The Bidding War

24:16People across the country, across the world, were watching this auction from various computers. But a bunch of the core team had gathered in one place. They'd found a space with a projector in Midtown Manhattan, near Grand Central Station. So everybody was sitting in there and sort of lining up. We started projecting the YouTube, and everybody was getting in the comments, obviously. And, like, everybody, all these, like, spammers were going off with the emojis and, like, we're all going to make it. and getting extraordinarily hype like an hour in advance. So that was very good energy. Yeah, people were excited.

24:45Somebody was wearing a tri-corner hat. People were excited. People were getting into it. I wore a red, white, and blue hat. I didn't have any just straight-up America gear. People were, I think, a little bit in shock that they had pulled this all together. And the fact that we were even bidding and had a person at Subby's bidding on our behalf in the course of six days, I think that was wild. $30 million with Brooke Lampley. $30 million now is bid with Brooke. It's Brooke's bid at$30. At$30 million with Brooke Lampley. Brooke, the bid is yours at$30. If you say$31. So in the room at Sotheby's, the actual bidding was being done by two Sotheby's employees, acting on behalf of the real bidders.

25:25One thing the Dow audience was not clear on was actually a pretty fundamental question. Of the two Sotheby's employees in the room, which one was actually representing them? There's never consensus, but a lot of people lean towards Brooke Lampley. Which just seemed right. Brooke was this young, striking woman. She kind of had the Michaela Maroney smirk the whole time. $10 million. With Brooke Lampley at$31 million. David Schrader at$31 million. At$31. With David at$31. Plus the other proxy. The other Sotheby's employee in the room just so perfectly seemed to represent everything Constitution Dope was fighting against.

26:00This guy, this guy was so perfectly cast. His name was David Schrader. He had a neatly shaved bald head An expensive, well-cut suit. He looked like a stylish villain from a movie about bankers who hide the vaccine for money. At 31, with David at 31. David Schrader now has a bid at$31 million. Brooke, should we say 32? And whoever Schrader was bidding on behalf of, they had a lot of money. The bids with David at$31 million. Brooke, any more? It's with David Schrader at$31 million. In the world where Brooke Lampley represented the Dow, who did David Schrader represent? Like Brooke, David also had a telephone to his ear, taking bids from someone, some mystery bidder.

26:46Sotheby's estimate for the Constitution's price had been$15 to$20 million. But the mystery bidder, like the Dow, seemed willing to spend way more than that, which was becoming a problem. because while the Dow had$47 million, the maximum they could bid was a little over 41. The core team had figured out they had to set some money aside for auction fees, transportation, storage, taxes. So the closer the number got to 41 million, the closer they were to losing this thing. Back at the core team's lair, Nicole Ruiz was actually sitting next to the guy who was placing their bids, who was on the phone with the Sotheby's rep they were seeing on the screen.

27:22He had his phone out, And so you just hear on the phone him counting numbers, like 40 million, like setting out numbers and sort of prompting him, like, can you go higher? Can you go higher? Do you want to go higher? How are you feeling? Feeling good? So you could hear both sides. You could hear the other side as well. Yeah, yeah, yeah. That's so great. And then he was just saying, like, yes, go up, yes, go up. What was he saying? Yeah, pretty much. He wasn't saying a whole lot. He'd be like, yeah, yeah, do it. Oh, we had one other guy from the company that he worked at who was his childhood friend.

27:56And so he was sort of calming him down in the minutes up to it. They're talking about how they made pasta as kids together and all that type of stuff, which was really funny. Like he was just trying to give him a memory, like a calm memory where he could like hide out instead of in his own anxiety. Yeah, exactly. I could not relate to anything more. It was so funny. It was really good. David, the bit is yours at 31. Brooke, any more? David, that might have done it. David Schrader, looks like the bid is yours at$31 million then. It's fair warning, Selby. Fair warning, Brooke, at$31 million. Week 32.

