Episode #13 - Three Breakthroughs: College Sports Turn Pro, Miles Per Gallon, and Ethereum ETFs

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• Where is the transcript for this webinar?

  Speaker 1:
  In a world captivated by criticism, it’s easy to overlook the groundbreaking technologies shaping our future. Let’s shine a light on innovators who are propelling us forward. As the most active venture capital firm in the US, we have an exceptional view of tech’s real-world impact. Join us as we explore, celebrate, and contribute to the stories of those creating tomorrow. Welcome to the Tech Optimist.

  As a reminder, the Tech Optimist podcast is for informational purposes only. It’s not personalized advice and it’s not an offer to buy or sell securities. For additional important details, please see the text description accompanying this episode.

  Speaker 2:
  Perfect. Welcome to the Tech Optimist Podcast. This is our segment on the three breakthroughs in science and technology, where we try to narrow in on three breakthroughs that will have an impact on the world around us. How are you doing, Mike?

  Speaker 3:
  Good. So, I am the founder and CEO of Alumni Ventures. We’re a venture capital firm that’s now been around about a decade, one of the most active venture capital firms in the world. We exclusively co-invest, but we co-invest alongside brand-name leading venture capital firms. So, we try to be a co-investor of choice, if you will. Every year, we do 200 to 300 investments. We see a lot of stuff, and I’m joined by somebody who’s just getting started in the business, Drew Lac.

  Speaker 2:
  One of the minions on the factory floor.

  Speaker 3:
  There you go. But a well-loved minion. Okay, so Drew, three things. I think I’m going first this week, right?

  Speaker 2:
  You are first.

  Speaker 3:
  And we have not—this will be a surprise to you. My first is really the settlement about Division I sports. I think this has been coming now for a while, but I think we’re heading toward a period of shaking things up, which always leads to great investing opportunities.

  This monopoly, if you will, that the NCAA has had over college athletics—that dam seems to have been broken. We’re moving beyond NIL to what seems to be a new world where athletes, especially athletes in profit-center sports such as football and basketball, are going to be compensated.

  So, you start with this basic idea: Is this a big business? Yes. Is this a business that is going to endure in an AI-robotic world? Yes. People are still going to want to go to see Northwestern on a beautiful Saturday afternoon in their brand-new stadium, for sure. And so, I think this opens up opportunities for entrepreneurs and investors to participate in the new world. So yeah, that’s number one. Any thoughts or comments on that?

  Speaker 2:
  For our viewers and our listeners, this is coming from a former Division I college athlete.

  Speaker 3:
  Marginal Division I college athlete, but I did get to cover Michael Jordan. Thank you for bringing that up, Drew—who dropped 48 on this guy. So yes, I still love sports.

  Speaker 2:
  We might have to get the VCR out of the basement so we can run that.

  Speaker 3:
  We can.

  Speaker 2:
  Run that as B-roll.

  Speaker 3:
  B-roll of my blocking Michael Jordan clearly needs to be B-roll. And if you look closely at the B-roll, you’ll see, though a foul was called, it was all ball and was recognized by MJ with a slight tap on my backside indicating, yeah, you got me. So, that will definitely have to be inserted into the Tech Optimist.

  Speaker 2:
  Yes.

  Speaker 3:
  B-roll.

  Speaker 1:
  Really quick, part of the interruption—it’s Sam. But I found it. I found the game that Mike is talking about here with Drew. So, I did some digging and I found out that Mike was on the Dartmouth Big Green men’s NCAA basketball team in 1983.

  That happened to be the same year that Michael Jordan was on the North Carolina Tar Heels basketball team. So, the game that Dartmouth and North Carolina played each other was in Chapel Hill, North Carolina, on December 21st, 1983.

  So, here’s some footage and audio of that game—proof of what Mike is talking about. Hey, Mike asked for it and the B-roll, so here it is. It’s super sick.

  If you want to actually see the footage that you’re hearing, you can also watch this podcast on Alumni Ventures’ YouTube channel as well. So, you’ll see the footage and the audio. But if you’re just on our podcast platforms, enjoy this audio from that game. I thought it was super cool and had to add it into the episode. Enjoy.

  Speaker 4:
  The Big Green of Dartmouth from Hanover, New Hampshire, the northernmost campus in the Ivy League against North Carolina, the ACC. Dartmouth coach Reggie Mitten in his first season without a freshman on the squad. He has a pair of very good seniors: the Green Tree, six-foot-five, Paul Anderson, six-foot-five, Brian Burke.

