Conversation with Michael Arrington

Hey Michael, it's great to have you on. First of all, how are you doing? You were just saying you were...

Just sing on. Can you hear me? Hello? We'll see. Never really know.

Afterwards, people say that they saw it. So how are you doing right now?

So we're on live TV now. Yes, that's correct. And there's no delay, there's no nothing.

So and we don't we don't have sensors or anything. So you can basically say whatever you want.

Whatever the fuck I want. Which is a very dangerous thing to say to Michael.

And the whole point of this is to showcase that Cloudflare can, which is your company, can do this, right?

Can like have a streaming live TV show that scales to dozens of viewers.

So... Is it dozens? Can we tell how many people are watching right now?

I assume this will grow over time. It's somehow, yeah, I mean, it was so that we've had continuously about 10,000 people tuned in, basically every show.

The peak's been around 40,000. Wow. It's, you know, I think that the real purpose for us initially was, I think live events have always been a big place where we found where we found customers.

And live events aren't coming back anytime soon.

And so someone's going to invent the future of what the future live event was.

And I don't think this is going to be the format.

But what we tried to do was create an environment where our team could just talk about whatever was on their mind.

So we have a cooking show, which is Cloudflare, you know, cooking with Cloudflare, which is literally Cloudflare employees and Cloudflare customers get together in a kitchen virtually on Zoom and cook a dish.

And there's, you know, there's been, you know, a series of other things.

And they asked me to just, hey, would I reach out to people who I thought were interesting and talk to them?

And I said, sure. And so you were one of the first.

I had Santi from Emergence Capital on last week. Wasn't the first. I wasn't even the first.

I was like one of the first. You were the third. Sorry. Are you going to start like big budget shows, like putting, you know, tens of millions of dollars into, you know, stuff like I'm very excited about the foundation finally becoming a TV show.

I think, you know, why not? You never know. It does seem like everyone is in content these days.

But that is not currently part of the strategy.

But who knows? I mean, I don't think you thought that you'd be running, you'd be in the events business when you started your career.

And that became a big piece of what TechCrunch was.

And you guys gave us, you know, a forum for launching. And so, you know, I always think of you as part of our founding story.

I definitely was part of your founding story.

I don't think you would have nearly the success you've had if you hadn't launched at my event and failed to win, right?

Because that's like a part of legend now.

And the reason why I feel good about you being third is because for us, you were, we were all excited.

So now I see we've won up to you.

So you had this cool career, though. I think actually, the first time we met, you don't even remember.

But I do remember. I interviewed you.

You did. Yeah, Wilson, Wilson Cincini. And I can't remember if it was in 98 or 97.

But sometime and you were, to be honest, I don't remember this at all.

But you told me this story. To leave the office. Yeah, you go on because you were going to start a company.

So you went from lawyer to startup founder, entrepreneur.

I mean, and I don't mean any disrespect by this, but blogger at first, which then became like a serious journalist job, and then a tech exec at this company and then VC and now with XRP Capital, you know, CryptoVC.

What's been like, what's been like the most fun?

You know, fun is hard because TechCrunch at the time, I hated every minute of it.

But looking back, there were great moments, right?

There was, there was, there were moments of extreme.

Because I never worked so hard, like, even as a lawyer, when I was billing 2500 hours, quite literally a year, which is a staggering workload, where you really focus every hour of that.

I never worked as hard as I worked at TechCrunch, because I'm so competitive that I never wanted to miss a story.

And so anytime I was sleeping, I was at a competitive disadvantage.

And so I just never slept. I mean, literally, yeah, developed like a, you know, all kinds of health problems.

Because of that, I woke up in a panic, like, what did I miss?

So when the office was your living room for a period of time? Well, that was the other thing is I was single guy, the house was our office, we had at the end, we had like 40 people in my house every day.

People broke into the house regularly.

It's like publicity stunt. But you know, it was, it was also fun being the center of everything and like getting access to everything and meeting all these great entrepreneurs.

So you know, it's it was fun. I will tell you, as I get older, I am becoming more and more focused on making more money for less effort, if that makes sense.

Like, you know, there are you Jason Kincaid, who works with you now describe TechCrunch as a treadmill, right?

