Stefan Rust - Building the most comprehensive on chain inflation index

Digital Gold

Welcome to the new season of The Digital Gold Podcast. This is season two and I'm sitting here today with Stefan Russ, the founder of Laguna. Stefan, welcome to the show. Super excited to be here. I'm excited to launch it again, especially with you, man. It's a great story you have and I'm excited to dive into it for everyone.

Yeah. So tell me more about Laguna Labs. How did you, when did you have the idea that we needed the products that you guys set out to build? So, it was started off a while back, right when Covid hit government, shut everything down. What are we gonna do? How are we gonna live with. we'll print a lot of money, but it's not gonna have any impact on no impact.

No impact whatsoever. We can shut down old economy, it's not gonna have any impact, and we'll just print money anyway. And I just felt something's gotta give. Right? And then, and ultimately it was inflation, right? And so all I, well, I was also intrigued by terror, the stable coin that they launched. And so how can we build an inflation protected stable coin and then ultimately provide more governance on chain as it relates.

quantitative easing, quantitative tightening. Mm-hmm. . And that there's a transparent, you know, not curated, immutable, visible, participatory sort of way of supporting the economy and opportunities. And so you mentioned a way that couldn't be obstructed or manipulated, so you had to build your own data source, right?

Yeah, yeah. So we, we looked at how the data source is being aggregate. We noticed that it was like more than a hundred years old, right? So they built this back in 1920s. Wow. So it was like on paper and pencil, on paper and pen surveys, you know, And now they do the same surveys and they do it with iPads,

That's the innovation. And so we just felt, let's take a developer mindset to do this. Um, how do we aggregate some, I think we've sourced from 50 million different source, 50 different sources. Okay. 18 million items that we track on a daily basis. 18 million. That you guys track all via programmatic, all programmatic, all on chain, visible for free to anybody that wants to go look at a dashboard and you can see.

12 indexes at the moment, but we'll have about 50 in about a week's time. Wow. So these indexes, what, What are they? What everyday? Household goods. Household goods, rent, you know, is it rent that you're paying? Is it a mortgage you're paying? The prices of housing. is it food? Is it in food that you eat in at home and you cook grocery store food?

Or is it food you eat out at a restaurant? Your utility bills, your the cost of electricity, because ultimately that's influencing the amount you transport, right? Your transportation costs the cost of everything. The cost of everything, right? Electricity, I mean gas. It's like we got these two building blocks of our lives and we don't realize how much the cost affects exactly.

that's really just, we've just been focused on that and try to identify all new sources. So just before I got, we started this podcast, I had a call with a entity outta Switzerland that are aggregating environmental data. Okay. And so they've hashed it all on the blockchain. And so we are working with them to put that and make that available to smart contract developers so that smart contract developers then can build product.

Financial instruments that allow anybody to hedge themselves and protect their purchasing power. So what type of environmental data are you talking about? Like is this temperature, is this humidity, or is this, So it's less climate data. So we have another partner that we're working with, and we'll be announcing that next week as well, where we're actually bringing to market climate data.

So old temperature, uh, hyperbaric pressure. Wow. , we're bringing. Historical weather data, you know, floods, warnings, , et cetera. So when you start bringing this data to the Oracles, yeah, that means people can build markets on top of this data that then they can make synthetic like purchases or decisions or bets effectively.

Exactly. Okay. Exactly. And so if you look at the derivatives market worldwide, it's a quadr dollar size industry. You look at the commodities industry, it's another trillion couple of trillion dollars. I mean, we can't even fathom those numbers because there's so many zeros . , but I mean, I think, , realistically, it's, it's just, , yeah, it, everybody's gonna be building off the back of this, and we want to allow that creativity to flourish.

To flourish. And I think that's one of the important things is you need to have the right data set to understand how you're being impacted by these decisions that are so far out, that are so, , abstract for most people. Like what is. What does a quarter basis point rate increase look like? What does a one basis point rate mean to you?

Yeah. You have no way to correlate that to your day to day life. So you guys are helping bridge the gap. Exactly. And we're not already doing that, so we're also allowing, we're building a personal calculator. Okay. So what is per, what is inflation to you? Because your spending might be different to my spending.

Yeah. Might be different to, , anybody else's spending. Right. Mail spending or whatever. Right. And so as a result, How do we deal with that? Right? Yeah. And, and, and how do we calculate inflation? To me, because I'm driving a lot. You know, Oh man, I, I have a high cost of transportation. So the inflation to me is 12%, right?

Mm-hmm. , But somebody in the UK that's staying at home, working from home has to use air con during the day because it's so hot. Heating in the winter at night, they're suffering 88% inflation on utility costs. Yep. So for them, inflation's gonna be slightly. How do you aggregate that number? Do I save, do I put that into my own spreadsheet?

I can upload a CSV file. Do I use Mint to be able to track all my expenditure and my budget? I can import from Mint, Can I have it on MasterCard? I see all my MasterCard expenditure and it import that and it then calculates my personal inflation. So, and that's also gonna be for free. So anybody can, That's an amazing tool.

Yeah. Cause that's one of the things I think is in part with inflation is how does it affect me versus how does it affect you? As you mentioned, electricity in UK is going crazy. So that is, that's such a cool tool. Yeah. So what are the numbers you guys are seeing at Reflation versus the numbers that are being reported or the numbers that have been reported?

Is it a small difference? Is it magnitudes of a difference? Um, or is it pretty similar? No, I mean, we had a magnitude, a much bigger difference earlier on. Um, and it seems to be plateauing at sort of a level of eight to 9%. Okay. Um, we are reporting 9% on reflation for the. And the government's reporting 8.2%.

Mm-hmm. . And so there is a bit of a discrepancy about by 1%, but it was greater. Earlier on, we were in double digit. We had recorded double digit, uh, inflations at the peak. Wow, up to 13%. We were just shy of 13% inflation. And so when you're calculating the number, and also the government is like a six months of like lagging data, is there like a, is there a string to it or is it just today the present moment?

Like how does that work? Yeah, so we, we do it on a daily basis. We can't get it right now to have it real time. Yeah, we want to get it to real time, but in order to do real time, we need to have more predictive, uh, capabilities in terms of taking into account future pricing. Of specific commodities. Uh, and, and that will then ultimately also then have an impact on today's prices that we experience.

