It's not about the speculation

and the price speculation of

where's the price of Bitcoin

going. It's about how do we use

these technologies to solve real

problems for real customers, and

to the extent that is delivering

utility and there is value in

those underlying technologies

and underlying assets.

That's Brad Garlinghouse, CEO of

Ripple, a $10 billion company

behind XRP, the world's second-

largest cryptocurrency by value.

Under Brad's leadership, Ripple

has received widespread

recognition, including being

named to the CNBC Disruptor 50

and recognized as a Technology

Pioneer by the World Economic

Forum. Before Ripple, Brad

served in senior executive roles

at Yahoo and AOL. For all the

crypto fans out there, in this

episode, you get to hear Brad's

insights on the crypto space,

how

to avoid what he calls the

peanut butter trap, and what he

thinks is in store for the

future of Silicon Valley. This

is Daniel Saks, Co-CEO of

AppDirect, and it's time to

decode cryptocurrency and

FinTech. Welcome to "Decoding

Digital," a podcast for

innovators looking to thrive in

the digital economy. I'm your

host, Daniel Saks, and I'll sit

down with other founders, CEOs,

and change-makers, to decode the

trends that are transforming the

way we work. Let's decode. Brad,

thanks for joining us today.

Thank you for having me, Dan.

Good to see you. Happy

quarantine to the extent that it

doesn't seem too strange.

Thanks. I think the last time we

met, we had nice coffee and

maybe some breakfast, which we

won't be doing today.

Well, coffee, but

remotely.

Yeah. We can do that. Before

joining Ripple, you worked at

early Internet powerhouses,

Yahoo and AOL.

At the time, they were

powerhouses. Less so today.

Maybe that's a good leading

question. Tell us about what

drew you to those companies?

Maybe also from an observation,

what went wrong?

I'll start with Yahoo. My thesis

joining both companies is quite

different. Yahoo, I joined it

the end of 2002, beginning 2003.

That was a dark moment of the

Internet's evolution. The dotcom

crash had happened. Measuring

these things by market value,

Yahoo's stock price, I think

that the market cap of the whole

company was a few billion

dollars, and had a couple of

thousand employees. It

definitely had gone through a

lot. My viewpoint generally was,

on the hype cycle, people got

too excited about what's going

on the Internet, and the despair

cycle, people gotten way too

skeptical about what was going

on with the Internet.

Fundamentally, I felt the

Internet was changing the nature

of how information is

transmitted, and it's super

obvious now, nearly 20 years

later. At the time, it felt

Yahoo had the opportunity to be

one of the most substantial

Internet companies. What went

wrong? That's a longer Yahoo

story which we'll probably spend

some time on as we talk today.

People forget that in 2005, 2006,

Google was barely on the scene.

Gmail had launched. Gmail is

really Google's second product,

the only thing that they had

researched. Yahoo was, what was

at the time, a big deal.

It was a great

experience. It felt it was an

amazing group of people. The

alumni network from that chapter

in my life was extremely strong.

Initially, I had a guy named

Mike Speiser reporting to me. I

got Stewart Butterfield

reporting me. I got Scott

Dietzen, the CEO of Pure Storage,

reporting to me at various times.

Jeff Bonforte. A really

interesting group of people that

went on to do frankly more

interesting things than I

have gone off to do.

Yahoo, I think lost its way, and

we can talk more about that.

AOL is a totally different

animal. AOL, I joined with a

thesis that this massive

audience. 100 million active

monthly users was using AOL when

I joined in 2009. They had a lot

of cash and it was spinning out

of Time Warner. This is the

post-Time Warner mergers. I spin

out AOL. It's got a lot of cash.

It's got a lot of visitors.

Let's reinvent what AOL is. I

got very excited with that

entrepreneurial opportunity to

say, "Hey, we've got all these

users, and the audience, it's

there. If we can introduce them

and engage them in new ways,

that can be compelling." I now

subscribe, more so than I did

then, to the Warren Buffett

saying of, "Most turnarounds

don't turn." It turns out that

in this case, that was certainly

the case. It was a really hard

journey. I was traveling back

and forth. The headquarters are

in New York City, working for a

guy named Tim Armstrong, and

finally said, "Look, this is

tough," and decided to pull the

parachute and look at something

more local. Anyway, those are a

couple of starting thoughts on

those early Internet powerhouses.

What lessons can you take from

that to, let's say, traditional

businesses that are looking to

digitally transform and embrace

innovation in a new way for the

first time to move into the

digital age and hopefully become

a growth player in the industry?

