ENTREPRENEURS Reveal What CENTRAL BANKS Don't Want You To Know! - George Kikvadze and Bill Tai

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1:30It could make somebody hard. It could make somebody cynical. How did you transform all of that? Your word is the most important thing. That really was the foundation of everything that I was raised on. Honesty, hard work, and doing good. You know, my parents were doctors. My grandpa kind of called up in the middle of the night, 3, 4 a.m. to go and save someone's life doing a surgery. And this kind of selfless giving. And if you do this selfless giving without thinking to receive something back, this is actually, ironically, the most selfish thing you can do. Because if you do it selflessly to go and make an impact and help others, you know, the universe comes back to you 100x times.

2:10Usually the people that get super rich are like incredibly ruthless. They're like backstabbers. They're going for your carotid artery with a ballpoint pen. I thought nice guys are supposed to finish last. How are you guys pulling this off? What I do is I look for projects where the teams can lower the friction to a solution to a problem and build it to replicate and scale. That's Zoom. That's Canva. That was Bitfury and Bitcoin. And if you can do that right, you go to sleep every night and you wake up the next morning and the value creation was bigger every day. Welcome to Open Book. I am your host, Anthony Scaramucci.

2:43Joining us now is George Kikvatsi and Bill Tai. OK, let's go to George's background first. He's the founder of Cryptic Aid at a VC firm. He's a Bitcoin pioneer, vice chairman and early backer of Bitfury. I'm sure there's some great stories there. and of course, Bill Tai, the legendary prolific investor and entrepreneur and founder of everything you are using in your house. If it's a technology, Bill Tai has been involved with this thing, but they wrote an amazing book and the title of the book is, And Then You Win. What a great title. And Then You Win, A Startup's Untold Story of Grit, Grind, and Clory.

3:24It's great to have you both. It's a rare opportunity to hear from two people with such an inside the room knowledge of everything that's been happening over the last several decades. So I want to begin with you, George, first. Tell us about your background. Tell us how you got to be where you are. Then we'll talk about Bill and the forward, et cetera. Yeah. Thanks, Anthony. Pleasure to be on your show. Pleasure to be here. You know, I grew up in Soviet Georgia. My parents were doctors. And then on one sort of a sunny day, 1991, the whole entire life savings of my parents that were in Burbank collapsed and everything evaporated and everything was gone.

4:09And basically, you know, I went on a journey where I, you know, applied for a high school exchange, ended up in oregon came to united states with 200 uh went to u of o uh then went to upenn wharton then went to johns hopkins uh and basically ended up working for jamie dinan at york capital and as the world was collapsing in 2008 uh you know there was an opportunity for me to take a time off and uh he just got sort of uh introduced to bitcoins through a good friend of ours marat that talked to talk to me about this sort of a crazy idea of bitcoin mining and this latvian entrepreneur val vavilo that you know produced the first asics and uh said why don't you you know come in and join and um you know coming from the background of not trusting the centralized governments, not trusting the central banks, you know, having sort of family paying the price.

5:11I was a big fan of mathematics. And when I started reading about Bitcoin, sort of connected to Bitcoin OGs, Wences, Cesaris and Mickey Malka were my first sort of connections in 2013. And we connected right away, them coming from Argentina, Venezuela, me in Georgia. And I realized that, OK, this is the next big thing. And I had some capital and I backed Bitfury and the rest is the history. Why'd you write this forward, Hanson? Mr. Bill Tai, why did you write the forward? You know, I was, I guess, lucky enough to be the main capital provider to the big ASIC that became Bitfury. I forgot the exact year, 2013 or so.

5:55And yeah, it's kind of a long journey into the Bitcoin ecosystem. But yeah, interestingly enough, I was working on peer-to-peer systems in 1999-2000. And I launched a product that eventually got bought by Nokia to be their cloud infrastructure with their web phones called, they called it Files by Ovi. The company name was called Avon. In 2003, I helped launch with Philip Rosedale, the digital currency in Second Life. So those two things together led me to Bitcoin in 2010. And in 2010, I started experimenting with the software and I was looking for somebody to buy from. And I met a young man named Nico Poonin, who was heating his apartment in Finland with mining rigs.

6:47And he ended up becoming part of the team at Bitfury. And it took a little bit, you know, to get to know him and the team across Central Europe. And I ended up funding Bitfury. You know, when I came into this, I'm after you guys. Obviously, I'm a little late to the party, but I think we're all still early unless you guys tell me differently. But when I got into this space and I asked somebody about Bitfury, they told me that it was more or less the industrial backbone or the sort of the, you know, you're like the OG miners in the space and you sort of created the ethos of Bitcoin mining. And, you know, basically you're the central nervous system of Bitcoin.

