E 102: Mike Novogratz: Why $100,000 Is Just the Beginning (don't miss out)

27:06And I can remember it like yesterday, actually. I was at the Fed, Federal Reserve, talking to a bunch of smart guys. And we started talking. And I just got this very uneasy feeling about the Swiss.

27:21And I called the desk and I said, hey, does this guy still have the big Swiss franc position on? I said, yeah. I said, well, tell him I got an uneasy feeling about it. And he should probably get out. I didn't tell him to get out. She'd probably get out that I have an uneasy feeling. young guy on the desk. Unfortunately, my buddy, if he was there, I'd have gotten on the phone with him and he probably would have gotten out of the position. He's in Chicago. He said, well, yeah, maybe I should just get out of the thing. And the guy, the young kid on the desk, he says, well, why don't you buy options just to protect yourself?

27:53Yeah, good idea. Instead of just getting out. So the pricing of, oh, you're not going to have a lot of liquidity until the morning. All right, wake me up in the morning. I go to bed. Three in the morning, the phone rings. Oh, my God. I literally remember. I don't pray a lot.

28:15I threw a hail there. I said, please tell me we got out of the position. They're like, hold on. 26 later. No. Oh, God. And I knew how big our position was. Where's the Euro Swiss? It's at 80. I said, we can't be at 80. That's down 40%. 45%. I said, it can't be at 80. No currency has ever moved that much in one day. They're like, it's at 80. And bizarrely and instinctively, I said, buy 100. Buy 100. He's like, what? I said, buy 200. I don't know. We bought 200 euro Swiss at 80. I don't think he'd ever traded there again, ever. And hung up the phone. I'm sweating. I'm thinking, I'm out of business.

29:02and by the time i got out of my bed two minutes later the guy called me back he said well now it's at 100 i was like i just you don't sell it all sell the 200 and so at least we made a tiny bit of money to but it was painful and you can't get mad at a guy because he's a lovely guy and there was a series of bad like it was a dumb position we shouldn't have been in it uh it did And it was the start of why I ended up shutting my hedge fund down. And it's funny. I don't get angry at people, which is a weird trait because it doesn't do you any good. Absolutely. What am I going to yell at the guy? It's not good for him.

29:42It's not good for you. He's beating himself senseless because he made a mistake. He's thinking, oh, my God, if I had only been in the office, he's going through all the rumination. So to me to make it worse is A, is mean and B, it doesn't do any good. And so I'm proud of the fact that we're still great friends. And, you know, we could have recovered. We kind of did. And finally I said, you know what, it's time to leave the hedge fund business. And so I left in 2014. And what's interesting is every time the door slams in your face, right, another one opens. That's a cheesy freaking expression. You should get a new version of that.

30:21But like it feels like shit. It felt like shit to leave Goldman Sachs the way I did. I mean that was horrible. And it didn't feel great leaving Fortress the way I did. Even though I still had a lot of money, you know, you lost. You lost the last game. And you'd like to go out winning. But every time. People often remember the conclusion, right? They remember the last chapter. Yes. But every time it forces you to say, okay, what next? and it doesn't happen today. In the case of leaving Fortress, it took, I actually went to India and I went to this beautiful camp, knowledge camp, meditation camp, life camp, what do you want to call it.

31:09And after a week, I still wasn't sleeping. I was blaming the lawyer and blaming this and my partners. I didn't like the deal and I'm never going to make the money. And I was just ruminating and ruminating. And rumination is literally the most horrible thing that anyone goes through. You can't sleep and it's just a waste. And this beautiful monk, Uptama, who was actually named Matthew from Pittsburgh, he sat with me and he was doing some meditation, trying to help calm me down. And he was like, let me ask you a question. Like, did the lawyer make the decision or did you make the decision? I said, well, I told the lawyer what to do.

31:42He said, then. And so he took me through and he was like making me really look at all the decisions I made, even on my exit, were my decisions. He said, so it's not really fair to blame this guy or your partner or this guy or that guy. And let me ask you another decision. Does you sitting here like a whiny bitch, not sleeping, spinning your head, help your family, help your friends, help yourself? No. He said, so this suffering really is you in this wildly egocentric pity party. It's obsessive self-centric pity party, obsessive self-centric thought. Who are you? Like some idea, some fake idea who you were just got smushed.