I've two thoughts on that. One

is, you have to be really clear

about what you're trying to

achieve. I remember I'm sure,

Dan...Well, this may be before

you got as involved in

than I am.

Back in the late '90s, '97, '98, '

99, there was this phenomena of

bricks and mortar retailers

adding a .com to their name as

if like that was a digital

transformation. By the way,

their stock price would go up

when they did that. It's just

like, "Oh, boy." I

think it missed the point.

Understanding where you're going

and understanding what outcome

you seek, I think having clarity

about that going in will help

enable a robust digital

transformation. Some people

just say, "Hey, we're going to

hire a chief digital officer."

That was all the rage for a

period of years. You had all

these companies, "Hey, we got

our chief digital officer, but

what does that mean? What were

they empowered to do? How are

you going to measure? What are

their OK hours that we care

about?" The second thing I

would really push on is focus,

focus, focus. Be clear about

what outcome you're seeking, and

then focus, focus, focus.

Certainly, this was true at

Yahoo and one of the things that

became well known for is I wrote

this document called the "Peanut

Butter Manifesto." The Peanut

Butter Manifesto was really

talking about how Yahoo was

trying to be all things to all

people. I did this exercise at a

leadership off-site. I remember

where we were when we did this

at one hotel down in San Pedro.

About 30 or 40 people in the

room, and I said, "OK,

everybody's got a piece of paper

in front of you. On that piece

of paper, I'm going to say a

brand. When I say the brand, I

want you to write what word

comes to mind." At the time,

again this is back in 2005 or

2006. I would say, "eBay."

People would say, "Auctions." I

would say, "PayPal." They'd say, "

Payment centered." I'd say, "

Google." At the time, it was

just search. I would go through

five or six of those. I would

say, "Yahoo," and I'd say, "No,

don't say it out loud. Just

write it down." We would go

around the room and ask people

to share what was the word that

the Yahoo brand represented.

What would happen is you go

around the room and some people

would say, "Sports." Some people

would say, "Fantasy." Some

people would say, "Search." Some

people would say, "Mail." Some

people say, whatever. The point

I try to make is, if we as a

leadership team are confused

what the Yahoo brand represents,

certainly our consumers are also

going to be confused about what

the Yahoo brand represents. To

me, that was the point of The

Peanut Butter Manifesto. If we

aren't focused on some specific

thing, we're not going to be

successful at anything. We're

going to be very average at

everything. As companies decide

to focus on certain things to be

the best in the world at search,

then we're not going to win that.

There are a lot of things that I

think Yahoo could have done

better in retrospect, but that

was certainly one that we didn't

handle perfectly. If you're

trying to kick off a digital

transformation, one, be clear

about what outcomes you want.

Two, focus, focus, focus, and

don't let the new bright shiny

object interrupt you from that

focus. That's true for

entrepreneurial endeavors as

well.

Tell us about the origins of

cryptocurrency? How did it

evolve? Why did you join Ripple?

I'm not the best person to give

you the first part of that

question, the origins of

cryptocurrency. I didn't get

involved with crypto deeply

until I was at Ripple. I did own

Bitcoin already when I joined

Ripple. I had been exposed to

crypto a bit before then through

a good friend of mine who sadly

has passed away, Dave Goldberg.

Dave knew that I was an angel

investor in various companies,

and said, "Look, Brad. Whatever

you usually write in check for

into an angel invest, you should

buy that much worth of Bitcoin,

and to think about it that way."

I was like, "Dave's smart guy."

I like him, and he badgered me

into it. To my point, the way I

think about the origins of

crypto, it really was born of

this idea during the financial

crisis of 2009, 2010, that the

banks are bad for society. An

idea that we shouldn't trust

government to manage currency.

There are certainly examples

where that bears truth to that.

Even many in the crypto

community, in those earliest

days, were very libertarian in

their kind of, "We want to take

anonymity back. We want to be

able to control our financial

lives with anonymity." A lot of

those things are key tenants of

the origins. When I had

purchased Bitcoin, I thought

that those are really

interesting, but I think the

idea that we're not going to

live in a world of laws is a

little bit...and like, "I'm not

really buying it." I remember

first hearing the Ripple pitch

in 2015, maybe in end of 2014,

2015. To me, the simplest thing

at the time was we actually want

to work with the government. We

want to work with the banks to

leverage these technologies to

impact way more people. Even

today, with the success of

Bitcoin, and some crypto that is

designed for more anonymous

transactions, it's a tiny, tiny

fraction of the global financial

system. If you want to impact

the most people and really put a

dent in the Universe, how do we

reach 99 percent, not one

percent? Not, how do we get the

one percent using Bitcoin for

payments, to two percent, three

percent? It's like, "Look, no,

I'm going to go work with the

major institutions, the major

governments. I'm going to

introduce these technologies in

such a way that they can have a

broad impact on a broad cut of

the population, the underbanked,

in ways that are profound." We

all have to remind ourselves

it's not about the speculation

and price speculation of where

is the price of Bitcoin going?

