea that everyone should be a speculator is a fool's idea.

32:38Alex Thorn:Yeah.

32:39Mike Novogratz:And so, again, when I was thinking how do we redefine our role is I want to help people create wealth, not just trade. Yeah. And that's an interesting shift I've had. Yeah, I think that's a really good – That's not officially our –

32:53Alex Thorn:You're thinking about it. I'm just thinking about it. I think you're right. Well, yeah, I think the disclaimer too is that like you're not specifically saying we're going to embark on a financial advisory new kick. But I think your point is very well taken, especially in crypto because so much of crypto – Both individuals, but institutions. Right, right. How do you help institutions create wealth? But so much of crypto has been about everyone trading all the time, right? It's been a very speculative and maybe a maturation that will occur is where we can – how do we help you put that crypto into a long-term strategy?

33:24Mike Novogratz:There's$3.5 trillion of crypto wealth. And at one point as people get older, like I'd like to save some of it, not have it all in 60-ball assets. And so that's where tokenized money market funds, tokenized credit. We're slowly going to see crypto wealth mature a little bit and we're going to see trade-fi wealth come into our space. And so, again, this is a multi-year process where the plumbing starts being – we're not going to talk crypto and TradeFi in four years.

33:50Alex Thorn:Four years, it's just going to be part of markets.

33:52Mike Novogratz:Digital assets.

33:53Alex Thorn:Yeah. Like, yeah, the assets. Assets, digital assets. Yeah. I think that's right. And it seems like also one of your – I go back to your earlier point when I was asking you where that demarcation line. Like, do we get – bring more to them, traditional markets, or do they – do we look more like them? We are small beings next to how large the global financial markets are.

34:18Mike Novogratz:And so I think we're bringing innovations to them that they're going to look at and say, that's cool. This is less cool than you think it is, but we're going to take some of it. And so it's going to be less revolutionary. We're not going to smash them down. Listen, over time, I think banks are going to lose out to stable coins and tokenized credit. Like stable coin and tokenized credit is a bank. Right. Right. And so you're going to see an evolution, but they're not dumb. They're going to like figure out how they get to be part of that, you know, that world.

34:49Alex Thorn:But our challenge then is to try to leave our mark there, right? Like dent the trad file. It'll make sure it gets the decentralization that we know is so useful.

34:57Mike Novogratz:You need more purists. You need more Joe Lubens out there, Vitaliks, to say, hey, guys, let's not forget the core of why we did this. Right. Right. We didn't do this just to have more efficient plumbing. Right. We did this because we believed in privacy. Yeah, Satoshi didn't say that. We believed in cutting out middlemen. We believed in peer-to-peer.

35:15Alex Thorn:He's that quote, the root cause, the root problem with conventional currency is that you have to trust the central bank not to debase you. And unfortunately, history is full of breaks of that trust. He didn't say the root cause with, the root problem with the traditional markets is that they don't settle quite fast enough.

35:31Mike Novogratz:Well, but so what's so interesting is the Bitcoin story of being a hard asset versus a debasing currency is such a powerful story that we often conflate that with all the rest of crypto. Right. The other crypto story is cut out middlemen. It's peer to peer. Yeah. Right. And so they're two separate stories. Yeah. And they're equally important. And I say that again. They're equally important. and like I like to almost talk about Bitcoin separately as the macro asset. Now, what has been surprising, of course, was I always thought Ethereum was going to be valued as a utility, right? And how often the blockchain got used, you would have some discounted cash flow of the little micropayment you get.

36:17Mike Novogratz:And in reality is it became popular enough that people saw it as hard money as well.

36:22Alex Thorn:Yeah, they just wanted to own it. Yeah.

36:24Mike Novogratz:And so this transition from utility to money is a very precious one. And I don't think very many tokens will make that. A lot acted like they did, right? Even like little meme coins did for a while. But they wouldn't have lasting power because they won't keep innovating. And at one point, someone gets sick of Pepe. I love Pepe.