7:36Do I have that right? Is that the right description of you guys? And if it isn't, what is the right description? In that beginning period, there weren't enough companies doing different parts of the stack. So Bitfury designed and made its own silicon, made its own servers, deployed them and built data centers, had hookups at, you know, George found a 40 megawatt dam in Republic of Georgia. This is 2013. So Bitfury in that window 2013 to 2017 was at times 40, sometimes a little over 50 % of the world's Bitcoin mining. I mean, there were months, George, I forgot the exact numbers, but there were months the company would mine tens of thousands of Bitcoins.

8:26Maybe more, actually. So, George, what did you see? It's an obscure technology. I know you guys are technologists, but it's an obscure technology. It's a cryptographic code on the internet that you looked at and said, okay, this is going to be perceived over time as super hard money and an eventual digital store value and potentially operating system for money around the world. But how did you see it so early? What rang your bell? You know, I think, Anthony, in life, sort of I trusted the way to follow the signs. and the number 21 has followed me all my life you know i was born on march 21st my house is on a 20 number 21 you know i would go to vegas in a casino you know from time to time i make bet on 21 and it sort of was there with me and 21 million coins uh bitcoin itself a big b my nickname as a kid i was raised under nickname buka so b was always so b and 21 so for some strange reason it's kind of connected the dots when you know i was investing in ukraine agriculture and that project was coming to an end that guy exited to cargill i had some capital here's my very close friend pestering me about bitcoin bitcoin is at 20 at 50 then cyprus happens and cyprus was a wake up coal.

9:56And the price went to$200. Let's stop on Cyprus for a second. I got young viewers that may not know what you're talking about. So during the Grexit crisis, where the Greeks were thinking about leaving the euro, and there was a whole sort of consolidation in banking, and there was a need to mark down assets in the banks in Cyprus, the banking authorities agreed to take a 10 % haircut of everybody's savings account in the commercial, residential, the banking industry in Cyprus. And so if you had a million dollars in an account, it was now worth 900. If you had$100 ,000 in account, it was worth 90.

10:38I just want to explain that to everybody so they know what it is. And why did that have such a big impact on you, sir? Yeah, because it was a wake-up call that at the end of the day, the fiat system is broken. um you know i sort of saw it firsthand in soviet union but not even soviet union but in established entities such as european union and not only not only the haircuts then there was also a moment where your money was frozen you could not take your money out so all of a sudden you know there was a massive panic and bitcoin went to 300 and i used my network i contacted some of my friends in silicon valley and one of the guys that reached out was divash makan of iconic who is my classmate and divash is like george uh some of the wealthiest tech investors that i manage money i'm not going to name names but they are big investors in bitcoin and i'm like okay this is very interesting and then i got into into can academy can academy had the first bitcoin course so i started religiously you know getting into it studying it up and i realized okay oh my god if this system alternative to existing fiat and central bank system work that's propelled by mathematics and cryptography works even you know 20 of it this is gonna be massive and another point was that when i met val the founder and the people around him they were just on a different level and when When I met the young coders that were coding on Bitcoin, these young Ukrainian geniuses, I was just amazed by their raw brainpower.

12:14And if anything, it was just a bet on the intellectual power of this young generation that was coming and coding and developing on his open source system. And for me, that was an aha moment. And that's when I got engaged in 2013. Why this book right now? And by the way, it's a brilliant book about chance, risk-taking, informed decision-making, not getting things right, making an adaptation, the grind. I mean, that's exactly what it is. You get to the glory, but you're grinding. And I think people have to realize that because they read these glossy magazine pieces and, oh, the guy, I guess he just stepped in it and he's made the money.

12:57But that's not really what happens. And you write such a really authentic book about that grind. So but why? Why write it now? Well, I think first, while we were going through the journey, we always joke that the stories are so unbelievable that no one would believe it. And at some point, we got to share this with the world, you know, the journey that we went through. And it really was a from my standpoint, it was a psychological kind of therapy in a way, kind of reflecting on the past we've taken, reflecting on the people and the friends we gained along the way, and reflecting around doing good things and going through this experience as band of brothers, let's put it this way.