28:33In time, at$32 million. Brooke, the bid is yours at 32. If somebody just stopped and been like, Paki, why is everyone in this room doing this thing? What has this room decided is important? What would you say? That's a really good question. One, it was the fact that everybody's talking about Web3 is this democratizing force and it's for the people and blah, blah, blah, blah. And then this document that represents democracy and we the people and all of that comes up for auction. And so you can get a group of what ended up being almost 20 ,000 internet strangers to come together to buy this document together.

29:11It was too much to pass up on and too beautiful of a symbol to miss out on. It's funny. people just get excited online about being part of a large group that is doing something powerful especially if it's like powerful and a little bit dumb 100 % it's like once people see that's happening they just want to be a part of that thing which feels like I know that for you the long term meaningfulness of DAOs can be about stuff like climate change and rare diseases but like the short term feels like Some of it was just like, holy shit, look what we could put on the Jumbotron today. Totally, and I'm not dismissing that.

29:54I think the magic is that you could have fun doing dumb shit short-term, and also as a byproduct of that, it tests models that could be used for less dumb things and more impactful things over time. But I don't know, yeah, it's a copy of the Constitution, but it's buying this thing together with a group of people that represents democracy and all the things that you love about this country. And like, I don't know, everything's kind of made up anyway. I think I do actually agree with Paki that democracy was being represented here. I just, I'm not always sure. It's not that I, I guess, is there any idea as beautiful in theory, but a stomach lurchingly rickety in practice as actual democracy?

30:41Back at the auction, while the bidders battled it out in increments of tens of millions of dollars, The video's live comments box showcased the anarchic crazed part of democracy as it is actually practiced. The commenters were not coolly discussing America's grand tradition as a republic. They were screaming their heads off. It was an endless scroll of cheering, jeering, paranoid screeds, and truly lunatic plans for the country's founding document. One person commanded, Nicolas Cage should be nominated as the primary guardian of this document. Another person said, let's burn the constitution and turn it into an NFT.

31:18Someone else agreed, let's smoke it. Someone asked, why not burn it? A calmer voice chimed in, anyone want to not burn it? And the compromise solution was proposed. Let's not burn the constitution and turn it into an NFT. These were the people that the core team had been essentially wrangling for the past six days. The raucous voice of real democracy, with the core team functioning almost like a Congress. Certainly the ability to have democracy without total chaos is one of the interesting things about DAOs. I mean, part of what stresses me out about DAOs is like groups of people stress me out.

31:56Group projects stress me out a lot. Totally. They can go badly. Do you feel that when you're looking at these DAOs? Do you ever feel a sense of panic? Oh my God, yeah. The difference between being the core contributor channels in the Discord and then the general channel in the Discord was night and day. This is why you progressively decentralize and you don't just open it up immediately. It was peaceful and the most well-run startup you've seen in the background. Everyone just having a daily stand-in, getting their tasks and going and doing those tasks and then checking in and getting help when needed.

32:40in the core contributor group. And then the main Discord was like, when token, all the things that DAOs get shit on for was happening in that main group. And it was total chaos and there's no way that you could possibly keep up with it. And people are guessing the bad intentions of the organizers and all of that kind of stuff. And those bad intentions didn't exist, but just groups can kind of take on a mind of their own. Which is why I do think it makes sense to really figure out what the structures are before fully decentralizing, like Constitution doubted, which was an intentional decision because had we just said, all right, everybody has a vote now, what are we going to do?

33:20We would have had someone wearing a 69-man costume go to Subby's and replace Brooke as our bitter. It can get out of control if you don't have the right framework in place from the beginning. the point is not that it's fully democratic in everything. It's that people have more of a say and more ownership, particularly over time as the product is more mature and doesn't rely on that kind of coordination or product vision from one person or a small group of people. I find Constitution now confusing the way I find crypto confusing. I mean, not just the jargon or the technology or the math of it all, but also just how to feel about it.

34:04It's confounding. Crypto is a populist movement opposed to big banks and central power, but some of its ringleaders and most excited cheerleaders are VCs. It doesn't really fit into the arguments or alignments that I'm used to seeing. I understand why someone like Paki can look at ConstitutionDAO and see a new form of joyfully absurd populism asserting itself. I also understand why someone would just see a bunch of internet gamblers buying our country's founding document to entice more people into a Borgesian online casino where everyone gambles on increasingly abstract concepts and the house is actually just other gamblers who got there first.