32:30It's a waste. Stop wasting your goddamn time. And I said another week, I left this place and I remember posting a selfie on Facebook. I'd lost some weight. It's all healthy food and you're meditating all the time and so I look good. And on a normal selfie, I get 50 likes or something and it got like 25 times more than I'd ever gotten. And I was like, what? People notice the energy of feeling full, of feeling healed, of feeling blessed that was coming through that picture. It was just a picture of my freaking face looking like a smiling, you know, beatific, you know, 50-year-old. And so I never forgot.

33:15And then I went back and I had made an investment in a friend's movie, Birth of a Nation. It was a movie about the first slave rebellion. And next thing you know, it's at Sundance. and he said I need to come to Sundance that'll be fair I made an investment I shook his hand I cheered him on I had nothing to do with the movie that's what an executive producer does writes a check didn't even read the script I just trusted this guy and it becomes the number one independent movie of all time selling highest selling independent movie of all time I'm at Sundance it's electric this guy gets a 25 minute standing ovation I'm on stage next to him it's just and I realized you don't need a lot of wins to get your mojo back.

34:03Like, that was a win. I did nothing to get the win other than make the investment, but I bet on the right horse. And then I was like, I'm back, I'm back. And I got my mojo back. And, you know, two years later, we started Galaxy. And so I always tell people, do something to get a win. Get your mojo back. Does that be a huge win? Small win. Yeah, small win compounds. Same as in finance and in investing, right? Yeah. Absolutely. But so much is getting your emotional energy back healed. What's the most transformative thing you've done in your life for healing? You know, for me, they've stacked. Like I don't think if I took a guy that's never looked at himself and said, we're giving you ayahuasca, it would necessarily be nearly as effective as someone who already has the framework of themselves.

34:57selves, so has done the Hoffman process or just therapy or understood how your parents impact you. Tony Robbins once told me this. He said, there are 8 billion people on the planet and 8 billion people all think the same thing. I'm not enough. I'm not good looking enough. I'm not smart enough. I'm not strong. I'm not tall enough. My boobs are too big. My boobs are not enough and therefore you won't be loved. And like he says, like, this is Tony. He's saying, your life's journey is realized we're all enough and it takes a while. Like if you start that process, there's so many modalities. Ayahuasca is, is, is like, it's like mainline, uh, you know, the, you drink the, the, the brew, uh, and the shamans and, uh, but MDMA therapy is also, if you're traumatized, if you have trauma in you.

35:56And most people have trauma in them. Have you tried that? I have. I had this idea, and I haven't been completely faithful to it, but I was for a while, that every single year, everybody should take one week just for themselves. Not with your kids, not with your family, not with your friends, not with your lover, just yourself. And go somewhere where you learn about yourself. I did a 12-day silent meditation. It was miserable. You did the Vipassana. I did the Vipassana. Oh, brutal. I talked so much. 12 days. But I did it. And I learned some things. And it makes you better. Because even if you don't take a ton from it, you take something from it.

36:42And so this camp in India called One World Academy, I've never sent someone there that didn't come back. Oh, my God, it was amazing. But the hard part about those experiences, like the first time I went to One World, I met these monks. It was one of the first times I was not drinking and completely joyful. Like I love drinking. I gave a couple of drinks to me. Then I really get joyful. I was just joyful the whole time, connected the whole time. And I was like, oh, this is great. And, you know, they gave you the things to do to keep it going. Three weeks later, I was right back to my old stuff.

37:16So I was like, wait a minute. I found the best way to live. But no, no, I'm coming back. I'm coming back. For later. I do think at one point you start tying the threads of all that stuff together. I hope.

37:36You said every politician should do one week of ayahuasca. I did. Why? You know, again, with my preface that I would love them to do a little work on themselves, it literally forces you to look at reality, right? To look at some version. It's a mirror. Like the grandma ayahuasca, she knows how to slap you when you need to be slapped. And so you're there looking at your own stuff and with a real clarity. And most politicians, they don't know who they are. They're so full of shit. I mean, like, you know, like I like some of them. but, you know, I hate this person. I like this person. I hate Israel.

38:17I like Israel. They're so worried about getting reelected. They have – if you work in my industry and you've made a billion dollars, you by definition have a decent dose of narcissism and you know a lot of people that think very highly of themselves. We look humble next to the politicians. It's an amazing sense of narcissism. and ayahuasca at least tries to beat that out of you for a week. At least for a week. Yeah. I mean, remember, you're literally lying on the floor, you know, so the guy next to you is shitting his pants, you're throwing up, and you're like, okay, you know, your status in the world doesn't really matter.