Yeah. Um, but we do it on a daily basis. In contrast, the government is about 30 days, um, late. So we're 30 times faster than the existing reporting mechanism. And do you guys only doing US dollar inflation domination, or is there. Currency nominating inflation. Yeah. So people have asked us, so we listened to the community and what they ask us, so they asked us to then go to the uk.

So we launched inflation calculator for the uk. Okay. Um, and we leverage the same architecture that we have. And so that was very easy. We're now getting asked to have it in different denominations. So we, at the past or so far to date, Only do US dollar denomination. Mm-hmm. . And we're looking to sort of see what other we've been actually been asked, Can you put it in BTC and E terms?

Right. Ooh. Okay. So I can then see how it ranks against that. And so we want to then have a widget that we can then add and you can have compare versus Bitcoin versus E, and then you can then actually US dollar and see what inflation looks like. I think this idea that, you know, we changed the base denominator currency is completely new over the next, the past 20 years.

Like, okay, you know, first year the four x currencies dollars, ster. Euro, but now it's like, Oh wait, you can have any asset underneath there really, or any type of currency in Bitcoin, Ethereum. So that, that's, that's huge for the, for the future. Um, let's see. So we mentioned, you talked about personalizing inflation data.

Yeah. What type of actions can someone take when they have that personalized information? , Let's, let's hear about that. Yeah. So how do I hedge myself, right? If I know I'm experiencing a 10% inflation, how do I hedge myself against that? What do I do? And those are questions. We're now trying to identify products associated with that.

And that's what we do at Laguna Labs. We're building and we specialize in tools and protocols that enable inflation protection, inflation proof, economic opportunities, right? Yeah. And so what do they look like now that we know what inflation is or true inflation, then how do we now build these products?

One of the products that we first launched was, is a flat coin. Okay? And a flat coin is a stable. Pegged to inflation. Okay. So it's actually moves us dollar plus minus inflation, minus when we have deflation, plus when we have inflation. So it sways both ways and it's just that it stays flat to a basket of items.

Okay. That you purchase on a regular basis. So it could some, Is it the dollar? Like could, is it a basket of items for the whole world with the whole US or is it for the stable point, I guess? Or is it a basket of items per in. At the moment, it's a basket of items for the us, for the us. So we've just got it for the us.

We don't have it for individual yet, but what we're doing is, I mean we, we've been on this journey. We've launched the product about maybe five months ago in the level of maturity. We had an mvp. Mm-hmm. , which was people could play around with. We were getting market feedback and giving. Independent developers, the ability to practice and tell us how to improve it so that they could get a bit of a advantage and build products ahead of others.

We have 40 companies and developers building on top of the true deflation data today. Are you able to talk further about what these companies are building on top of your platform? Any really cool use cases that you're like, Holy crap. Yeah. Super cool Use. I mean, you can always expect, right? So they, they're building prediction markets, right?

So people can gamble on what the inflation is gonna be. So like you could gamble on what their coffee's gonna cost in the future. Yes. So they've taken all this up. We don't have coffee right now. Okay. We will have the coffee index up there, but you have already, you know, they, they built out, you know, the cost of food.

What's food index? How's that gonna change? And so, and then there's a company in Latin America, they built. A lottery ticket. So you're buying lottery and in the form of an nft, a dynamic nft, you're buying a lottery that then shifts based on um, true on true data and at a cutoff time that that data counts and then you win or you lose.

Right. So interesting. So they're actually the lottery prize Yeah. Is worth more or less cuz of inflation. . This is opening up a whole nother world. Cuz you know, before you weren't able to speculate on inflation. It was like, this is what, what it is. You, you can't really stockpile a bunch of food and gas and hold it for five years from now, but you've effectively opened up these financial markets, which are tools We have, you know, derivative markets to hedge corn production for farmers.

And you're saying, Why don't we hedge the product, our consumption of anything. Yeah. And when that realization are on that journey, how has that shift, how has that changed? Like are you, as you join in or you jump into this inflation kind of. Conversation more. What are you learning about this massive force on people that you know?

We really don't know the full implications. So it has an impact to everybody. Right? And, And now that we're actually aggregating all these different components that will add up to the cpi Yep. And are leading indicators to a cpi, we get a feel for what the sentiment is, but also we get the feel for what the price of oil is today.

And if I can create a flat coin based on the price of. Can we, uh, based on the CPI basket? Yeah. Can I create a flat coin to oil corn, to sugar, to coffee? So I can buy today a coffee at coffee's price. And I know in a year's time when I really want that coffee, yeah, I can actually buy that coffee at today's price.

Same price. At the same price. I know I will always get a basket or a bushel of wheat, or I don't know what the terms are or the measure. But I will always be able to buy that same amount today. So it's ultimately the hedge for anybody, and it's available to everybody. Right. Not only airlines that can hedge against oil.

Yep. And have huge treasuries for that. I, all of a sudden we've democratized that and made that available to every farmer. Every coffee drinker, you know, that we'd want to individual. Any individual. So the, the process is that you believe that the price of, let's say coffee is gonna go up in the future or food your food basket.

So you're gonna put dollars into the stable point today to protect against that basket from degrading. Can you use those dollars in any way while they're in the protocol, or do they have to sit there as liquidity? How is that? Are you guys working on features for that? Yeah. We'll, we'll be working on features for that.

We don't have those yet today. Yeah, but I mean, ultimately you'll be able to trade off that. Okay. We want to get to a point where you can then actually go and spend. In a payment network somehow. Okay. So I mean, ultimately this is a journey where we're in a marathon, right? . Um, but I mean, if you think about it, we came, you know, we got into Bitcoin really early.

We're very lucky to do that. And if you look at it, you know, what's it now, 12, 13 years since, you know, and we now have, you know, the Federal Reserve chairman go up there and saying that crypto currency. Are influencing their decision making policies. Right? That's huge. And that's huge in the ca course of 10 years, right?