You never got off of it.

Yeah. And, and, and that was hard, right? There was no let up ever until they fired me.

But now it's sort of like, I'm leveraging other skills than just my time every hour.

And I find that more interesting. Did you I mean, did it is? Did you think of it as a, as a, as a business?

I mean, what point did it did it turn from, you know, blog to business?

Heather, I mean, it was it was a, it was a pure hobby, as I started to get back into the tech scene.

So I had taken a little bit of time off and moved to Canada.

And I needed to research what was going on with Web 2.0.

There are some interesting developments with the Internet. And I was like, well, I'm doing all this research, I might as well post it.

And so it's just a hobby.

And I thought it was something I was going to do. I launched another company.

But it became big, despite my best efforts and Heather joined. Heather was a CEO of TechCrunch and is now my partner at my event at my at my crypto fund.

I hired her away from Fox. She was an executive there who had acquired Myspace, which nobody remembers Myspace, but it was a big deal at the time.

So she came over to TechCrunch.

It was clearly a business. And I mean, she turned it from just, you know, a guy blogging in his underwear to, you know, a pretty big business.

So that was all her. Do you like I mean, even before TechCrunch, you were starting starting companies.

Did you do you enjoy that? Did you did you like that process of like starting?

And I mean, yeah, yeah, yeah. Yeah. Yeah. I'm an entrepreneur.

I mean, I hated being a lawyer, because while I like being a lawyer, because I represented these cool companies, like that's when I first met Marc Andreessen at Netscape, like they were one of our clients.

We took Amazon public.

We did all kinds of fun stuff. And so but lawyers. Yeah, but lawyers like to think of themselves as like this intricate piece of like the business puzzle.

And they aren't, you know, like we would get Netscape would buy a company and they'd bring us in and we negotiate, you know, the reps and warranties clauses like it was important and and the business people didn't give a shit.

And so I realized that the lawyers liked it, honestly, like cognitive dissonance, they think of themselves as very important piece.

But I realized like I was just on the periphery of like the real action.

And so even though I could make a million dollars a year being a lawyer, like quite literally in the 90s, I much preferred to like go and see what I was made of and like go into the arena and fight and see what I was made of.

And so I did that I started companies and they just like they fucked up for like multiple different reasons.

I never made money. Although I did make money for our investors in one of them, I started a company and raised 18 million sold it for 33 million a year later, and made no money because Draper Fisher Jervison had a 2x liquidation preference, which was standard at the time.

So I learned it's better to be a VC sometimes than an entrepreneur.

But again, I just figured I'd keep trying until you know, until I figured it out.

And the tech branch was a mistake.

I think it'd be a VC and I think of it as I actually can't imagine any worse job.

No, it is. I feel the thing like I also don't understand these people that get into it, like they find out they're really good at something and then they do that for 30 years.

I find that to be so boring. And so like, my father's generation, and they didn't have the option to change jobs so much.

And I was like, do something else being a VC has.

It's just networking job, right? It's not it's not a thinking man's job.

It's just a shaking hands job. And so I got bored with that pretty quickly.

It's the I mean, that and the timeframes, you know, you make a bet on something early.

I mean, I think of our first investors who again, I, you know, feel incredible debt of gratitude for.

But I mean, we were a bunch of jokers early on.

And yet they, you know, they make you make a bet on that. And, and, and 10 years later, like it's, it's hard to change jobs once you're a VC because because your funds are, you know, in 10 year increments often.

Well, you also you make a lot of money, you get addicted to the money.

And people get houses and they start families and pretty soon they can't leave.

So, so, so you were sort of a traditional VC, and then you started XRP Capital.

And what, what is what is, is it?

Is it a VC? I haven't quite ever actually sat down and talked to you about what what it is.

And what, like, what are you doing every day? Well, it's funny when we, you know, you know, our friends, right, we see each other socially, and, and there's a lot of history with us.

And, you know, and so you asked me on the show.

And of course, I am and I'm glad to be on it. But we are talking back and forth about what we would talk about.

And you asked me what I want to talk about.

And I said, I'd love to talk about the First Amendment. Because I think Cloudflare is central to the whole discussion around free speech.