13:41And time has come and it was, you know, we were at the Diamandis' Peter's Summit and it just by coincidence, one of the folks, one of the guys in my forum. He just wrote a book and Kerry Oberreiner of Igniting Souls was there. And it's just another sign. I said, okay, time has come and let's do it. And I posted on a social. And as you know, when you post something on a social, I said, I'm going to have book in six months. And that's it. That was a commitment. And I just grinded and grinded and grinded and and worked and worked. And, you know, Bill obviously has helped out a lot in terms of guiding.

14:21And we put this thing together. And it was really a journey in terms of what we went through and trials and tribulations. And really, if you think about Anthony, the space had a lot of reporters and journalists writing about the space and the great stories. But we really never had a true insider story. So what I want to do as part of it, kind of unleash the storytelling by all the founders and folks that went through this, you know, through journeys of building up and being part of this ecosystem. And, you know, I think it was fun and I'm really glad that we did it. Well, listen, I mean, the stories are awesome.

15:00I want to go to Bill for a second because when I think of the title of the book, I think of, and you guys write about it, I think about the famous progression, the entrepreneur mantra, right? First, they ignore you. Then they laugh at you. Then, of course, they fight you, and then you win. So let me go to Bill first. When did it dawn on you, oh, my God, we may actually win here? Oh, boy. I would say that I had a feeling maybe four or five times during the journey, and then we would get literally hit in the head with a sledgehammer, whether it was regulatory or competition or something. And it wasn't really till the end where the company, through a lot of George's creativity, spun off Hutt 8 Mining that became Hutt and American Bitcoin and created this, you know, the entity to take Cypher out through us back.

16:00You know, at that point, we had liquidity. It still wasn't clear at that point whether the liquidity would be enough to carry the company all the way through. But, you know, with the advent of AI lifting those companies because of their infrastructure, the balance sheet and the capital wherewithal behind Bitfury has grown substantially. And so now I feel like it's in a safe zone. But I can't say that I ever felt that until about a year ago. All right. So for those of you listening and not watching us on YouTube, George just crossed his fingers, okay, which is a sign that he's superstitious like the rest of us.

16:42So you're crossing your fingers. You're like, I'm hoping that, you know, right? Because George, the uncertainty that you've lived with and the doubt, right? We call it fun, right? The fear, uncertainty, and doubt. And of course, the wave of people, and by the way, myself included, and Michael Saylor has admitted this, I didn't understand it. I walked away from it. I think I met, you know, we were mentioning, you guys are mentioning Peter Diamandis. I met Hal Finney. It was either 2011, maybe, I don't know what it was. It was at a Singularity University workshop at the Ames Research Center in, you know, in Palo Alto or where that is exactly.

17:21You know it better than me. It's in Silicon Valley somewhere. Moffat Field. And I was like, where is it? Moffat Field. Okay, yeah, Moffat Field. Exactly. So I'm meeting him. he's making a presentation on bitcoin and i'm my eyes are glazing over i don't get it so how do you combat all of that and also you guys are too old for this shit if you don't mind me just pointing that out okay i mean you you know if you were 21 and a computer programmer i'd be like all right but you wences another great og in bitcoin how did you how did you see it you know i think from from our standpoint yeah go ahead bill yeah for me i think the lead up to the great financial crisis told me that there had to be a new alternative and i don't you know a lot of young people on here as you mentioned they probably weren't around during that era but i I got stuck with a bunch of auction rate securities in 2007.

18:20And I didn't understand how a capital market of massive - I have to stop you, sir, because again, I got to explain this. We have so many young viewers and listeners. So what is an auction rate security? So Bill is talking about something that we thought prior to the global financial crisis was relatively riskless. We were rolling commercial paper on seven-day rolls. It was probably giving Bill 50, 75 basis point improvement in his interest rate. And Bill was told by a financial advisor somewhere, this is fine. We've been rolling these successfully for three decades and you never get caught in them and you'll always be able to get out of them.

19:03And guess what happened, guys? We had a global financial crisis. And in the fine print of these auction rate securities, in an event that they don't roll, you could get locked in them. So how long were you locked in them? Because I have clients that were locked in for several years. I couldn't believe it. Okay, so I had told my broker at Smith Barney Solomon to put them in something safe. And I thought they were in treasuries. And I get this letter from BlackRock in my physical in-basket in that era that was called the benefits and risks of leverage. And I'm like, what do I even have BlackRock?