So that goal of separating state money is, is something that is still, I believe, core that of an objective of what we should be achieving. A hundred percent agree. You got to sep, that's the biggest invention at Bitcoin. Came, came and brought to the world. So the question I have for you is:

Electricity is what backs Bitcoin in my mind. Yeah. How does that compare to the advancements in Web three and what you're seeing there? Like how are those similar? So are they just two massive forces that have been introduced to the world that are gonna change everything we know? So my view Web three is just a market ploy, right?

It's a new cool name to shrink wrap. All of this stuff that's going on in the blockchain from cryptocurrencies to blockchain, to the technology, the coins, uh, to smart contracts. It's just, we call it. Blanket Web three. Blanket Web three. I like . So, And it's a new name, right? So it's fresh and Oh, people are, it's politically correct to talk about Web three, but if you talk about cryptocurrencies, Ooh, what are the regulations?

Associa true that, right? It's like a Bitcoin energy usage. It's like chill. It's okay. And I think what a lot of people don't understand is that from the energy, I mean, electricity is the core of what drives the economy. Every economy needs electricity. Yeah. And if you. I mean, there's even a book that came out.

Somebody wrote about it, about the right when the rising Tigers in Asia grew, they had air economics. It wasn't economics, it was air economics. Why? Because they built enough electricity supply to, to maintain cooling in all of their office buildings across Singapore, Hong Kong, et cetera, so that people could work in dire heat and humidity.

Miles and be productive still. Yeah. Without being, Oh, I need to, CS done so hard, I can't work anymore. And in, in Austin, same thing, right? We've got enough air con to be able to work in an environment that we don't need to be out in the dry heat versus the human heat. And these, these problems effectively made these, these solutions not gonna make humans way more, not valuable, but um, Productive.

Productive, exactly. And like that are off overall. So web three, what is it? How is it gonna make. And I think proof of work has a bad, you know, I mean, the institutions have created a bad reputation for something that is hyper efficient. And what people don't realize is that every builder in the, the, the proof of work industry has to bring down their electricity costs all day long.

It's all about. And, and, and it's, How can I bring that down? And, and you tapping in, it's actually an electro dollar, right? I mean it's, it's, it's really, it's what Bitcoin is effectively. It's really that. Um, and then this shift to proof of work. I mean, we just from proof of work to proof of state that, that, for example, Ethereum had just done Yep.

You know, that they claim that it brought down worldwide Energy's energy supply by 0.2%. Mm. Which is a huge number. I don't know what, I don't know what energy supply is worldwide, but I'm sure you go to that there. Cambridge has a cool website where you can go and see how much worldwide supply is. Um, and so they brought that down, but then you know the same people that complained about the electricity consumption in a proof of the work network.

You know, complain about, ah, now it's a security. Now you can't have that. Right? So, yeah, I mean the S sec was like, because their Ethereum nodes are all in the US now we're security. Now we're going, we're this is security. Why is it a security? Because all of a sudden it's supposedly deflationary and because they're supposed to be burning more coins.

Then they are minting coins. Yep. Um, and if you actually go, there's a website called ultra stable.money. Yep. And you can actually see how much they're burning and how much they're minting. And in fact they're not burning and it's not deflationary, It's still inflationary just at a much lower rate than if it were a proof of work network.

Mm-hmm. , No, I, the thinking, the proof of work networks are, like you said, the electro dollar is what Bitcoin gives. It is value. Definitely. Um, and it's interesting cause we're seeing that these energy c. They don't actually wanna mine Bitcoin. And then when you think about it, they don't wanna use their own energy, their energy companies, they don't wanna use their own energy to mind Bitcoin because of the potential pr, the bad press of using energy to my Bitcoin.

And I'm like, You're multinational conglomerates, but you don't see the value of this energy dollar yet. And so it's gonna take more years for that, that trend change education. So, but they have a lot of wastage throughout the production. The transmission. Yeah. Uh, the gen, the extraction, sorry. And then the transmission and then the generation.

Well then that's the problem. There's this one group came to me and they said, Hey, we have a coal plant. Yeah. We can't meet demand of the grid cause we can't get the coal plant started fast enough. So we can't actually be that last reserve to make sure the grid doesn't go into blackout or. Because the coal plant's not running to full capacity, but if they had a Bitcoin mine, it would already be running to full capacity and then they could automatically put the power on the grid.

But that right there might even be too conf, you know, Not confidence. Controversial. Controversial, yeah, exactly. So it's like little things like that, like even utilizing the energy resources. And is that because they have institutional investors? Are they publicly listed companies? They're publicly listed, but it's, It might be institutional investors.

It could be the, the public about, Oh, you're mining Bitcoin. Like that's uses energy. We have this false assumption of society. I think it probably plays into the true inflation index well, is that there's not enough energy in the world. Yep. There's not enough goods in the world. And we were talking about how earlier, how someone.

You know, how we could use the tools you guys are building. Yeah. To really extend the, let's say, the ability for the world to grow above 78 billion people. What is, like, what do you see, uh, what is holding us back from like economic growth, economic prosperity, for, for all? Is it just massive policies? Like, I mean, that's a hard question to answer for, like, what do you see holding us back the most?

Incumbents, Incumbents, incumbent. These are the incumbents today and coming back. One of the ideas that I have as to why they're so reluctant to use and run up at capacity using Bitcoin mining is because if they did that, that would not comply with esg. Mm-hmm. criteria under which. , all these big institutional funds, these legacy incumbent funds can invest into their stock.

Mm. And so as a result, they're worried that their stock will go down. They won't have that many shareholders interested in their stock because they've done something that does not comply to this checklist that was put in place by these incumbents. And that's been a big push over the past six, seven years.

Like ESG wasn't a thing in 2010. Yeah. As much as it is it is today, right? It's taken, it's taken everything, you know, by, by, and, and, and funny thing is Tesla doesn't fit into the ESG criteria, but Shell bp, you know, all these big, you know, Exxon, you know, all of these big oil companies. They're okay. They comply.

Yeah. I don't understand that checklist. It just doesn't compute. It doesn't make any sense. The biggest electric car maker, , So we talked about, we're talking about web three. How did you get into web three? Like were Bitcoin? Yeah. You just were here along the whole journey, or was there aha moment for you?

No, I mean, smart contracts was the AHA movement, right? The fact that I could put more governance on chain and have the chain provide a consensus. Mm-hmm. for smart contracts to me for that go. That was awesome. Um, that was really the aha moment, the realization. Yeah. The real, I mean, I really got into Bitcoin because I loved the peer-to-peer electronic cash system.