And you said, so yeah, but you know, we don't need to get into it.

But you said, okay, but maybe we can talk about crypto.

And I said, okay. And, and well, I thought we talked about that, you know, and I don't think you're hiding from it.

I think you're trying to honestly think about what's interesting, but I actually think they're the same discussion.

So I'm answering your question. I think it's actually the same topic in a way.

So crypto meant Bitcoin in the first few years.

And I was always fascinated by Bitcoin, but I didn't get it. I didn't quite get what it really meant.

I understood it from the edges enough to make investments in the ecosystem, but I didn't truly get the religion.

And, and I did, I started getting it a couple of years ago, when my fiancee convinced me to get into crypto.

And she was at a crypto company. And, and, and I really started to understand the importance of it from a political standpoint.

And the idea of money that isn't controllable by any government or any single person is, I think, important.

And if you don't know why that's important, I urge people to buy a book written by a real dick.

The author's a huge dick, total asshole, but it's a beautiful book called The Bitcoin Standard.

And it really does talk about, you know, it talks about why Bitcoin as a political idea is important.

And one of the important things about it is that no one can print more of it, and nobody can change it.

It's immutable. And so when we talk about the First Amendment right now, there's this big debate about free speech versus hate speech, and what do those ideas mean?

And people like you, and prior to you read it, were put in this difficult situation where you, your, your fundamental idea is that you, you think free speech is an important political idea.

I assume that you think that. Reddit used to think that.

But there's this constant pressure to do the right thing and to be the arbiter of what, of what hate speech might be.

And so you guys finally folded in the sense of you shut down the Nazi site Storm, Stormfront?

Daily Storm.

There you go. I've never been on that site, but I assume you had good reason to do it.

And I will say it's actually, it, it, there's a, there's a, there's a viscerally positive reaction to firing Nazis as customers.

And it feels good.

But you are one of, you are regularly one of the people who, who writes to me and tells me that I'm being an idiot when we, when we make those decisions.

And I, and I, and I read your, and I think of you as a thoughtful person. So, so I appreciate that.

Well, you know, it's, I'm not this pure ideologue. I remember when Facebook, there's this, one of my, one of my most favorite posts was Facebook wrote, Facebook started banning, like they, you couldn't have nudity on Facebook, right?

And so they started banning pictures of women breastfeeding their children.

And, and it was partly automated and partly not, but they allowed Holocaust deniers free reign on the website.

And I wrote on TechCrunch, I wrote some story like lactating women not welcome on Facebook unless they're Nazis or it was a clever, it was a clever title.

And I remember at the time I was thinking, I wasn't thinking they should put the pictures of the breastfeeding back, although they should have, and I think they finally did, but I was thinking they need to get rid of these Holocaust deniers.

I mean, it was actually that way, you know, so I'm not like this pure like soul.

Like I, my thoughts on this have evolved over time.

And Facebook's position was, and Mark is Jewish, was we're going to allow it.

And, and honestly, it was a tough decision because they got a lot of pressure for it and they lost a couple of employees that quit over it.

And so my, my thinking has evolved on this as I've gotten older.

And I realized that like these bad ideas need to be circulated so people can laugh at them and realize the horror of them.

But regardless, you're, you were under regard, whether or not you took pleasure from firing them, you're, you were under pressure to do it and you folded to the pressure, whether it was something you want to do or not.

With Bitcoin, there is no person, there is no Matthew Prince to make that, that decision.

It is what it is and it's unchangeable and it's uncensorable. You can post anything to a blockchain, which is just a database.

You can post anything to it at all and nobody can ever change that.

It's there forever. And so you have these censorship resistant social networks being popping up where the content is written to a blockchain.

And that is crypto. That is part of the fundamental reason it exists.

And it's, so that's why I think it's the same conversation. Yeah. You know, I, I, so I, I actually, if you read my notes that I had here, I sort of, I was, I was going to steer you into saying that it was, it was kind of the same conversation.

And, and I, and I think that is the interesting thing. I guess two, two questions, which actually there's a, there's a tension between one is, you know, how big a market is that really?

How, how, how important is having sort of a censorship resistant database that can exist?