  And the tap—Michael Jordan. Great. Vince, Michael Jordan will take it. Michael Jordan, six-six junior from Wilmington, North Carolina. Six points in the game to Jordan. Carolina leads 12 to five.

  Speaker 5:
  Great move by Brad Dougherty to keep the ball up above his head, turn to the basket, and shoot it without ever bringing it down into a position where a defender could get his hands on it.

  Speaker 4:
  Brad Dougherty has 10 of North Carolina’s 62 points. Here’s a little play they like to run. That’s inside to Brian Burke, six-foot-five, and he goes over Dougherty that time.

  Speaker 5:
  Nice pass by Collins. Jordan with the jumper.

  Speaker 4:
  No good. Tipped away. Kilroy with the ball. He’ll dribble up. North Carolina has come out just a tad bit flat here in the second half, and Dartmouth has seized the opportunity. Brad Dougherty pops and telegraphed his intentions on that one. Here comes Dartmouth and Burke inside. Brian Burke—he’s there. There’s no real true pivot man, no center on this team. Jordan pulls one up. Jordan saw the foul coming, I think.

  Speaker 2:
  Exactly. And then going back to your point—I mean, this is obviously, I think both of us have been looking at this pretty closely. We’re both sports fans and it hits a little bit close to home. Can you touch more on what this settlement was? It felt like a pretty seminal moment, either the start or towards the end of how this landscape is changing. What actually happened here?

  Speaker 3:
  Yeah, I mean basically they got sued and instead of going to court, where it may have been completely set aside, there had been some signaling from the Supreme Court that what the NCAA was doing with individuals looked a lot like antitrust and a bunch of other things that our system doesn’t allow.

  And just historically, for a lot of reasons—oh, let’s treat it like we all love college football, so let’s keep that, or we all love baseball, so let’s let them create a monopoly—that has happened in our American society from time to time. But this was a case where we were starting to see lawsuits happening and some settlements and the NCAA just trying to preserve as much of it as they can, as long as they can.

  This was just another case of a settlement that is staying in front of it. But with every settlement, we move closer to a marketplace where individuals are free to be paid for their services. And this patina that big five college football isn’t a business was frankly a joke, preserving it under this patina of student-athletes.

  So yeah, another settlement and another move toward that. This is the portal. Athletes moving around every year is kind of a new recruiting game, more and more direct payment for athletes directly to play at a college or university.

  And I am not saying even I like it personally or that it’s not going to be problematic for the way things have been done historically. I just observe that this is what’s going on and as a venture capital investor, it’s going to create opportunities for entrepreneurs and new businesses and investors. And that’s the nail with which I drive my hammer.

  So, I’ll just leave it at that. It’s a big deal. It’s an announcement, it’s an opportunity. In future parts of Tech Optimist and AV webinars, we’ll dive very deep into our theories about how we’re going to address it. We have a sports fund, for example. I’ll leave it to that team to share some of our reads on what this means, how we’re going to invest in it, where we think the puck is heading. So yeah.

  Speaker 6:
  Hey everyone, taking a quick time out so I can tell you about the Sports Fund from Alumni Ventures. AV is one of the only VC firms focused on making venture capital accessible to individual investors like you. In fact, AV is one of the most active and highly rated VCs in the US, and we co-invest alongside renowned lead investors.

  With our Sports Fund, you’ll have the opportunity to invest in a portfolio built around tech and business advancements across the sports world—from personal wellness to sports media to team ownership. This fund is focused on companies that have the potential to tap into the massive global sports market that is expected to exceed $250 billion by 2030. To get started, visit av.vc/funds/sports. Enjoy the rest of the show.

  Speaker 3:
  First one, NCAA. Your turn. Big deal. Big breakthrough of the week. Drew?

  Speaker 2:
  Big breakthrough—well, we’ll say little to medium breakthrough. But what if I told you that we were thinking about fuel efficiency in totally the wrong way?

  I saw this recent report that basically was anti-MPG. You know, miles per gallon—you see it right on the sticker. And it really was this focus of: this is probably the wrong metric that we should be using when we think about fuel efficiency.

  And let me kick this off with a little bit of a pop quiz and see if you get this right. Most people get it wrong, so be ready. But let’s say I swapped out a 25 MPG car, an old Camry or whatnot, for a 50 MPG car—I got a new Prius—or I had a 10 MPG truck and I switched it out for a 15 MPG truck. Which one would actually be saving more fuel?