That's what I loved about it. I could pay, I could send money around the world to anybody I wanted to that had a Bitcoin wallet, and if they didn't have one, I got them to get one. Yeah. use a free one. . Um, and. Yeah. And, and the fact that you could do that seamlessly instantaneously at no fees, just that to me was just all inspiring.

Right. Um, and it changed how we do commerce. Yeah. It changed how we think about the world. And so now web three is changing how we move, how we get consensus and how we run programs on chain. Yeah. So truthfully, how much of that is, what is the data all on chain? Like how do you guys collect making these data pools or data.

So we're not fully decentralized yet, but we're putting it all on chain and every, it's all hashed. Every daily numbers are all hashed, so everybody can go and check it and it, we'll check it at alternated and change. Right? And that's huge. That's, that's a first step, right? We know how the CPI is, we know it's calculated, we know it's weights, right?

But we don't know. The data behind the weight, or is there cherry picking data? Well, you don't even know the weights, you don't know the allocations specif, they really, and it's all curated, right? You don't see transparently how they come to those calculations. And so we've tried to make it extremely visible for anybody to see.

Visualization is really important. I think a lot of people look with their eyes versus reading. Mm-hmm. in spreadsheets. Um, and so that was just a big, um, set of feedback that we. Um, and the fact that we are actually aggregating 18 million price items and tracking that versus the 60,000 that, um, other institutions sort of 2 million.

Yeah. Insane. So one of the things I've heard about, oh, we have multiple price points for a lot of those 18 million items. And what do you mean? Like different types of price points? So like one item of one vendor is this much, this vendor might be this much. So one of the things I've heard is that inflation historically has been low because technology is advancing in the price of televisions are going down.

Yeah. How is that affecting your index or how did you guys take that into consideration? Is that, you know, what does that mean for people looking at inflation? You know, if, if you're waiting a TV that you only buy once every five years, you know, if you're waiting that everyone classes here every, every year or a new laptop every year, obviously it's getting cheaper.

Like how do you, how do you deal? So, I mean, we, we build that into the equation. We, we then have a data team that go and do look at the waiting. Okay. And where we're getting to is within the next sort of three to six months. We'll then be exposing all of that waiting and allowing, uh, token holders to then allocate and vote and help us structure the waiting.

At the moment we're working with bigger, I mean, institutions. We're working with, um, Penn State to help us with the real estate. Location and how we wait property and how come how we get to a better algorithm that then computes what is the price change across the US for re residential, commercial real estate, things like that.

So that, that's, that is huge. So you guys are working with multiple partners to get all this data. I mean, how do you keep up with it? You've got a stable point. You got reflation, like, come on. We're, we're, we're about 50 people across people Google Labs at the moment. So the, the Tru team is about 12 people.

Um, the new one team, the flat coin is also about the same. And then we've got people working on other projects as well. Um, that will be coming out soon. But I mean, I found that the, the other thing actually is the bigger an organization, the less effective it becomes. Mm-hmm. , because if you're more than eight people at a table at a conference, uh, or at a diner ding tape, that you can then just be.

Yeah, and or not contribute. Or if you're, you know, what are the action items outta this meeting? If you're eight people, you're still pretty productive. If you don't come with a result at the next meeting, I couldn't deliver that. Then that impacts me. And we know each other personally because we're still eight people around a table uhhuh.

And that then has a bigger impact. And so how do we deal with that? And so how do you build scalable teams? And to me it's clusters of teams unique cluster. Um, because if you get too big, you get ineffective. Yeah. You don't move fast anymore. Um, and people can be like, Ah, it's not worth my time. I'm not worth, Oh, Jack will do it.

I, it's like, Oh, they'll do it. You know, it's like somebody else will, Oh, I'm sick. I just won't tell anybody. And you know, I can push it out another week or something. Whereas in the startup world, you, you can't afford to do that. Or in rapidly innovating economies, you can't do that anymore. And the event, I mean, a couple of things, right?

You. technology. Technology is the savior of inflation. Yeah. If we wouldn't have had technology, so if we don't have innovation, we would have much higher inflation. Yep. Cost of everything would be, Cost of everything would be much higher. The other thing that brought down in inflation is the global economy.

Right. Globalization has helped bring down costs because ultimately we can leverage. You know, more efficient manufacturing on one spot, more distribution, another spot, um, the sourcing of raw materials from another area, and we could leverage that bringing up economies of scale. Yeah. That allowed us to produce a hundred thousand TVs at a much slower unit cost so that we could all have better tv.

Um, and I, and, and increase the rate of, of how many TVs we buy and, and ultimately lead in more trash. But we're recycling those TVs now too. Right. So there's a lot of raw materials inside a television, inside a mobile phone that are being recycled. And we reuse and we reused. Right. The live, the supply chain is coming out.

I think when you said the globalization is key, I mean that's what has led us on this 20 year journey Yeah. Of lower prices, lower costs, and now, , we, we, we've hit the wall of QE and now it's showing us the, the poison to that pill. Yeah. Effectively cheap money for everyone. Um, so this this dollar base coin, I wanna go back to the, the stable coin you guys worked on.

What's the name of it? Neuro Oron one. So nuance, stable coin. And I'm, Talk to me more about use cases on the stable coin today. And then also any type of regulation that might be affecting you guys in the future. What you're seeing. Cause it's, it's allowed, it's allowed space right now. Yeah, I mean, so look at, Look at how money has been distributed.

It's always, it's centralized. You have a centralized institution that prints the money and distributes the money through large, centralized incumbent organizations. Yeah. Private institutions that then try to redistribute it to other smaller institutions that then are supposedly going to give incentive structure.

To drive adoption of this money into the marketplace, and they're making investments. So that's like the funds and they're supposed to hire people or even like, the same with Goodwill. They got, you know, they get 20 million for a senior citizen working program and skill program. It's like, so the government's giving goodwill money to hire senior citizens.

Why don't we get the money straight to them and yeah, how they can enjoy their lives. And, and guess how many people along the stages keep a portion of it, right? So everybody gets, and, and the month goes. Uh, you know, trillions of dollars to the first layer that get a percentage of that. Then it goes to billions, and then it goes to millions, and then it goes to thousands, 10, a hundred thousand, 10.