39:02Shit. You are just part of this universe. And when you realize you're just part of this universe, it is liberating because you don't need to be so important. How much do you feel like that when you wake up in the morning and you come to this office with all these employees or all your employees? You know, I don't think that way, which is interesting. I flew helicopters in the Army and then I had a helicopter here and I hired my best friend from Alabama when I was in the army to work with my family office. And he does all our aviation. He does our real estate. He does lots of stuff. And one of the first things he did was sell my helicopter.

39:52Didn't tell me. I was like, eh. And he bought a seaplane. He's like, you know, a seaplane's safer. He had a lot of reasons and it made sense. But he was like, I don't really want you flying. I was like, what do you mean I like flying he said you're kind of a shitty pilot you have no self-awareness when you're flying you're talking you're on your cell phone he said like we take our we take our flying seriously and he said by the way you have all these people that rely on you and i would feel horrible if you got into a crash and i was in charge of the safety and i i was like i really thought about all the people that rely on me it's just funny i think one way i deal with pressure is i don't think about the responsibility.

40:30It's not that I'm irresponsible about it, of the philanthropy or the people, because it starts weighing on you and then you get passively aggressive, angry about it. And so I look at most of my friends, employees, people I meet on the street as peers, and I meet them where they're at. And that's a superpower in some ways. It often is unfair sometimes because you think, oh, we're just buddies. And you're not smart enough to think that other guy's saying, oh, this is the most important conversation because he might be able to fund my business. I had a funny thing. We were interviewing. We have a fellowship we give in the criminal justice space.

41:12And we were doing interviews. And my guys are so earnest. They do a lot of interviews for this. It's a very hard fellowship to get in. And I was tired. So I'm doing the, and it was the Zoom era. So I'm doing the interviews from Zoom. I'm lying on my bed in my PJs and I'm on the interview from my bed. And one of the old fellows texted me and she said, jackass, like this is his most important hour. And you're lying there on a fricking bed in PJs. Can you at least get up and put a shirt on. I was like, I'm so sorry. I'm so sorry. And so, you know, it's nice to have friends around that can call you out and help you not make mistakes.

41:54But I do think it's just one of the way I'm wired is to kind of... Do you think you've reached a point where you can go to a restaurant, talk to a waiter and feel like they're equal to you and you're equal to them? I've always felt like that. I never felt different than that. And it drives me insane pain, like the trait in life I hate the worst is the opposite of that. To the point where like, I don't fight a lot, but I always want to smash people when I hear that. The entitlement of class or the entitlement of intellect or the entitlement of, I was like, Jesus Christ. Like, I remember using the expression.

42:33So I went to Princeton as an 18 year old from the middle class. And my first roommate was a rich kid from New York. Not just a rich kid, he was like royalty. And I went home with him and he had one of the nicest houses in the city. And I was fascinated. We went to Studio 54 and all these places. I met all these fancy people. And I remember my mom said, well, so what's it like? I said, mom, their sheets are so nice. Like I never understood what like a 300 count sheet was back then versus the sheets that we had. I was like, it's not that much different, but man, they have good sheets. But about a month later, I was like, you know, and I got to know him.

43:12He was a lovely guy. He had his own insecurities and like anybody else, I was like, yeah, we shit in the same toilet because we're sharing a room. His poop's just as stinky as mine. Yeah, absolutely. And I literally have always kind of seen people as equals. That's something my mother, she always told me. She was like, you know this person who is impressing you, especially when you're a kid, right? They have to pull down their pants when they take a shit, like everyone else. Like that's it, right? That's what she would repeat to me. Yes. Yeah, it's true. That's it. That's it. Don't let people wow you too much.

43:47The good advice, mother advice. So in your last reinvention of yourself, one of the parts that you've done is building Galaxy. What is Galaxy if you had to explain it to your mother? It's full of good advices. When I started, like I said, I'm not going to go back to work full time unless I can do three things. I want to learn and venture. I'd never done venture before. And so there was this curiosity of like what venture investing was. But also just the process of every venture pitch is a new idea. And so I love that piece of it. I want to have something to add to the community. And I thought, well, you got a bunch of crazy crypto people that don't really understand finance in the traditional way.

44:35They don't understand how traditional finance works. And I could be a bridge. I can help translate crypto to Luddites and help these young guys understand that there's a world they got to live in and they've got to participate with. And I got to work with young people. I think the only way you stay young in life, the only way you grow old happy is to be curious and work with young people. And so I surround myself with young people and I do think that you learn that way. And this is a weird business. In every other thing I've ever done, from army helicopters to Goldman Sachs to Fortress, the people that worked for me or the people that worked for the bosses knew less.