It's about how do we use these

technologies to solve real

problems for real customers. To

the extent that it's delivering

utility, then there's value in

those underlying technologies

and underlying assets.

On the speculation side, shortly

after you joined Ripple, Ripple

co-founder, Chris Larsen, didn't

his network spike to about 60

billion due to a huge bump in

XRP valuation?

I never dug into that, but yes.

The value of crypto in, I guess,

it was 2018, went through a

massive, speculative frenzy,

which, it has to some degree

worked itself out. I still think

it hasn't totally worked itself

out. I only say that because

there are now thousands of

different cryptocurrencies. The

vast majority of them, I'm not a

believer. I, frankly, not

recently, but I've said publicly

that 99 percent of

cryptocurrencies are probably

going to go to zero. There's a

small number that are at the top-

end. I certainly include Bitcoin,

I include Ether, I include XRP

on that list. They have real

value in how they're solving

problems for consumers or

businesses. The way Ripple

deploys XRP into it to solve an

institutional problem for banks,

and that has served us well.

That speculative frenzy

certainly drove Chris Larsen's

net worth way up.

Yeah, no, it's crazy. You look

on the cover of "Forbes," he's

the fifth richest person

overnight. What's into this

crypto stuff, like in the '90s,

Netscape IPO. That was a whoa

moment for me. Like you say,

it's about the underlying

technology, right?

I remember where I was when

Netscape went public in '95. It

was August of 1995. Yes, that

was a moment of frenzy, of

interest, and participated that

IPO, which brought a lot of

attention into the industry

overall. It also, that interest,

brought a lot of investment,

brought a lot of attention. In

some ways, that Crypto frenzy

did the same thing. The number

of smart entrepreneurs, the

number of investors who came in

and said...Blockchain

technologies are quite profound

in how they can change the

nature of transactions. Ripple

focused on payment transactions,

other people were working on

other things. At its core, the

novelty of a blockchain is a

little bit academic, maybe a

little bit esoteric also. The

novelty of a blockchain is

simply enabling two parties to

transact without trust, but with

certainty. Today, if you and I

were going to transact, there

has to be a middleman involved.

Now, the middleman could be I'm

passing you a $100 note, or a $

20 note, and it's, effectively,

the US government, the federal

reserve note is commuting trust

between us as you trust that is

worth something. Today, if you

want a middleman transaction,

you have a credit card company,

you got stock transactions.

You'll pick your middleman, but

there's a middleman everywhere.

A blockchain's basically saying, "

Hey, take out the middleman."

You can still transact, you can

have certainty, but you don't

have to have trust. Anybody

who's in the middleman business,

in financial transactions,

blockchain technologies have the

opportunity to disrupt that.

Again, Ripple has said banking

transactions, cross-border

transactions, there's trillions

of dollars flowing globally. In

many ways, it's stuck on how it

was developed 50 years ago.

It's amazing to me that,

literally, you can stream video

from the Space Station, but if

you, Dan, want to send money to

me in London, that's going to

take days to get there. It's

going to cost you a fair number.

It's like, "Wait, how did we end

up here where I can do all these

things almost on an

instantaneous basis, but I can't

move my own money from point A

to point B?" To me, that's the

middleman transaction, how

blockchains can be leveraged.

Ripple has decided to focus on

payments, and simple cross-

border payments. There's a whole

bunch of middle transactions

that could be disintermediated

to improve speed, to improve

cost, efficiency. Blockchain

technologies will impact a lot

of industries over the next 10

years.

You spoke to hype cycles a few

times back with Yahoo, Netscape

era, and then, potentially,

again today. You also mentioned

that hype cycles are maybe

necessary, because they take

esoteric technologies and make

them more aware in the public

light. Where do you think we are

on the hype cycle for both

crypto and overall tech right

now? How do you think that will

impact the future of work 15

years out?

I do think that the next two to

three years are very bullish for

crypto at large. That's because

we have governments around the

world, US government being one

example, printing massive

amounts of additional dollars.

The stimulus associated with

COVID, that's happening on a

global basis. When that happens,

if you print more dollars, the

dollars you hold just became

worthless. This is inflation.