And so every time there's a percentage that goes along the way. But of course, the five institutions that get the trillions are much smaller community. Yeah. And are, you know, and are ultimately a keeping and. That's why certain, if you go into every city center, you look at what all the logos on top of the buildings in any downtown city center, They're all banks.

They're all accountants. Yeah. Or they're all lawyers. And the accountants are working for the banks. Yeah. The lawyers are also working for the banks. And so these are all downtown in every, every location. Those are the the prime real estate owners. So it's a bit funny how that happens. I don't know. The close you are, the money, the easier it is.

And like you said, the more work you have. Because if you're a lower billing, $600 an hour. Heck, I got a new, great example of this is the IRA comes out, makes renewables way more worth, way more. That means every renewable law firm's gonna make money. More money. Every accounting firm's working on renewables gonna be more money.

All the companies have all these new projects that no one needed the energy before. It's not lowering, but it's now it's like, Hey, here's another $800 million. That's not even on the taxpayer. It's, it's just like, Create, It's just 800 million added the Q or more that, but, but how much of that 800 billion or million is going into building solar panels, building wind farms, building water gen hydro plants, or whatever it is that we need to meet the demand of energy requirements in a population or nuclear power plants is now accepted as as, as energy renewables as well, right.

I mean, it should be, It's the best energy we have. But that's, And if we don't build that infrastructure, we're not going to be able to, you know, modernize the system. Modernize the system, and it's just gonna be lawyers and, and, and, and accountants and, and institutions and consultants and, you know, analysts that are going to tell us, Oh, we should build one.

We, we should, we should, right? We should, we should have a nuclear power path. You can pay me. Oh, we can't get the regulations. Um, so one of the things that I've seen with financial education Yeah. Is that most people that are in the lower, like poorer in the lower middle class is because of the, they don't understand the forces that are at play good.

Like they are able to make buy with the salary of let's say 50, $60,000, which is a great salary even today. Yeah. How do they, how do you educate this? A group of individuals about the true wealth destruction that inflation has. Cause when you think about 8%, it's like, Oh, that's a pretty low number. What we don't realize as humans, we have really, our hard understanding is 8% compounding.

Yeah. Is huge. So how do you, what are you seeing on the education front mean true inflation is like, I feel like the core product helped answer that, but, And that's why we wanted to do the personal calculator, right? I mean, and. Will people spend the time to, in, you know, track all of their expend? How many people actually track their expenditure?

Number one, correct? Uh, how many people? And so, okay, let's say we now have tools to do that, right? The credit card company provides you a breakdown, you know, Mint provides you a breakdown. Yeah. How many people then of that use those tools as well, right? Um, and so how can we get, make it easier and easier to visualize what it actually means to you and what inflation, how inflation.

You personally and what you can do against that. I mean, that's ultimately one of the dashboards we wanted to create. Mm-hmm. . Um, it does require effort, so people need to invest the time to do so. And if you've got two or three jobs at the same time, it gets really difficult. Right. Yeah. Um, well, and it's also, you can't, you don't prioritize it cause you don't realize either how it's affecting you or how you could do anything.

It. But one thing I found was, you know, I, I also think there's a role that our educational institutions need to take on. Mm-hmm. educate at a much earlier level. How, you know, if I, should I lease a car? Should I go to a bank and borrow or get a credit to buy a car? You know, or do I use it on my credit?

Right. Do I buy the car for my credit card? Right? What is, and how do I calculate, well, how do I compare, how do I build, what tools are available to do that comparison? Mm-hmm. , I think that would be super helpful, right? I mean, uh, mortgage, how do you get the best mortgage? How do you count? What are the different types of mortgages that you have?

Things like that to, to then streamline versus going to a loan shark, you know, paying 20 bucks, 20% a month, or having it out on your credit. Having 20%, 30% a month. Right. And who has your best interest in mind? The reality is, is that you don't know as a consumer, you are just, Okay, I have my credit card. I might not be able to pay it off this month.

Well, I get hit at 18% interest , Well that's another guy on the street that'll offer you 10% who just gotta know who he is and talk to him. Yeah, exactly That, That's that, that sort of critical mindset or I don't know. That's, We need to educate at high school levels, right? I mean, that. Like come at a college level.

I mean, you have just earlier that we could, in real world practical examples versus, you know, um, Yeah. How does that impact, what can, you know, so. You learn maths around examples, what would it take? You know, sort of that's the mathematics you need to do. Yeah. The, the real world examples, like when you're in math class, you should be figuring out how to use this math to determine your cost of goods or your how to get a mortgage.

Like that's all things you can determine with. It's all math. Yeah, it's all math. It's actually what's the price per square foot in, in this problem? Why not correlated to real world purchase decisions. Exactly. . So with Luke Gun allowed you guys raise money. Let's talk about that journey. Yeah. Can you explain to me when you started, like how the process was, how many pitches you had to do?

Were people thinking you're crazy or people like, I love this idea. Talk through that. Cuz I think it's something that, you know, we're talking about financial freedom, financial education, raising capital to build a business is one of the, I think the best things you can do to build wealth. Yeah. So how is that process?

It's not an easy one, that's for sure. , nobody believes you in the beginning. Everybody's super skeptical and and you need to overcome that, right? I mean, I, I had the advantage that for Laguna Labs when we launched that we, I had a good team. Uh, I had a track record. Uh, and I had a lot of experience in being able to prove that I, I have executions capability.

Mm-hmm. . Um, what investors generally look for is they'll invest in the team. So it's the people that matter. You matter if you're going out and raising money. So how do you bring across the energy you have, the passion you have bec to sustain and hold through really tough times. Mm-hmm. that you will go through the 50,000 no's you'll get before you get a yes.

Um, the Skepticisms, everybody's got advice. They tell, Oh, everybody tells you how to do this better, and that. But when you're actually, you are the person in the arena, you know, you are, you are the one fighting the bull, the bull's gonna come out at you and they might have some, oh, change, move to the left.