Like what, what are the, what are the real applications? Cause you know, for a long time it was everything is associated with block.

Everything should be on blockchain.

Like, are you on, are you in sort of that camp or, or just anything you consider important?

When I, when I talk about crypto, there's like, there's Bitcoin, which is money.

It's the only thing that is money.

It is more money than gold. And, and we don't have time to go into why I think that, but I truly believe that.

And the Bitcoin standard and other books will walk people through the arguments.

But there's other crypto projects. So Ethereum is, I think the second largest by market cap, isn't about store of wealth or money as much as it's about being a world computer.

And the idea is that you can actually run code against, on this world computer that executes on its own.

And so the idea there is like, if you and I enter into a contract, I buy your house or you sell me a bicycle.

It can be, the contract can be broken. And then a judge ultimately, or jury has to decide what the contract actually meant.

And that, and that's fine.

It's, you know, common law and it's worked for hundreds of years pretty well, but it's inefficient in the sense that you don't always know.

Right. Yeah.

And just walk in the courthouse door is a hundred thousand dollars. So yeah. Whereas with, with Ethereum and smart contracts and its competitors, it self -executing code, it is what it is.

So you, once you agree to the code that it's going to execute subject to flaws in the programming language, which are being worked out now.

And then there's, there's Ripple, which is really just a banking coin.

So Ripple is XRP is the currency was founded by the same people that founded Ripple.

And I'm speaking carefully because there's litigation with the SEC over this right now is the relationship between Ripple and XRP, which is something I don't personally care that much about, but I want to speak clearly about it, but it's more of a banking coin and it facilitates banks that want to use crypto for its, for its speed and cost benefits because crypto work can work very quickly and it's very cheap to move money.

And so people are using XRP for cross-border payments and MoneyGram is using it to make cross-border payments, which we know are in the past have been very expensive, which that cost falls on sometimes manual labor, sending money back to their families and other countries to something very, very cheap.

That is instantaneous.

We moved $50 million in our first close in a few seconds.

I think it was two seconds and it costs 40 cents. And why, and why, I mean, that, that was, you know, when, when Facebook was working on their own cryptocurrency, I mean, that was that, you know, you can send a, you know, full streaming movie anywhere on earth instantly and effectively for free, but moving a dollar from one point on earth to another point on earth inherently costs at least, at least 50 cents.

And so, and that's, and that really is a fundamental problem.

But, but, but, but I guess then the other, the other concern is that what you've just described is such a threat to so many institutions that we, that we do see when, when it does appear like in Facebook or otherwise, try and try and do something that, that, that the world kind of collapses in on it.

So like, what's the, what's the end game here?

You know, I've had debates with other crypto people, you know, so when digital photography came around, it killed Kodak and Kodak couldn't do anything about it.

What Facebook is trying to do with Libra and what Bitcoin's doing on its own is, is, is going to do to the U.S.

government what digital photography did to Kodak.

And the difference is the U.S. government has a way of stopping these things because they have the monopoly on violence.

And so my opinion has always been the only thing that can stop Bitcoin is the U.S.

government, possibly other governments.

People now argue that that, that is impossible, that if the U.S.

government were to overtly attack Bitcoin, that, that China, Russia, our, our geopolitical enemies would adopt it more heartily as a way to disrupt the U.S.

system. And they think that we passed that point where the U.S.

can actually kill Bitcoin. I don't, I don't know if I have an opinion on that, but people have made these arguments and I've, I've entered into these debates with people.

But what Facebook is doing is very easily killed by the U.S. government because it's a centralized organization and you can apply political pressure and threats of violence against the executives, which they've done.

And so the project has changed in ways where it's unrecognizable now.

And it's, it's just to me, an example of why Bitcoin itself, which is controllable by no central person is so important.

Would you think if, like, if, if you were rebranding this, would you get the word currency out of it and coin out of it?

Does it, because there are so many applications that actually aren't necessarily monetary in what they are.

And that seems like it would have, it potentially would have been less overtly threatening to, to, to the folks that, that, again, have a monopoly on violence.

I wouldn't because the fact that it's overtly threatening is, is a, is not a, is, is not a bug.