34:41I don't know which opinion is right, or really if there's any right opinion at all. The only thing I know for sure is that making any big pronouncements or predictions about what this is or where it's going seems like a great way to look stupid when it all changes again in five minutes. So instead, how about I just tell you the identity of the person who was bidding so aggressively against the Dow. Why don't I just tell you about the mystery bidder? I have become more involved in politics over the years because I'm trying to protect the American dream. I'm trying to protect the opportunity that everyone in this country should have to have a great life, a great education, and to have a life well lived.

35:28That is multi-billionaire Ken Griffin, 45th richest person in America second richest person in Illinois hater of internet populism the guy who bailed out Wall Street when Redditors were beating them up with GameStop stock you just heard him speaking at an event a month before the auction where conveniently someone asked him the question I've learned derails every dinner in 2022 Ken, what do you think about cryptocurrency? Do you believe in crypto? And even if you don't, Ken should your businesses be active investors or traders in crypto anyway? That is a great question. So first and foremost, I wish all this passion and energy that went into crypto was directed towards making the United States stronger.

36:21I mean, let's face it. It's a jihadist call that we don't believe in the dollar. A jihadist call that we don't believe in the dollar. That is mystery bidder Ken Griffin. Griffin was a person motivated not just by a desire to own the Constitution, but by an understanding of what it was Constitution DOW was trying to say. He disagreed with them. And he was disagreeing with them in one of the oldest, clearest languages America has. Money. It is with David at$40 million. Nice round number. Brooke, it is not yours with David Schrader at$40. In this moment in the auction, the Dow does not know that they are bidding against Ken Griffin.

37:00He was simply the mystery bidder. All they know is that somehow, six minutes into the auction, the cost of an old scrap of paper had reached$40 million. The Dow doesn't have much money left. All eyes are on Brooke Lampley, the person bidding on behalf of the Dow. We think. Waiting for you if you'd like it at$40 million with David. Again, 41 will be next.

37:26$40 million. Brooke? Quig Brunig, hands folded on the podium, looks at Brooke. So we're still thinking about it, but maybe that might have done it. David, the bid is yours at$40 million. It is not yours, Brooke. We can bring the hammer up again. Brooke's on the phone. She gestures with her hand to hold. Increase the drama one more time. At$40 million. David, the bid is yours. $41 million. With Brooke at$41 million. Brooke raises her hand. $41 million. She has it. Just in time at$41 million, Brooke Lampley. The bid is yours at$41. So Schrader, what shall we say? At$41 million, it is Brooke's bid at$41.

38:08It's ahead of your phone. It's with Brooke at$41 million. Just watching this is nerve-wracking. Quig looks at David. David's hand is on the phone. He does not look up. This historic document with Brooke Lampley's bid at$41 million, viewed around the country. 41, no? Are we sure? David finally looks up and shakes his head side to side. No. At$41 million, Brooke, looks like congratulations are in order to your bidder. David, you're out. Anyone else is welcome to jump in, but Brooke Lampley, the bid is yours for the United States Constitution at$41 million. Sold. $41 million. Prattled 4-1-1. Congratulations.

38:53It was over. Brooke Lampley, still holding the phone to her ear, now smiling like a cat who ate a canary. In the YouTube comments box, people are still arguing about whether or not they've won, whether Brooke had indeed represented them. Someone says, yes, yes, we did it, followed immediately by someone who says, oh, no, no, no, no, no, no, no. The most important thing, and the funniest thing, about DAOs is that they are decentralized. No CEO, no gods, no masters. So what happened next? A couple DAO members, not the core team, started celebrating. They opened up an audio chat room on Twitter to members of the press.