It's like the bull's coming at me. If I move to the left, there's a big stone there. I You don't, you need to be the one in charge of your story. Yeah, exactly. And could people, like I said, they'll say, No, no, no, no, no. But it's like, you believe this so strongly. Yeah. And so I guess, what is that belief for you in Li Labs Health True inflation.

Why, Why do you do what you. because I just want to protect people's purchasing power. I, that's my mission. I, I believe global economic trade is going to create a happier planet. Mm, Because with exchange of goods and services for a certain value drives interaction. Interaction creates communication, Communi.

Creates a better understanding for both parties. Mm-hmm. , a better understanding of the both parties creates a much more consensus driven environment versus a conflict oriented environment. And that's what I want to get back to. And I believe the blockchain and what we are doing at Laguna Labs, putting more governance as it relates to economic benefits.

Mm-hmm. to everybody is the way to go about it. Oh, a hundred percent. It's the granular approach, but also has the macro. In it. Exactly. And it's what, like you said, this, these forces that affect us that we don't really know yet. Blockchain is gonna help us quantify that. Exactly. And we'll put so much more, it's going to go onto the blockchain.

We have no idea today. I mean, I wrote a white paper way, you know Right. I think in 20, 23 years ago about how we can tokenize the planet. Mm. Okay. Tell me more about it. You know, so can we tokenize the carbon credits, right? Can we tokenize, you know, the car, you know, if you plant a mangrove tree, mangrove trees have been.

Um, have been verifi, you know, scientifically proven to be a great absorption of carbon dioxide. Yes. And so, okay, if you plant one, should you get over the life cycle of that carbon tree? Should you get of the life cycle of that mangrove tree? Yeah. Should you get, how do you quantify that? What are some examples?

How could you build a marketplace around that? And so build a whole ecosystem around that. Anyway, so the thought process here. Why do we let the big guys get the carbon credits and build their carbon separation plants? Why doesn't everyone have the same ability to, you know, where they keep, That's their job.

They're gonna plant mango trees. And the reason why you wouldn't do that for a drug per se, is because you don't have the, the credits, the government credits or the system in place. But the reality is it's in place at the financial institution level, but it's not in place at the individual level. So they're forced to go work for another massive.

And so you look at, I looked at that industry, There are five, four or five companies that really matter and are the only ones allowed to verify and certify that you have planted that mangrove tree and that mangrove tree is doing 10 carbon credits a day or a year or whatever it is. And though then of course they're big consultants.

Yep. They're approved by the big institutions. Uh, or governments, if you will. And ultimately you need to pay them gazillions of dollars to come and verify you. And I can't afford that. Yeah. And for that three trees that we have at home that we planted to do good. Right. It's not worth, It's not worth it.

It's just, it's, it doesn't work. So how can you democratize that? Or consumerize that and make that available to anybody. My, bring all this data on chain. Yeah. We're allowing to be authenticated, Val validated at any moment, and then allowing people to take action and incentives. Incentive structures are huge and that's, I think what is, is changing the web three and with crypto is we now have the ability to control incentives.

Yeah. At the very, like we, we all wake up in the morning and we have these plan of action all because we set these incentives up for. Of what we're wanting to do and how we're gonna spend our time. Actually, in a good example of that, directly to consumers are things like, you know, you call 'em city, but they may, but they are a very clear experiential manifestation of the incentive program.

It's like sweat, coin or a step right where I walk. . I walk to work, I earn coins. Yeah. Because it's clocked my step per step. I do. You know, so there are all these little ideas that all of a sudden with the phone, you can now earn money without doing anything, right? Mm-hmm. , and yeah, by doing your day to day by just doing your day to day in and how can we game if I more of what we do on a day to day basis.

And then it comes down to what does society value as value creation? And then how do we incentivize, like we value planning, mango truths, trees, versus. Walking, Walking . That is, this is a beautiful market. Yeah. So what are the problems, What are the problems with this space? Like holding it back Web three in general or, or Laguna Labs?

I mean, what constraints are you guys seeing in the marketplace? So it's the resistance to new and resistance to innovation. I think full start, if I would summarize it, that would be it. And the reason I see that, We have today. People running the world Yeah. That have been in their roles for decades and decades and decades and decades.

Right. So five, six decades run, they're still in charge. They have not been entrepreneurs themselves. They have, you know, not really, you know, they've, they, by attrition, they've worked their way to get to where they're at. Mm-hmm. , just because they stood around and hung around the longest. And they're the ones deciding on how, and of course they don't want change because they said professional life and they all went to the same schools.

By the way. They all went and worked at the same departments or the same offices and the same industries. So they're all together and so they don't want change. Mm-hmm. . Cause they don't, It's changed to them. Doesn't bring any immediate, What's the benefit to change? That means I have to work more. I have to understand something new.

Lose my job. I might lose my job. I might bring myself obole. Um, and so that to me is, is something we really drastically need to change quick. Mm-hmm. , because we can't become complacent. We, we need to innovate because otherwise somebody else on the planet will do so we'll do so and we'll bring more jobs and scaling when it comes to developers.

Yeah. How are the, how is that availability, the amount of all the developers in the world, Web three developers, I mean, they're hard to come by, so how, what can we, what are you seeing like in, uh, programs? More web three developers. What are you guys doing or seeing in the development world? So, a couple of things.

One is, um, there are about 26 million developers worldwide. Okay. About 18,000 of them are active on a monthly basis in web three. Wow. So that's less than a percent. So there's a big push and, and we, we are really building out Laguna Labs to attract developers and come up with economic models. That incentivize developers to provide value to a blockchain instead of just building, building on the blockchain and getting a grant and then running away and doing something else.

Mm-hmm. . So how do we do that? And, and so, and how do we incentivize developers and where do we go to find developers that are interested in writing? Programming, Right? So development software development's complex, right? A lot of people think don't, It's just easy. Just build that, right? It's like no app just works.

Exactly. It just works, right? What, What programming language do I need? What tool sets do I use? Does it have a database? What's the load that I need to manage and maintain the input output associated with that app, the process. So all of those things you need to make decisions on as a software engineer.

Um, and, and there, that's the reason why they called engineers. Maybe that's why it's like we build a building. I need to know how many water pipes do I need? What's the toilet ratio to capital? What's the air con, air docks? I need to manage the flow of air. I don't know. They're solving really technical problems that, that if you don't solve in the application, it makes it unusable.