36:46Alex Thorn:I never get sick of my rare Pepes. But I hear you. I think that's a really prescient way of thinking about it as well. I don't think – doesn't seem like many will cross the chasm and be durable as a money. Bitcoin has though, right? Bitcoin has. And you were just in the Middle East. I know you were at Breakpoint. You were at Abu Dhabi Financial Week or whatever it was. What's the sentiment there about Bitcoin and about blockchain?

37:11Mike Novogratz:I think I left that trip far more bullish that in three, five, and seven years, digital assets and blockchains are going to be important because they're going to be more important than the rest of the world. Yeah. You're going to bank the unbanked. The neobank concept is going to explode. And so we just opened an office. I'm excited to go back. There's capital there. There's innovation there. There's excitement there. I also think in the shorter run, people are less focused on the old crypto. Bitcoin, I think people are a little bit confused on why it's not higher but haven't given up on the story and think, okay, they believe in this.

37:49Mike Novogratz:Okay, there were a bunch of whales that sold. Like, there is a rational reason why, you know, we sold$9 billion. I look back on that, I sort of said. Yeah, for that whale. Again, that was one-third of all of IBIT this year. From one guy. And so, like, when you're digesting that, like. Yeah. I was actually talking to the guy who helped organize that deal, and he's like, you think the price would have been higher if we didn't sell it? And I was like, yes. Yes. Yes, we would have gone a little higher first. We would have come down a lot of. Yeah. Like it's a lot of supply, right? Markets are always, prices are always set on the margin markets.

38:26Mike Novogratz:It's the last, it's, are there more buyers than sellers? That's what sets a price.

38:30Alex Thorn:Yeah. And so. There were a lot of sellers in 25. There were a lot of sellers. Yeah.

38:35Mike Novogratz:And that's been digested, being digested. And, you know, we'll hit an equilibrium and then there'll be a time when there are more buyers.

38:42Alex Thorn:But you're saying.

38:42Mike Novogratz:But I would be loud and clear. I don't think we've seen the high in Bitcoin. Right. Like I, again, have we seen the high in the next three months? Probably. Have we said, maybe not though, but have we seen the high in the next three years? No, I really don't believe we have.

38:54Alex Thorn:I don't either. And what you're saying too about in the Middle East is that while there are some people squinting at the price and being a little confused, the flame is still alive for them with Bitcoin.

39:03Mike Novogratz:Well, actually the flame is alive in Bitcoin and the flame is boiling in the rest of these businesses. Blockchains. Listen, if you're Binance, you have 285 million people that you're connected to. Crazy huge business. So don't you think they're thinking, huh, when there's tokenized Apple stock, I got a lot of people to sell it to. Right. Right? Instead of selling the latest, you know, crypto that I can't even remember the name of, they're going to sell tokenized assets.

39:32Alex Thorn:Well, this is what I think too, is like get the better quality assets on the blockchains because there's a lot of demand for stocks, for... Yeah. Well... That's going to happen. Here's the last question. It's Christmas, Mike. You've got the Christmas hat on. I called you St. Michaelis St. Michaelis It's not that good but it's what I came up with What's under the Christmas tree for next year? What's gotten you most excited? You talked about market structure, talked about crypto, macro but I don't know, when you think when you see the numbers 2026 in your mind's eye what's the best thing?

40:07Mike Novogratz:It is a building year for us and for other crypto companies. It is the year for this stuff to start working. Like we've been in industry telling this story about how important we are. It's time for us to start being important. It's time for decentralized ticketing. It's time for decentralized finance to really show up. And it might not happen on 26, but it's the building year. And by 27, 28, you better see it. So you're energized. Again, when you're using crypto on this thing, not buying and selling and trading it, but using it, using it as a stable coin, using it, your tokenized equities, using it for ticketing, using it.

40:48Mike Novogratz:Then we've won. Until then, we're an industry in process.

40:54Alex Thorn:There you have it. Mike Novogratz, CEO and founder of Galaxy. Merry Christmas, everybody. Thank you, Mike. That's it for this week's episode of Galaxy Brains. Thank you to our guest, my boss, Mike Novogratz, CEO and founder of Galaxy. Everybody have a safe and happy holiday and New Year's. and we will see you next year, 2026.

41:43Alex Thorn:platforms like YouTube, Spotify, Apple Podcasts, and more. We'll see you next time.