39:27A reporter from Motherboard recorded it. I'd like to welcome all the media outlets that are in the space. I see you, CNBC, I see you, CNN, I see you, Fortune Magazine, I see all the different media outlets. You are in the right spaces right now, ladies and gentlemen. You are in the history. Imagine this 10 years ago when you heard about Bitcoin. Right now, what is happening with the Constitution DAO, it is history. He said he'd just gotten a text from one of his friends who was higher up in the Dow, they'd won. I literally want to cry. We fucking did it. We won it. We're going to make it. She said, we did it.

40:00I confirmed from the team. We won the auction, ladies and gentlemen. Congratulations. We're going to make it. Let's just take a quick pause for a second. Just soak it in for one second.

40:17History was made. Another DAO member said, maybe it was time to consider the next auction. Maybe we do the declaration next? I don't know. They were giddy. They were taking questions. These random DAO members who had appointed themselves revolutionary spokespeople, but they'd made a mistake. Their assumption had been that Brooke was their proxy. She seemed like their proxy, but nobody really confirmed it. And then another text came in.

40:45Yo, I've been texting. my friend who's on the multi-sick and she says that they didn't get it. I just got reconfirmed. So we did not win this, ladies and gentlemen, but it's still history in the action because we really opened up the Pandora's box. I want you guys to think about we pulled enough money to actually get close to winning. We were really close to winning. Now imagine what we do is we pulled the money together for next projects. Maybe what, NBA team? That's right. Yeah. Right? Yeah, this is just a start. I don't know if you caught what he said there. Maybe next time we buy an NBA team.

41:19This is just a start. What did it feel like when the auction was over? It felt... It still felt good. I don't really know if it was a letdown. It was just such a crazy thing that we did. It felt special for sure. I don't know if it felt historic. At the end of the day, we lost an auction to buy the Constitution. And so it's not like the world changed. I do think it was a good opportunity to show that this other structure is kind of out there and people are going to do some wild things with it. It felt very uncertain because we didn't know what was next. I think deep down maybe we all knew. But yeah, just kind of riding the adrenaline high.

42:07After the break, chapter three.

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45:05Deadlines. People like to complain about them, but the truth is deadlines can, in the right circumstances, create miracles. Like really? There's something about a good deadline that can draw a team together like a school of fish. No real boss necessary. The deadline is the boss. There's this almost ecstatic clarity of purpose that can take hold up until the moment the deadline is over, at which point the whole thing falls apart like a dream. Or so I've heard. Anyway, something like that seemed to happen post-auction for Constitution DOW. Not that the team became particularly fractious, more like general miscommunication and mild disorder flourished post-auction.

45:44Part of this, I think, was related to something I actually didn't understand until pretty late in my reporting. I started to get a sense of it when I asked Nicole Ruiz this very basic question. How old are you? I'm 24. Everything that she's done, 24 years old. And what was the age range of people on the core team? Was it a lot of people in their mid-early 20s, older, younger? Yeah, I think the youngest person might have been 16, and the oldest person might have been 35. I could have that wrong by one or two years, but I think that's about it. But so pretty young. Young to be, I don't know at what age, this isn't true, but young to be controlling a wallet with over$40 million in it.

46:27Totally, totally. Yeah, I mean, technically, I think six people were on the multi-sig, so technically they weren't, the 16-year-old I don't think was one of the people who could have run away with the money. You know, the multi-sig prevents that in general. But yes, yes, in general, you know, a cool age range. I don't mention the ages of the core team here as a dig. Young people are capable of the same successes and failures as anybody else. I'm trying to get at something else here. Which is that what stood out to me meeting the core team was just the moteliness of the crew. Finance people, coders, medium-tier meme lords, a motley crew of people, many of whom were doing jobs that either were not their expertise or were perhaps several promotions passed where they would have been at a regular organization.

47:13And what had kept this school of fish together was velocity itself, the speed they had to work at. But now that velocity was gone, and what remained was a group of young, exhausted people with a delicate and thorny problem to solve. The money. What was to be done about all the money? $47 million of donated Ethereum collected from just under 20 ,000 people, medium contribution$200. It all had to be refunded to that raucous crowd of DAO contributors. The core team had promised to do it. But in the days after the auction, there were conflicting messages about how exactly that refund process would work.