It's a feature, right? It has survived despite that. And part of that is because there are members of our government who are freedom loving, who support this, at least the idea.

So the government hasn't acted against Bitcoin itself yet.

Other than to try to control the fiat gateways. And that really just comes down to taxation and money laundering issues, right?

Which is national security stuff.

But no, I think it's, I think it's fine to describe it exactly as what it is.

Bitcoin is money. It is money. The dollar is a pale, a pale shadow of money.

So, so you said, you know, other than the money laundering and national security issues, those, those are, those are definitely issues that, that people are, are concerned about.

And today, you know, we saw it pass out of, out of committee in the Senate, which is, which is about how, how censorship works.

And I mean, at, at some level, I have no idea what you're talking about.

I'm like nodding my head.

Like, I have no, I never heard of heard it. I know what the U.S. Senate is.

That's it. Yeah. It's, and so, you know, you've got, that, like those, those are, those are, what's the, what's the, what's the, is there a way that the U .S.

government and sort of whether it's Bitcoin or some other cryptocurrency standard can live happily, live happily ever after, if you still have money laundering and, and.

No, there's no, there's no way that Bitcoin and the U.S. government can live happily together in its current form because the U.S.

government is a hegemonic force in the world of, you know, unilateral power.

And part of the reason that we're able to do that is the, is the fact that the dollar is the world reserve currency and it's used in oil transactions and transactions all over the world, which allows us to be inflationary in a way that is not painful to our own citizens.

That has to end whether Bitcoin or not. Traditionally, what happens is just some other fiat system would take control over time.

But hopefully it'll be, Bitcoin will take control because then it won't allow the kind of evil that I think governments tend to create.

The way I'm speaking here actually sounds like I'm a revolutionary and I, and I guess you do sound a little bit like a, like a revolutionary here.

I mean, is that the, that's the underlying idea is to take power away from governments.

I mean, I'm a, I'm a libertarian.

I'm almost an anarchist. And I, and I believe that like governments need to serve certain purposes.

Like they need to protect property.

They need to protect lives. But that most of the stuff that our government does is not only unnecessary, but kind of evil.

And, and so the extent you can remove power from government, I think it's a unqualified good.

So I, I, I ask, and, and, and I, and I didn't quite get the, I still not quite sure what, like what, so what is XRP?

Like, what is it? Oh, we're simply, other than, other than overthrowing the world's governments.

Spread nonviolent revolution. So it, while I'm doing, while I'm espousing those ideas, I also like to make money.

And so I have a hedge fund and we are, we're, we trade, we trade cryptocurrencies on the open market and we're also a venture fund.

Like it's all one fund, but a big part of our fund is, is investing in new projects that are crypto related.

And hedge funds have the ability to do just about anything they want within the bounds of their agreement with their limited partners in US law.

And, and we do that. So we, we make money lots of different ways.

So there's the venture part is me. Like I'm a venture guy.

I like entrepreneurs. I meet entrepreneurs. I have three more meetings today with entrepreneurs and we will invest in some of these companies.

I have a trading team in Asia that, you know, they all day, they, they look at charts and they, and they make trades and they, they do super well.

They've outperformed. I think they've outperformed Bitcoin by 21 % last year, which is, which is good.

Much better than most funds have done.

And so it's fun. Like, and I'm learning a lot from them and they're learning a lot from me.

So that's, that's what I'm doing day to day.

In the venture world, is it, is it all things that have a crypto end to them or can it be if somebody, somebody comes in with the next Airbnb, but it has nothing to do with crypto.

I mean, you could invest in it, but would that be outside of your mandate?

I could invest in it. Our LPs would wonder why, particularly if it didn't do well.

I'm still making investments, but I'm doing a lot of those with my own checkbooks.

I just invested in a company called Fight Camp, which hasn't been announced yet.

It's not a big deal, but it's sort of Peloton, but for boxing and it's, you know, it's a fantastic company.

I'm not going to invest in that through my crypto fund.

My investors don't want that investment. Right. So I just wrote a check and I've done that with a few other companies as well.

Are you, are you, now that you're like a billionaire, are you investing in startups directly or just, are you investing in like venture funds?