  Speaker 3:
  Yeah, I mean obviously that’s going to be a trick question, but one would think if the measure was good, when you go from 25 to 50, that would be a better environmental choice, a more fuel-efficient choice, one would think.

  Speaker 2:
  One would, and it is still a measure of efficiency—how efficient your vehicle is with the fuel that it’s using. But if you think about how much fuel is used over a hundred-mile period, the 25 MPG vehicle uses about four gallons over the 100 miles, and the 50 uses about two. You have a two-gallon fuel savings in that adjustment even though it’s a 25 mile-per-gallon increase.

  And then with the 10 to 15, think of your big trucks on the road. Well, the 10 mile-per-gallon takes 10 gallons of fuel to go 100 miles, and the 15 takes about 6.7 gallons of fuel. So it’s a 67% difference in fuel saved.

  So why does any of this matter? I’m not just trying to throw circular math at you. Because if we can change how we think about fuel standards and efficiency, it changes how policy gets created.

  And I think that’s really important, and it’s the public perception of this. Traditionally, we’ve been looking at MPG and we’ve been going, “Hey, how can we get this 45 MPG vehicle to 60 or 70? How can we get our really efficient cars more efficient?”

  But really, if we want to focus on reducing the amount of fuel we use as a society, we should be focusing on the lowest-rung MPG vehicles. Because even small differences in increased efficiency have a massive impact on the total fuel that’s used.

  The UK has started to add this. You can even see this on new cars when you look at the sticker. There is this new metric called GPHM—it’s gallons per hundred miles. But I thought—just wow.

  Speaker 3:
  Listen, I think it’s an interesting thought. I will share that we went through a similar period a long time ago when we were really concerned about tailpipe emissions, and where you really got the bang for your buck was literally paying people to stop driving their old crappy cars that just totally polluted—or you had an old lawnmower that put more nasty stuff into the atmosphere than five brand-new cars.

  So, I think it also points to the number of measurements that we are using—the KPIs we are using in our society—are really outdated and not always effective and can sometimes lead to bad policymaking. There are discussions going on with GDP, gross domestic product, right? Is that really capturing what’s going on?

  Does the GDP take into account how different levels of wealth are distributed? Because you can have GDP growing, and people at the top half of the economic spectrum are getting 90% of the benefits of the GDP growth because of the way it’s measured.

  So, I just think you bring a really good example of a bigger issue that I think entrepreneurs, investors, and society as a whole should really be thinking about: What are you measuring, and is it the right thing? The old chestnut, “you’re going to get what you measure”—I think it’s a really good reminder of that. So, good one.

  Cool. Back to you, Mike. All right, so for the third big breakthrough, this is the news around Ethereum ETFs. Earlier this year, ETFs for Bitcoin were approved, and now there’s a roadmap for them being approved for Ethereum as well.

  And I think again, the announcement is just the announcement, but this seems to be kind of the disruption that is taking place slowly but pretty profoundly. With all these kinds of crypto things, we’ve gone through booms and busts and hype cycles and craziness, but the fact that both Bitcoin and Ethereum are going to have ETFs that people can buy on Schwab and Fidelity and are offered by BlackRock and iShares—it is a big deal to me.

  It means that we’ve crossed the chasm of acceptability and that the genie, when there’s an ETF for something on Schwab, does not get put back into the bottle. I saw similar reports—we’ll probably put it up in the show notes—but again, really interesting statistics about who owns Bitcoin today: the vast majority of it is still being held by individuals.

  But you are starting to see family offices and institutions that historically have been very conservative dipping their toes in the water. And for an asset like Bitcoin in particular, which I would argue is just a digital gold—a repository of value with supply constraints—I think it bodes again very, very well for the future of those categories over the next 5, 10, 20 years.

  So, I think the combination of the recent ETF approval for Bitcoin and now Ethereum kind of on the heels of that—again, I think in 10, 20, 30 years, in a well-diversified portfolio, you’re going to have public equities and bonds and venture capital and real estate, and there is legitimately, even among the most conservative folks in the world, going to be a slice that’s holding Bitcoin.

  So again, a bit of a prediction there, but I think that news—this feels to me like the frog being boiled—that this is something that just every year is creeping into acceptance more and more. So that’s my third one. It’s a big one.