Over time, you are seeing people

saying, "I don't want to hold

dollars. I want to hold

something that is non-

inflationary." Crypto's a good

example. When you go out and

inflate currencies, fiat

currencies, people want to hold

non-inflationary assets. Crypto

is an interesting new one that

people are increasingly like, "

Huh, that's a pretty good one."

That bodes very well for the

next several years. The hype

cycle on tech, more broadly...

Tech is in an interesting, and,

I'll even say, a little bit of a

frustrating and depressing spot.

I say this as, I'll call myself,

a veteran of Silicon Valley.

I've been here 23 years. I've

been a part of, as we talked

about, some interesting

companies, and certainly watched

them up close and personal.

Tech needs to take ownership for,

both, how it has positively

contributed to the evolution of

society and how we interact

together. We also need to take

responsibility for some of the

negative, unintended

consequences. There are a lot of

positives. The fact that you and

I can have this conversation, I

don't know where you are

geographically, I'm in

California. The fact that we

can do this so seamlessly, and

it can be recorded. It's magic.

There's also factors that we

look at, and we're like, "Wow,

how is tech contributing to echo

chambers? How is tech

contributing to the polarization

of, frankly, society? How is it

being abused by bad actors?"

When I see tech leaders not

owning that, and not saying, "

Hey, we didn't intend for those

abusive behaviors, but we can

help address them." It's

frustrating for me as a tech

veteran to see that happen.

There's a powerful Netflix

documentary called "The Social

Dilemma" that, if you haven't

seen, and your viewers and

listeners haven't seen, it's

worth listening to. For those

of us in tech, we know some of

the people in the documentary.

It helps you understand some of

what has driven where we are.

Again, the first step to solving

a problem is admitting you have

a problem. When I see some of

these tech leaders say, "Well, I

mean, that's not our fault." I

think, "Wait a minute, come on,

guys." I know that the intent

wasn't that bad outcome, but to

not acknowledge there's been

some bad outcomes is a little

bit hard for me to process.

Do you think the solution is

policy? Obviously, congress has

taken a very vocal stance with

the tech leaders, trying, in

many ways, to vilify, but also

drive accountability. Do you

think this becomes a policy

issue? Is it better self-

regulation? I agree with you on

the "admitting the problem." How

does this make progress in the

next few years?

Self-regulation on this topic

has not worked. The evidence is

rampant. When self-regulation

doesn't work, I only see one

alternative. It is for the

regulatory dynamics in

Washington DC to change, or by

state, Sacramento, to enforce a

level of accountability. If

YouTube bills financial risk

associated with scams on their

platform, they're going to

change their posture. They're

going to change the way they

engage on this because there is

risk to them. Now, I'm not

smart enough nor spend time on

it to know exactly how to

approach it, but I will suffice

to say I don't think self-

regulation is going to work.

You've mentioned, you've worked

with a lot of tech leaders,

people like Stewart Butterfield

at Slack, or you knew Dave

Goldberg, founder of

SurveyMonkey. In this community

of early Silicon Valley leaders,

what have you learned from those

who have succeeded? Are there

characteristics specifically of

people that you worked with that

outperformed versus now?

That's a really good hard

question. Sometimes, I see

entrepreneurs who I think are, "

Wow. They are so talented.

They're so smart," and they

don't achieve success. You say

like, "Why? What went wrong?"

Anyone who tells you luck isn't

part of what drives success,

that's not true. Luck is a

factor. Right time, right place.

If I were to highlight a couple

of attributes that I value in

the investments I have made as

an angel investor, and as I

think about people I like to

hire, optimism is one. It's

fundamental belief that you put

any wall in front of me, I will

find a way through it, around it,

over it, under it. I do say to

my kids, I don't talk with kids

a lot, but when they say the

word, "Can't" at home, I don't

know what that means. I'm like, "

Word 'can't' to me, it's not a

word." You may choose not to. It

may be difficult to do that, but

can't is very rarely. They love

to have fun and say, "You can't

teleport into the middle of the

sun." I'm like, "Not yet."

I don't know how to do it yet,

but somebody's going to figure

it out." I don't know. It's a

bad example. I think that in

amazing entrepreneurs, there's a

sense of optimism and a sense of

like, "Can do," that is really

powerful. The second thing that

I was highlighting in all of

these two, and this is going to

sound a little bit derogatory or

pejorative, but it's effective

storytelling. The best

entrepreneurs are good at

articulating a vision,

articulating where they see the

world going. People sometimes

think like, "God, they're so

smart, but they're not good at

storytelling." If you really

want to be an entrepreneur and

build a new vertical, develop a

new category, you've got to help

the world see what could happen,

and effective storytelling is an

important part of that.