45:28And in crypto, the young guys know more. I could take 10 of my 30 youngest guys and put them against six of my most senior people and the young guys would kick their ass in a lot of crypto. They just would. How does a bridge work? I'm 32 and I feel like a boomer in crypto. Yeah. I'm 59. I'm a grandfather. I used to say I was the oldest man in crypto, but I met one or two older. Not many. Yeah. And so for me, that was the exciting. What does Galaxy do? We were an ecosystem company originally, right? We invested a lot around the ecosystem. system, we said, okay, how do we build businesses that mirror traditional finance to bring traditional finance in?

46:16So a banking business, a trading business, an asset management business. So that was our first shot. And then we were like, well, that gets a little boring because where's the puck going? And so we have been working on infrastructure a ton. So staking validators, DeFi lending, DeFi trading. And as I think of it, the world will slowly move on chain. We will slowly start using blockchains for real world use cases because they're now going to be cheap enough and safe enough and trusted enough. Not there yet, but we're going to get there. And so Galaxy's role will morph a little bit, but broadly, we are trying to understand what's good and bad in the space and transmit that to our clients in lots of different ways, right?

47:09Through sales and trading or credit lending or asset management or venture investing. And so there was a little bit of Golden Sacks DNA in there, which is be the smartest guys in the room and then sell that. And so - Before people even understand, right? Yeah. And so that's what we've been trying to do. And so, again, I stand by that fact. I think my smartest employees with the best understanding aren't necessarily my most senior. And I feel proud that we now have an army of really – because we used to get criticized. Well, you're not crypto enough. I was like, I'll take my 30 best crypto guys and put them up against anybody.

47:47Like we really are a group of professionals that care about the space, that are trying to push the space. I care about more than just money. which is probably not the case for most people in crypto let's be very honest they will learn, I'm older I'm older my dad's 87 and I don't know if he's going to be 88 or 89 or 90 but he ain't going to be 95 given his health well I shouldn't say that, take that back maybe he'll be 95 you sit with him, he's happy, he's laughing I don't think it matters if he's got a million dollars or 5 million or 500 ,000 or 50 he got his kids it's less important the older you get it's just really interesting it's so important when you're your age and it is like you want to accomplish things you need to have money money is energy you want to take that energy you can put other places and you want to attract the woman yes you'd be in the top 1 % the only reason I used to say this all the time absolutely I needed to get a job because I needed to pay my bills so I could take women out that's it it was all about women And I always say being born a rich kid is harder because you have no – you have to find purpose to get a job.

49:05Being born middle class, I needed a job or I was not going to get laid. Yeah, absolutely. Yeah. Absolutely. And so where do people find that self-drive? Most people are forced into their first job and then they pivot from there. So what are you doing with your kids? They have a much harder life. No, listen, we try to raise nice kids. I think you model hard work and you model kindness and you model your dysfunction and how you deal with your dysfunction and your kids become who they become. They are all working, knock on wood. But they certainly, two of the four, have wrestled with, well, what do I do?

49:51Because I don't need to work just for money. I need to work for purpose. Self-actualization. That's a lot harder to figure out in your 20s. Yeah. That's the problem of most of the kids who get rich too quick, especially in crypto. Yeah. And like, before getting wrecked on Luna, I had this problem too. I was like, what the fuck do I do now for the next 35 years of my life? I thought being retired before 30 was it, right? What's the goal? And I was like, I found myself super lost and being like, what the fuck do I do? Do I travel 35 years? If you think about money not as a mechanism to buy stuff, but if you think about it as energy, and you're just going to be an energy mover like that goddamn guy on the Super, whatever, one of those Avengers, it makes it easy.

50:36I work just as hard as you do probably, and I'm 59. I get up early. I'm constantly on my thing. I'm doing lots of different things. And it's not that I need any more money, but it's energy. It allows you to start philanthropies. It allows you to send kids to school. It allows you to dream big. And people say it's a scorecard. It's not a scorecard. It literally isn't because you'd get bored of the scorecard, right? Like at one point, how many games of ping pong can you beat your friend in before you're like, okay, I'm a better ping pong. Let's play again. Right? Like, okay. I got the scorecard.