19:41And why am I getting this kind of title? Something must be wrong. And it took me a while to track it down. And I call my broker's name, Fred. I was like, Fred, why am I getting this letter from BlackRock? And he said, well, the market froze. I said, the market froze? How does a multi hundred billion or maybe trillion dollar market freeze? He said, well, just like you explained, Anthony, these are pieces of paper that get auctioned every week to set the interest rate. And nobody showed up at the auction. I said, what? I said, so what do I do? And he says, well, I guess if you hold them the maturity, you'll still get your principal back if the companies are around.

20:18And so I said, well, how long dated are these things? And he said, well, there's some that are like 30 years. And I was like, 30 years? So I get my money back. And I said, well, I guess those go to my grandkids or something like that. And that got me thinking about what is wrong with the world financial system. And I started to look at the level of debt of the developed countries. And I realized the math doesn't add up. I mean, I don't remember the exact numbers, but at that time, I would guess the world economy was about$70 trillion. And the debt on the world economy was about$270 trillion. The world economy was growing 3 % a year.

21:00The debt was growing 10 % a year. And those lines will never intersect. So that made me say, this system that we are living in is not durable. Got to do something about it. And I didn't really know what that was. So I started buying gold and derivatives and things like that. And then, of course, Bitcoin came out. And then I thought, you know, this could be the solution. So I jumped right in when I understood what it was. George, I feel we're getting close. What Bill is talking about is 15, 18 years ago. And we all know it's gotten so much worse since then, which is probably the reason why Bitcoin went from, I don't know, a market capitalization of tens of millions of dollars into the several trillion dollars now.

21:52But what happens? Is it just a slow boiling, George? where our kids wake up one morning and the dollar, no one wants to use it anymore? Or is there an explosion at the end of this thing? Or what happens to this fiat-based currency system that we know has been woefully corrupted by bankers, central bankers, and politicians? Yeah, Anthony, if you look at the history of the fiat, I mean, it has been corrupted from the day one it originated and there were so many competing fiat systems at the end of a day sooner or later you're going to face the banquet of consequences you know winston churchill and we're kicking the can down the road and we're kicking the can down the road the central banks are printing more money the governments are living beyond their means the budget deficits are widening so i think from that standpoint where we are it's just a one directional asymmet bet and when When a system is in trouble, where do you want to be?

22:55You want to be outside of the system. And Bitcoin is that bad. Okay, but why? Let me play the steps for a second. And everybody knows on my podcast that I'm long Bitcoin. I'm loud about my book. But let me play the skeptic. Why? Why would it be Bitcoin? Why wouldn't another coin manifest itself that maybe has more quantum resistance or has a better security control, or maybe uses less energy. Tell me why it would be Bitcoin. You know, and we were using something called like AltaVista or Yahoo to do search in the late 1990s. And then the whole thing got bigfooted by Google, as an example. Why wouldn't Bitcoin be bigfooted?

23:41because bitcoin is the first decentralized protocol there is all the companies that you mentioned google altavista or napster for that matter these are centralized companies and a single point of failure bitcoin is decentralized it's supported by 25 gigawatts of compute power that's globally distributed and the ledger this immutable ledger gets updated at thousands and thousands of nodes it's the first out there and it's a tcpip protocol of the sort of uh money and of the new age can someone compete with bitcoin uh potentially but it is first it is the largest it is the safest it is the most secure it is the most decentralized it is the most scarce i mean it's already running in terms of the emission of new bitcoins at less than one percent which Yesterday, I had a meetup with Peter Schiff here at the conference and gold 2%.

24:42And if a price of gold goes up to 10 ,000, other miners will come to gold and emission will go to 5%, 6%, 7%. If Bitcoin and when Bitcoin goes to 1 million, Anthony, the algorithm will not change. The emission, the scarcity model will stay. So from all these parameters, it has been able to survive. And I say it's like a Mowgli that was really young and it has grown. And now it's sort of the king of the jungle. So I don't see any sort of challenges for it. Serious ones going in. It's there. And if you look in terms of sort of the Bitcoin itself and the acceptance that is happening right now on institutional level, you know, yesterday you had, for example, Vanguard for the finally sort of coming in and putting in the ETF.

25:33I think we're there and I just don't see anything that can in a meaningful one challenge. Now, in terms of quantum computing, you know, people mention that all the time. Guess what? There's also quantum cryptography that's being developed to counter that. So I think Bitcoin is the future of Bitcoin is very bright. So, so guys, you seem too nice. okay i mean you know usually the people that get super rich are like incredibly ruthless they're like backstabbers they're going for your carotid artery with a ballpoint pen so how do you know i thought nice guys are supposed to finish last how are you guys pulling this off well we'll start with you bill because i've never seen you without a smile on your face you son of a bitch so let's start with you?