That's space and those are structural problems, right? And that, that needs to be solved. And so anyway, Where do you go for those and how do you attract them into the web Three, And the advantage that we have in Web three is there's innovation happening and there's creative freedom that these developers can exercise without the framework of.

Legal restrictions, regulatory frame, you know, impediments, right? Mm-hmm. , uh, lawyers, product managers, marketing guys that are shouting down their neck to get this down going and build this and to build this widget and only incrementally improve it. I don't wanna change anything. Just improve it incrementally, right?

I mean, that was, Don't change my business model. Yeah. They have all these developers, 70,000, 8,000 people. They hire them not because they need to, new products, they're working with cool things. It's cuz hey, your job as developers to just always make little changes. And what that means is that you're incentivized to make new changes, bring non incentivized, to optimize old systems or to maintain old systems.

And I think that's a lot of what happens in Develop the world, but it's like how do we build core systems that we can affect people's lives? And I think the software is, is coming. That point in Truth is one of those tools where it's like this can really affect the lives of millions of people because it's fundamentally different than what else, Whatever, everything else that's out there.

And it's verifiable and trust. Yeah, and I think you go, I mean, Innovator's Dilemma, a book comes to mind, right? Sort of. You look at that, and I think every tech company or every company that starts up is the innovator. Yep. And then you grow to a certain size, and then you run the dilemma. If I change too much, now I change my business model.

Right? Yep. And if I change my business model, then ooh, that could impact my investors who are, who are gonna be worried about going back into a new business. Right. And so it's, it's, it's, it's definitely a dilemma. And tech companies have been going through that all the time. Right. I mean, we've seen a huge transition between all the tech companies and if you don't innovate, you die.

Yeah. Right? And you experience that. There's no government bail allowance. There's. You know, you, you die. You, you crash and burn. And that's the way it goes. Right? And, and that's how it seems to be for everyone in the market who's a small business. Yeah. You know, but when it comes to larger guys, it's almost like they're too big to fail.

Exactly. And they are the ones that get the debate on. But the way, um, by the way, we progress from that. But I think one thing that, that's to me is, is that as an innovator you have to get distribution. Faster than the incumbents get innovation. Mm, Distribution faster than the incumbents get innovation.

Exactly. Because the incumbents already have the distribution. Yep. And if they understand how to innovate and then get the dis, And so the incumbents are gonna do everything in their power to slow down any kind of innovation that might threaten their distribution mechanism. Right? Mm-hmm. or. Versus adopted, and I've been involved in a lot of different in, I mean, I've got involved very early on in the mobile industry, and I remember mobile app developers were the disruptors, right?

It was like trying to build apps on, I don't need apps on the phone. Right? This was when Noia was trying to sell, you know, phones that could have play music and have your credit cards in your phone. Really? Yeah. Nokia had all of that, but then they lost that ability to convert that into reality, right?

Mm-hmm. , um, because they weren't able, To build the user experience that we now use today, which is the full screen. And so everyone was like, Yeah, this is cool, but it's not 10 x back, because they started shifting from an engineering based organization into a more structured financial, analytically driven marketing orientation, Organiz.

And so as a result, what's the spreadsheet? What's the ROI of that innovation? Of building a flat screen? Yeah. How And, And I'm gonna base the ROI based on historics. Yeah. Based on the pattern of our traditional phone. I can then calculate that if you're doing a flat screen phone, Oh, we launched that two years ago and nothing worked then.

And so if we take the trajectory that we've got now, Versus actually taking a fresh look and let's try and get something new into market. Mm-hmm. . And I think that's the innovator's dilemma that really happened. So again, it also comes down to how big are you? How do you stay nimble? How do you stay focused?

How do you have customer. Feedback and incorporate that into the product development cycles and your product needs to be amazing. Yes. I think it an incumbent, your product is the, the status quo where it's the defacto and it's not the best. It's not in the, Someone has a new product. The tech guy, they have to be 10 times better say where 30 times faster than the government collecting this data for tri.

So, and nobody appreciates tech com. Tech companies deal with this all the time. And so how do they go about doing it? They generally do acquisitions, so they let small, innovative companies blossom. Yep. Google bought YouTube for a billion dollars. I mean, you know, think of that. I mean, everybody thought they were crazy, right?

They had all these lawsuits that's clean it up and they made it now today, but they saw something at the time that nobody else saw. Yep. Facebook bought Instagram. They bought WhatsApp 20 $18 billion. They paid for what? 50 employees. Everybody thought they were crazy. But look at what's at now. It's the worldwide messaging platform.

Yeah. For everybody. Right? And it's mobile. But at the time, everywhere to Facebook was crazy. But they saw something that nobody else saw. Instagram, it's just a picture, you know? It's just a place that's share pictures. Yep. And now it's part of their feed. It's a part of that product. And then everybody criticizes them.

Oh, now they're too powerful. Right. , Adobe just bought Figma. Yeah. Why are they buying Figma? Because everybody's moving away from that Photoshop. F. And then nobody's using their cloud service. So everybody's using Figma though. Why they using Figma? Because we need it in websites. Websites are more important to PowerPoint presentation.

Exactly. And that's what the real developers are. Exactly. So making the tool set that the future is using. How do you guys, Blue New Labs view, you're building two tools for people. How do you view that experience being 10 x better? Like what, I guess, how do you think about making the experience? It has to be 10 x better.

Right. And so we felt that with Reflation. , we can already do it 30 times faster. We're already doing it, you know, a million times better because we've got 18 million data point items that we track versus the 60,000 that other institutions track. And so we felt that that's definitely a 10 x improvement.

And we felt that not many people have tackled that problem. Right? Yeah. Um, and, and so we looked at that angle, right? And we had a lot of difficulty coming back to the investor story, convincing investors. That this was a mo what's your mode? How are you gonna charge people? Right? Still people ask us that question all the time.

Yeah. And it's like our mode is the big, you know, how did Google build a mode? They started off, you know, with aggregating more websites and crawling more and more websites than anyone else, than anyone else. And so our view was how do we make a great user experience with the data that we're aggregating?