  Speaker 7:
  Ever wonder how the ultra-wealthy invest their money? They often back startups before they go public through venture capital. Now individual investors like you can too, with Alumni Ventures. Visit av.vc to get started.

  Speaker 2:
  I think there’s probably a percentage of our audience here that didn’t know what half the words you just used were, which is okay. I’ll ask the simple question and ask you to explain it a little bit more. I could buy Ethereum a year ago. What’s the big difference? Why is this such an important stamp of approval—not just as a market indicator from what the institutions are doing, but for me as an individual? Maybe I have a Coinbase account with some Bitcoin and Ethereum. What’s this going to do for me?

  Speaker 3:
  For the people, what this allows you to do is go on your Schwab account or your Fidelity account or wherever the average person manages their money, and they don’t have to mess around with a wallet. They don’t have to mess around with, “Oh, this is a scary thing like FTX,” or even Coinbase—which has been around a while and is pretty well established now.

  But it feels like, “Oh, I manage all of my stuff through Fidelity, and I know how to buy stocks, I know how to buy ETFs or mutual funds there.” So this allows you to buy an ETF of Bitcoin with just the symbols that you would use to buy the S&P 500 index through an ETF like SPY or something like that.

  So, it just makes it much more accessible, much more legitimate because Fidelity is going in, buying the Bitcoin, managing it, and handling the ability to buy it, sell it, and report it in your traditional way that you manage your stocks and your taxes. It’s just another ETF you can buy now. You could buy it for uranium or you could buy it for the Standard and Poor’s 500.

  From a user standpoint, it just makes it much more accessible—just another asset you can buy and own, buy and sell it, and report it on your taxes like all of your other investments.

  Speaker 2:
  Great. Fantastic.

  Speaker 3:
  And Ethereum—while Bitcoin is kind of the original grandparent of this whole class—Ethereum is probably the second most popular crypto product because it allows you to do things with it like smart contracts and other applications. It was really designed to be part of the infrastructure of the crypto ecosystem that allows you to do more useful things with it, while Bitcoin itself is just a thing in and of itself.

  So again, think of it as just the ability to buy a fixed, controlled asset like you would gold as an inflation hedge—you can buy Bitcoin. But Ethereum is really more of a platform infrastructure technology that allows people to do things on top of it and the tech stack. It gets the benefit of distributed ledger and all that fancy stuff that goes on, but you can use it to solve very practical human problems.

  So, it has become kind of the number two most popular crypto asset.

  Speaker 2:
  Yeah, you used the comparison well. I think it’s like Bitcoin is the gold—that’s purely this store of value—and Ethereum is this development infrastructure environment, and the coin token itself is kind of what you use to facilitate transactions and movement within that environment.

  Similar to if JavaScript or HTML or maybe even AWS—the other side of the analogy—came out with their own currency.

  Speaker 3:
  Yeah. Cool. Excellent.

  Speaker 2:
  This is our three breakthroughs. I don’t know when this is going to air, but we are on the verge of the NBA Finals, and I hope maybe this airs either during or after, and we can see if we were right or wrong.

  Mike, who is your NBA Finals winner this year?

  Speaker 3:
  I think it’s an interesting matchup, but I have to go with the Celtics. And I know you’re a Celtics fan and I’m not, but I do think that they have, really from the beginning of the season, played the best, most consistent basketball.

  Now that doesn’t mean they’re going to win it, but I think if you’re forcing me to pick a winner, I’m taking the Celtics. How about you?

  Speaker 2:
  Oh, I’m taking the Celtics.

  Speaker 3:
  Yeah, that’s just a bias pick though. That’s not an analytical pick.

  Speaker 2:
  We are already assuming a Celtics-Mavs matchup, so hopefully we are not wrong.

  Speaker 3:
  Yes, we are assuming the Mavs. And what I really like is the backstory here with Kyrie and talking trash, and I think—I hope it’s Dallas in Boston. I think that would be a fun one to watch. The TD Garden will be a pretty electric place. It’ll be rocking, it’ll be rocking. Going to be a fun series.

  Awesome. Excellent. We’ll do it again next week. Thank you, Drew. See you.

  Speaker 1:
  Thanks again for tuning into The Tech Optimist. If you enjoyed this episode, we’d really appreciate it if you’d give us a rating on whichever podcast app you’re using, and remember to subscribe to keep up with each episode. The Tech Optimist welcomes any questions, comments, or segment suggestions. So please email us at [email protected] with any of those, and be sure to visit our website at av.vc. As always, keep building.

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