26:23Well, you know, I think technology brings with it a totally different dynamic that is growth oriented. I think that I don't know where the line is that you draw delineating, you know, past versus present. But I think there was a point in time that pre that line, wealth was about taking everything from everyone else, kind of zero sum game, very transactional trying to make a penny or a nickel off of every deal and i think what's happened uh since the advent of silicon valley and the new ethos of growth it's become an industry where you're looking for not necessarily the smaller piece but a smaller piece of a bigger pie and that if you can get collective energy of a lot of people working on something the size of the outcome in the pie is so big that the people that are social and contributing and can gather other resources in that way do better.

27:27And you see that in the advent of companies like a Google or a Facebook or things like that, that have network effects and they just keep going. And I think I had the benefit of really learning that from Linus Torvalds. And for those young people out there, if you don't know Linus, Linus created Linux, but Linus was an engineer in a company I put together in 1995. He wrote compilers for us at a company called Transmeta. And as a side job, he managed this amazing group of developers, the worldwide footprint, taking on Microsoft for no pay. And they created a ton of value, both in Linux and all of the derivative companies that came from that.

28:12Linus became one of my advisors to my peer-to-peer project that was called at the time ifrog.com and the site is still up it's e-y-e-f-r-o-g.com but uh he was a uh an advisor along with a bunch of interesting people including philip rosedale that started second life uh and we created this peer-to-peer fabric and you could see energy would just come into this and it would just value would grow without you having to do very much so And that might be why I smile, because I tend to fund projects that are naturally viral. What I do is I look for projects where the teams can lower the friction to a solution to a problem and build it to replicate and scale.

28:55That's Zoom. That's Canva. That was Bitfury and Bitcoin. And if you can do that right, you go to sleep every night and you wake up the next morning and the value creation was bigger every day on average. and you just like take, you don't take life easy. You still got to work at it, but you get rid of that stress because you're not fighting every day. You're getting things to work on love. I love it. It's a little less cutthroat than financial services, Wall Street, what I've experienced. You're basically saying the pie is growing and you guys are smart enough to take your requisite share of the pie and also recognize there's a lot of pie out there for everybody.

29:37But George, you grew up in a rough place. You're talking about communism, totalitarianism. You're talking about the taking away of liberties. You're talking about loss of financial freedom, inflation, devaluation, waiting on lines for just economic basics. It could make somebody hard. It could make somebody cynical. How did you transform all of that? Tell us about your mindset. Tell us about your physical and mental makeup up that gave you this wonderful ability to see the glass half full and things. Yeah, I think it's, it was very important, the upbringing and the foundation in my family, that your word is the most important thing.

30:26And that really was the foundation of everything that I was raised on. Honesty, hard work, and doing good. You know, my parents were doctors. My grandpa kind of called up in the middle of the night, 3, 4 a.m. to go and save someone's life doing a surgery. And this kind of selfless giving. And if you do this selfless giving without thinking to receive something back, this is actually, ironically, the most selfish thing you can do. Because if you do it selflessly to go and make an impact and help others, you know, the universe comes back to you a hundred X times and we've said it over and over and over again.

31:07And if you smile, the universe smiles back to you. It's a, it's a law of universe. It's a mirror. And for us, you know, Anthony, we were on this journey, which I was utmost confident that everything would work out. You know, I was really in a way kind of missed those crisis days because that's when we rallied out. That's when we tested each other. That's when we kind of got sharpened up. And, you know, it came to a point where we have amassed a lot of capital, but, you know, we don't buy yachts, we don't buy jets, you know, all of this capital is going towards investing in young founders in new projects, we just launched a billion dollar fund to invest in a mission driven entrepreneurs, it's very important for entrepreneurs to be informed in the same understanding of our mission, to do good and do impact.

31:54And actually, one of the key projects we just announced 50 million phase one is the young audience you're gonna hear it first here it's a decentralized ai play run by proof of work compute power initially it's gpu it's growing like crazy close to 6 000 gpus and soon we're gonna switch to a6 and david liberman is the founder of the gonka uh gonka ai and i think at some point uh anthony once we sort of a do this major announcements would be great to have David come in and talk to your young viewers in terms of what going on. David, we welcome you coming on. And I appreciate you joining us as a witness to this podcast.