Um, and we had to convince a lot of investors, right? This is core tech. I need core tech, right? Mm-hmm. , so. What do you mean by core tech though? So they mean sort of, okay, what's the core underlying algorithms that you're gonna be building that's gonna be unique to your service and you don't opensource that?

Or Yeah, what is the infrastructure that you're gonna be building in terms of hardware, aggregation, software components that are gonna plug into those hardware and build a new database on the blockchain, for example. Right? But then, you know, At least that this investor's not the right investor for you.

So you then go and find who and which investor suits you. But if you have a clear vision, you're not gonna know. Some investors will like what you're doing and it's, it's latching onto that because those are people that you can then brainstorm with, evolve your product. They'll give you good constructive feedback.

They'll have faith in you as you go down this path. And I think that's the most important thing. It's that clear vision. Yeah. As an entrepreneur, as if someone raising money for. If you don't have a clear story and vision, I was like, Well, you don't know what you're doing either. Yeah. Yeah. The reality is we're all our emperors with no clothes on and we don't know what we're doing.

But you have to be able to have that understanding of, I'm gonna wake up every day, I'm gonna leave my team to this success, and I'm gonna execute. And I have done it before. Yeah. I'm gonna continue to do in the future. Exactly. And that's why you should give me capital. Exactly. And it's all about the guys that give you the money.

They're at capital allocators. Yep. And so they look for where they can get a return on their capital. And venture is high risk, so they know that I'm gonna make some. Um, but they're risking and they're betting on the people. Um, And you think they're, when they're making a bet, they're more betting on the people than they are the technology or the idea, or I guess, you know, it still goes together.

I think they go together, Yeah. But I mean, it's, Can the people execute on the idea? Yeah. And the technology that they, Because actually, I think more of the people, I'd say it's a maybe a 60 to 7% waiting to the people and then a 40, 30, 30 40% to the technology. Cause the people are the ones who. Building the story around the idea and also the clarity around that idea so they know where the target is.

And so it's like the people paying the target, do they think you can hit the target? But if you don't have the target, you don't have the people anyway. So, and you may shift, right? The market shift all of a sudden, can you pivot? Can you pivot? Can your story grow? Can you grow and can you grow off the same theme?

You know, the other thing is what if, you know, at the time everybody thought inflation was only gonna be transitory when we launched inflation. Oh, more than you, three months inflation's gonna be gone. So how are you gonna be relevant? Right. And it's like, we heard that a lot too. Right? It's like, so how many no's did you get if you had to estimate before you got your, all your yeses to fill out the round?

Are we talking 10 no's, a hundred no's, thousand no's? No, it was definitely more than 10. Less than a hundred. Okay. I mean, it was definitely in the. Twenties, thirties, maybe 30 nose. Nice. Um, and, but I, I was very lucky to get a yes. Very early on and a super committed Yes. Mm. Um, so, and that you think that's a key for reasoning money.

It just gives you momentum. You have the support, the backing and the credibility. So was that a yes. With a check or just a Yes. I'm gonna commit the term sheet. Maybe sign a document, or how did that Yes. Come about? If you don't mind sharing. Um, so the Yes came, uh, there were two, two yeses, right? The Yes for reflation came about with a term sheet and, and commitment and, and, and network.

Right. And so opening a lot of doors. Yeah. And helping, and that, that, that got us going. And we still got a lot of nos, but at least we got a lot of doors to the right people really quickly. Really. And that, that helps. Um, and then with Lagoda Labs, we originally found a investor that. , um, had committed a significant check size to, because we just had an Excel spreadsheet mm-hmm.

and this concept of a flat coin. And, and, and, and that was, and I said, Okay, we'll back you, based on your background, we'll back you. And, and so we got, we got that and we then had to come up with the story and then, and we, we walk them through our, every sort of, We had weekly, weekly, monthly updates. And so we would just update how far have we come this month?

This is what we're thinking. This is where we're going. Yeah. And they saw that progress and we executed fast, right? Yeah. And so that's what they liked a lot. That's, that's, I think that's a very, a key portion of young entre don't, it's a lot of talk, but not a lot of execution. The reality is it's better to not have any meetings for over week, show what you can do and then have that meeting and know what you want.

The investors like, Hell, let's do it. And it's, it's, yeah. Show. So I have a, a statement that I stole from a really close friend that I worked with in the mobile ecosystem. But code beats, you know? Code beats PowerPoint. Code beats PowerPoint. Yeah. I love it. So if you have code and you can show a demo it, that's much stronger than a business plan on a PowerPoint.

Exactly, yeah. Because the code is like, Oh, this is actually the future set. Yeah. It's tangible media. And I can see you build something you've invested your idea to try and conceptualize, take your concept and put it onto mm-hmm. . Cause it's easy to connect the dots and be conceptualized, but it's hard to execute and make better experiences.

And that's why the incumbents don't do it. Yeah, that's fine. It's like, give me a plan. Show me the Excel spreadsheet. What's the roi? What's the investment gonna be? What's the cycle? And so you have to go through this whole rigor, reward, uh, rigor. I don't know what that word. Maybe that's not right me to say it, but you have to go through this whole process to get to an outcome before you can even start.

Right. So it's like so burdensome. It's like you just finished the marathon and now you're actually gonna start your ultra marathon, but it's also safe, right? There's no pressure on you if you're in a bigger organization because you're still earning your salary all this time. And if you're sick tomorrow and you don't turn up, nobody's really gonna notice.

I mean, if you do it very regularly, people get a bit upset that they'll notice, but, but ultimately, you know, you, you're in under this sort of safe umbrella of a bubble. Mm-hmm. . and so of, of the corporate. Yeah. . Yeah, exactly. Well, Ste, what else do you have to wanna share with the community and on the podcast?

Um, look, you know, it's check out app, you know, check out truth.com and, and you know, check out the una, l u g a l, agu.na na um, and, and check out our product. And if you're interested, you're a developer, build, um, we'll provide you with all the support we. Um, to make, uh, your product a success around what we are trying to do and where can we all connect with you personally?

What's the best social media? So Twitter s Russ 99 s r u s t 99. Um, and then on Telegram, same handle. Hell yeah. Well, thanks again guys for listening to the Digital Goal Podcast. This is episode one of season two and we're excited to be back. Yeah, I'm glad to be on the pilot!