Both really impactful traits.

Really appreciate that. I know,

the last time we connected, you

talked about the crypto space

and a lot of crypto fans out

there and people reaching out.

Some famous wanted to get to

know you, wanted to get to learn

more. Can you tell our viewers

about who and why and how?

Right around the time I saw you,

I had the opportunity to sit

down for coffee with Bono & The

Edge. They were super interested

in what's going with crypto. I

will say, both of them were

quite knowledgeable. The Edge

was super plugged in. He asked

very specific questions, even

about performance issues,

different blockchain

technologies, and scalability,

and I was super

impressed. Obviously, I was a

guy who went to high school and

graduated high school in the

late '80s. "The Joshua Tree"

album and U2 was the .

For me, there's examples like

that, that have been very cool

opportunities to connect with

people and talk about how these

technologies could actually

impact. Bono particularly has

been incredibly generous with

his time, his energy, his

attention, and some of his money,

and addressing particularly

communities that I would

describe as either completely

unbanked or very much

underbanked and how some of

these technologies can bring

them into the financial system

in a way that is constructive,

is a big deal. Those are maybe

one example of an interesting

opportunity.

Got it. Fast forward 15 years,

do you think Silicon Valley will

still be the center of gravity

for technology?

Silicon Valley's dominance isn't

going to go away. I guess, if

you're to have a metric of

concentration, that will change

and the concentration will go

down. COVID has obviously had

an impact on a lot of cities.

The tale for how it impacts San

Francisco, and the San Francisco

community might be a little bit

longer than how it impacts New

York City, for example. New

York City has a broad-based

economy. You already have some

investment banks. They want

their traders already back on

desk, and there's tech there. I

think that people will come back

to New York City more quickly.

San Francisco, when you have

companies that have said -- like

Twitter, I would highlight as

one -- that said, "Look, you can

permanently work remote." What

does that mean? If 10 percent of

people in San Francisco take

advantage of that, 10 percent

doesn't sound like a lot, but

that means tens of thousands of

people don't move back to San

Francisco. Don't come back. How

does that impact, given the

concentration of tech, as a

major employer in the Bay Area?

To your core question that I

think that the concentration 15

years from now of tech as the

center of gravity out here in

the Bay Area, it will become

more distributed. COVID has

accelerated in what was already

happening.

Is there a call-out technology

or trend that you see now on the

early precipice that you think

is going to be game-changing in

the future?

I'm going to talk my own book.

I'll give you two answers. One

is, I do think blockchain

technologies are still in their

early innings, and digital

assets are in the early innings

for how they transformed various

transactions. We talked about

that earlier, but I think

there's a lot of industries that

will be touched by blockchain

technologies that we haven't

even started. The second one,

I'm not smart enough to go into

this industry, but I am

completely fascinated as a human,

by genetics and some of what's

going on with regard to

understanding genetics being

able to -- I like the word

manipulate, suggests a negative,

but -- to be able to leverage

these understanding in a way

that is the betterment of the

human experience, I think is a

very big deal. As an

entrepreneur, I like to get

involved with things I feel like

you can put a dent in the

universe. That's what gets me up

in the morning. Ripple has been

an example of that. There are

certainly companies in the

genetic space that...Again, I

don't know who's going to win,

who's not going to win. If I

were to reset my career for the

next 20 years right now,

genetics would be high on my

list of being really smart. I'm

not, but I would be interested

in pursuing that.

Amazing. Any last piece of

advice you'd give to our

listeners?

It's great you're doing this.

It's great you're taking the

time as a commitment of your

time and plan to do it. I

appreciate you inviting me.

Hopefully, it's somewhat

constructive for your viewers

and listeners.

Thanks so much, Brad.

Good to see you.

On the next episode of Decoding

Digital.

Companies, as they moved to

subscription-based business

models, they now have this

massive new thing they've got to

figure out. How do I make sure

my customers have been onboarded

properly? That they're adopting

the products and services.

They're getting value. They're

going to stay with me. They're

going to grow and spend more

money over time. We thought

that would create a whole new

industry, and it turns out it

has. It's created a new job,

customer success manager, which

according to LinkedIn now is the

sixth most promising job in the

world. It's created a whole new

strategy for companies which is

not just about sales and

marketing, but making sure your

customers are successful.

CEO of Gainsight, a pioneer in

the customer success sector, and

a new unicorn company, Nick

Mehta. Thanks for listening to

Decoding Digital. Make sure you

never miss an episode by

subscribing to the show in your

favorite podcast player.

To

learn more, visit

decodingdigital.com. Until next