How do you do all that? It's, well, I mean, so first of all, on paper is not the same as, as, as ability to write checks, but I, every once in a while, I've done a handful of, of sort of small angel investments, but it's usually, you know, people I've known for a really long time.

And, and, and it, and it actually gets, you know, it gets more complicated now that we're a public company because we, we've got, you know, the corporate opportunities doctrine and everything else that we've got.

Well, then you just create a family office, right?

You create a family office, you get a staff, you know, people.

You, you, you always are living my life about, um, about 40 steps ahead of where, of where my life actually is.

I, that's because I want you to live your life in that.

I want you to have a yacht so that I can hang out on your yacht. I want you to have a private jet so I can hang out.

There's nothing better in the world than hanging out in your friend's yacht, right?

You don't want to own a yacht.

I mean, I think you should, but owning a yacht is expensive and time can, it's a pain, but hanging out on your friend's yacht.

So I, yeah, I think now that you're a multi-billionaire, you should definitely get to that stage.

You're already, you're already getting, getting, getting far, far ahead of you.

I'm just trying to embarrass you.

No, look, I think, um, you know, you're, you're, you built a company and with your, with your co-founders and the company is vastly valuable and you made a lot of money for a lot of people and you've provided a lot of jobs for a lot of people and you help keep the Internet running.

I think that you're, you know, you deserve what you've earned.

And, uh, I, I, I, I, I, I appreciate it.

And, and again, I think that, you know, we owe, we owe a lot to, to some of the institutions that you built, build along the way.

And, and it's been fun getting to, getting to know you and, and follow along.

And, and I, and I hope that, uh, when, you know, the U S government, uh, when you overthrow it, that you won't, you won't, you know, look, look, scans at me, uh, who's, who still holds most of, most of my ability to pay my bills in U S dollars.

Let me, let me ask you something.

There was yesterday, somebody proposed that San Clemente Island in Southern California become like an autonomous on the, basically become the new Hong Kong.

And, um, and that basically means visa free zone, no taxes, all that. If something like that existed and it was legal, would you consider moving there just because the incredible economic growth and personal freedom that would, you know, evolve from that?

You know, I, I, you know, for me, um, you know, what I'm optimizing for in my life, um, which I actually think you, you know, I was actually somewhat inspired by you, uh, in this is, you know, my dad's in his late seventies and, uh, and so, and he's, and he's in Utah.

And so when in March, um, you know, we, we, we went to a work from work remote policy.

Um, I, I got on a plane as quickly as I could and I flew out to be near him.

Cause I thought, you know, I, he, there's the, I think that, you know, if somebody is going to get, um, if somebody is going to get, you know, really sick from the current pandemic, it's much more likely to be, you know, our dads.

And so it's like 43% of the deaths are, are nursing home patients.

I mean, so it's people who are older in their eighties and not, yeah.

And so, you know, I thought, I thought being around him was really important.

And then, and then, um, and then my, my, my wife's, uh, you know, family, um, I'm, I'm currently in my in -laws, uh, place.

They're being very nice. They're out, out on the, out on the front lawn while I'm, while I'm talking to you.

And, and I think, you know, honestly, um, being, being in places where you can be around your family, um, you know, you, you sacrifice a lot, uh, to, to do that.

And so, you know, I, I, I, I'm certainly not optimizing for the taxes, um, at this point.

I think, I know we have to end cause you've got something on next, but let's do this every week.

Let's like make, you know, let's just do this every week and let's bring on guests and let's, uh, I think we should just do it.

We'll set up. Jason can, uh, Jason can make it happen.

I really appreciate you, uh, you doing this. This is easy.

I told you this was going to be fun. Can we get sponsors? Can we make a lot of money from this somehow?

I mean, effectively Cloudflare is the sponsor, but that's what I said.

When we actually have people wanting to pay for ads, that'll be when we know we've, we've, we've, we've been successful.

So, well, I know we have to cut off exactly now.

So thanks so much for having me on. This is fantastic. What you're doing.

Stay safe. Give my best to your fiance and, and, uh, and, and your family.

Say hi to Tatiana for me. Bye. Bye.