51:13It's right. It's not. And if you think about it as energy and you're responsible for removing that energy, and energy has to move. Energy can't stay still by its principle. It's a nice way to think about it. And you'll never retire. You might spend less time on one thing than another. But you're going to retire. You're going to get old, fat, and die. yeah I'm the anti-retirement guy

51:41my wife says keep that to yourself like other people when they retire don't make them feel bad about it or what does she think about that? I think my wife gets who I am in that respect but I think she's also sensitive like you're probably anti-retirement this guy just retired you're going to make him feel bad and she's very very keyed in on very empathetic very empathetic and so I was like okay for me What's your biggest prediction for the next 12 months?

52:11I think with 12 or 24 months, we're going to have the first jump at AI. Where right now it's like a novel thing for most people. Right? You get on, write a poem in the words of Walt Whitman to, you know, my 14-year-old son. Now he goes off to prep school.

52:34but I think you're going to see these agents, right? Your AI agent start actually working for you. And I'll tell you a funny story. I'm not sure I should tell the story, but I'll tell the story and I'll get some shit from it. So one of my friends asked me to do a forward for his book and he's a lovely guy. And I'm like, yeah, sure, I'll do it. I was thinking he meant blurb. Blurb is a sentence. And I said, well, I have a forward. She's like, a Ford's like three pages. I'm like, what? Three pages? So I Google, what's a Ford? It's 1 ,000 words. That's the average Ford. I'm like, oh, I've got to write a 1 ,000 word essay because I've got to read the book.

53:13I see where you're going. And I had postponed this thing. So I'm like, oh, okay. And, you know, it was a book on hedge funds that had been published in 2012, and it's being republished this year. But, you know, so I ordered the book on Amazon. I'm like, oh. I read, I'm writing a person and I've read what a Ford takes. I went, this is going to take all day. I said, I had an idea. So I used perplexity as my interface with AI. I dumped the book into perplexity. It takes two seconds. Then I say, perplexity, write me a Ford in the voice of Mike Novartis.

53:59And originally he came back with 750. I was like, make it a thousand words and make it a little more forward looking. And this is what I think is cool in the hedge fund space. Took me 10 seconds to say that.

54:15And I was like, it's a little generic, but it's pretty damn good. And so I said it to the editor and they loved it. And so I thought I was going to have to use that. And I was like, so instead of spending. This is not the 2080 rule. It is a 199 rule, right? Instead of spending seven, eight hours. Yeah. Now, would it have been better if I spent seven or eight hours? Maybe. But it got all the. And I put a few sentences myself to personalize a little more. But it was a 20-minute exercise. 20 minutes versus eight hours. That was crazy. It was the first time I've seen AI really help my own productivity.

55:00How does this affect crypto?

55:05I think for all coders, you know, you're not going to be able to code without using AI to help. And so hopefully you see an acceleration in development because of AI. I intuitively think that AI is really scary. I go back to the Minority Report, that movie, you know, with the precogs and the pictures. And so it is one of the great centralizing forces on the planet, right? Huge database centralized. And so the yang to that yang has to be blockchain. Absolutely. And I don't know how it works. I'm not smart enough. I just intuitively know there's got to be something that protects us from Big Brother.

55:58And blockchains have that capacity. And so we've been investing in – and the other piece of it is these AI agents. Your agent is going to know what to shop for you like groceries. Where is it going to get the money? It's going to have to go into your account, send the money. That stuff is going to operate much smoother, I think, on crypto rails than on the rails Amex uses or MasterCard uses. The AI agents, the AI girlfriends and boyfriend, especially girlfriend, are going to exacerbate even more the point we talked about in the beginning, right? Yeah, and then the robots.

56:42Blade Runner is one of my favorite movies. and then Blade Runner 2, not as good but watchable, but they had that AI girlfriend. Do you remember that? Blade Runner 2, you got to want the AI girlfriend and he's in love with her. And then they did something crazy. They put her image onto a normal prostitute. And so now the guy was having sex with his AI girlfriend and it felt like his AI girlfriend, but it was an actual person. And I was like, whoa, whoa, Blade Runner 2 ahead of its time. Like, yes, the world's going to go to crazy places, but it is going to exacerbate this thing. And I love that movie, Her.

57:25Absolutely. It's always so interesting to me how goddamn smart science fiction writers are. They're 10 years, 20 years, 30 years ahead of everything, all the time. And they're always right. Yeah. I mean, Her was brilliant, and now we got Her.

57:42Thank you so much for doing this, man. That was amazing. Awesome.