47:53By the end of the week, what they said was, yes, there would be refunds, but the Dow would not cover the Ethereum gas fees, which are expensive. It meant that there were people who had donated$20 or$50 who were now understanding that the fees on their refunds would exceed the refunds themselves. And they were angry. Angry about the money, angry about the communication around it. I asked Brian Wagner, another core team member, about this. I mean, I think they're both reasonable criticisms. Like, communication certainly could have been better in the days after we lost the auction. But we also were basically telling people, we're figuring out what we're capable of doing next, just as people.

48:36And we need a minute. And we didn't know. And I spent a Saturday with one or two other folks on the team trying to estimate the costs of different ways that we could refund this money. And it's expensive. And there was no getting around that. And so we were kind of like, well, we got to make this available as soon as we can. We can't just hold on to these people's money. That's not okay. And we probably should have done a better job of educating people about this. And here we are. Do you feel like you learned that it's more fun to start a revolution than to govern? Yeah, 100%.

49:18There was certainly an element of the dog chasing the car situation. Yeah, like you caught the bump right now, what do you do? Yeah, like we're on it, like, oh, it's really hard to manage all these viewpoints. Prustration with the Dow seemed to reach its peak the Sunday after the auction and crested through the following week. But over Thanksgiving weekend, it disappeared in the face of something unexpected and deeply hilarious. On December 1st, the headline in Forbes read, Crypto investors wanted to buy the Constitution. Instead, they birthed another hyped-up meme coin. That coin was the People Token.

49:56The coin that ConstitutionDAO had given its contributors as a share in the DAO. Should have been nearly worthless, since the group had failed to acquire the asset that would have backed it, the United States Constitution. But now, for reasons no one was entirely clear on, a bunch of traders suddenly wanted to buy that coin. A lot of this interest was coming from crypto traders in China. The best rumor I heard explaining this was that crypto in China is considered anti-Chinese government. These investors may have liked a coin whose symbolic value was tied to democratic revolution. Who knows? But whatever the cause, the price of the People Token shot up.

50:34Way up. At its height, a 3 ,700 % increase. Which meant that the small investors in ConstitutionDAO, the people who had not been able to get their refunds, they had now won a minor lottery. Here's Paki. And then, lo and behold, those people were the lucky ones because I, like an idiot, took my ETH back and missed out on the pop. But the people who had to keep their$50 in because it didn't make sense to take it out, all of a sudden their$50 was worth$2 ,000 within a week.

51:14It's so dumb. It's so dumb. I mean, I know people who made like a couple hundred thousand dollars by accidentally like leaving. I would have made, I put five Ethan, I would have made, I think at the peak, something like$900 ,000 had I just waited a day to refund my money. Oh my god. Yeah. It doesn't bother you. There's so many of these things here. Yeah. In the end, Packy left Constitution Doubt the way he entered it. A crypto enthusiast with a good story about the fortune that he'd almost won.

51:55That is our story on Crypto Island this week. A disclaimer, if I have accidentally given you the impression that you should run out and start investing in a weird crypto project, please do not do that. This is a very hard to navigate space. I am puzzling it out one story at a time. And if you're along with me on this series, if you're learning from me, just don't. Nothing here makes sense. Nothing is fixed. On that note, mystery bidder Ken Griffin, the billionaire who won the Constitution, announced this month that his firm will now start investing in cryptocurrency. That old jihadist call against the dollar.

52:36Everything changes, man.

52:49We first aired that story in 2022. Since then, Ken Griffin still owns the Constitution. He's loaned it to the Crystal Bridges Museum in Bentonville, Arkansas. You could go see it there. Nicole Ruiz is not working on any crypto projects now. She's a stay-at-home mom trying to build a big homeschooling community in Brooklyn. Paki McCormick, still in crypto. His newsletter, Not Boring, is going strong. This episode of Crypto Island was produced and edited by Shruti Pimanemi, fact-checking by Elizabeth Moss, sound design and mixing from Stephen Jackson and Phil Demahofsky at the Audio Non-Visual Company.

53:24Theme song by Christine Andrews. See you next week.