Stefan Rust - On-Chain Inflation Index

JP Baric: 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 Labs. Stefan, welcome to the show. Stefan Rust: That's super excited to be here. JP Baric: 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. 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? Stefan Rust: So it started off a while back, right? When COVID hit, government shut everything down. What are we going to do? How are we going to live with that? We'll print a lot of money, but it's not going to have any impact on… No, no impact whatsoever. We can shut down all economy. It's not going to have any impact.

And we'll just print money anyway. And I just felt something's got to give, right? And ultimately it was inflation, right? And so I was also intrigued by Terra, the stablecoin that they launched. And so how can we build an inflation-protected stablecoin? And then ultimately provide more governance on chain as it relates to quantitative easing, quantitative tightening, and that there's a transparent, not curated, but 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? So we looked at how the data source is being aggregated. We noticed that it was like more than 100 years old, right? So they built this back in 1920s. Wow. So it's like on paper and pencil. On paper and paste surveys, you know? And now they do the same surveys, and they do it with iPads, you know?

That's the innovation. Stefan Rust: And so we just felt, let's take a developer mindset to do this. How do we aggregate some, I think we've sourced from 50 million different sources, 50 different sources, 18 million items that we track on a daily basis. 18 million items 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 across 12 indexes at the moment, but we'll have about 50 in about a week's time. Wow. So these indexes, what are they? What everyday household goods? A 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 food that you eat in at home and you cook grocery store food? Or is it food you eat out at a restaurant?

JP Baric: Your utility bills? Yeah. 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, we got these two building blocks of our lives, and we don't realize how much the cost affects. Exactly, everyone. And that's really just been focused on that and tried to identify all new sources. So just before we started this podcast, I'd call with an entity out of Switzerland that are aggregating environmental data. Okay. And so they've hashed it all on the blockchain, and so we're working with them to put that and make that available to smart contract developers. So that smart contract developers then can build products, financial instruments that allow anybody to hedge themselves and protect their purchasing power. So what kind of environmental data are you talking about? Is this temperature, is this humidity, or is this…

Stefan Rust: So it's less climate data, so we have another partner that we're working with that will be announced in that next week as well, where we're actually bringing to market climate data. So all temperature, but hyperbaric pressure, we're bringing historical weather data, floods, warnings, et cetera. So when you start bringing this data to the oracles, that means people can build markets on top of this data that then they can bake synthetic purchases or decisions or bets effectively. Exactly, okay. Exactly. And so if you look at the derivatives market worldwide, it's a quadrillion dollar size industry. If you look at the commodities industry, it's another trillion, a couple of trillion dollars. I mean, we can't even fathom those numbers, so many different. But I mean, I think realistically, it's just, yeah, everybody's going to be building off the back of this. And we want to allow that creativity to flourish.

Stefan Rust: 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. What is a quarter basis for a rate increase look like? What is a one basis point rate mean to you? 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 only doing that, so we're also allowing, we're building a personal calculator, okay? So what is inflation to you? Because your spending might be different to my spending, might be different to anybody else's spending, my mail spending or whatever, right? And so as a result, how do we deal with that, right? And how do we calculate inflation to me because I'm driving a lot car?

JP Baric: You know, oh man, I have a high cost of transportation, so the inflation to me is 12%, right? But somebody in the UK that's staying at home, working from home has to use aircon during the day because it's so hot, heating in the winter at night, they're suffering 88% inflation on utility costs. So for them, inflation's gonna be slightly higher. 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 my expenditure? And my budget, I can import from mint. Can I have it on MasterCard? I see all my MasterCard expenditure and import that and they then calculate my personal inflation. And that's also gonna be for free, so anybody can… That's an amazing tool. Because that's one of the things I think is in part with inflation.

Stefan Rust: How does it affect me versus how does it affect you? As you mentioned, electricity in the UK is going crazy. So that is, that's such a cool tool. So what are the numbers you guys are seeing at your inflation? Versus the numbers that are being reported or the numbers have had been reported. Is it a small difference? Is it magnitudes of a difference or is it pretty similar? No, I mean, we had a magnitude of much bigger difference earlier on and it seems to be plateauing at sort of a level of eight to nine percent. Okay. We're reporting nine percent on true inflation for the US and the government's reporting 8.2%. And so there is a bit of a discrepancy about by one percent, but it was greater earlier on. We were in double digit. We had recorded double digit inflation at the peak. Wow, up to 13%.

Stefan Rust: 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 lagging data, is there like a string to it or is it just today the present moment? Like how does that work? Yeah, so we do it on a daily basis. We can't get it right now to have it real time. We want to get it to real time. But in order to do real time, we need to have more predictive capabilities in terms of taking into account future pricing of specific commodities. And that will then ultimately also then have an impact on today's prices that we experience. Yeah. But we do it on a daily basis. In contrast, the government is about 30 days late. So with 30 times faster than the existing reporting mechanism. And do you guys only do a US dollar inflation domination or is there other currencies in terms of interesting inflation?

Stefan Rust: Yeah, so people have asked us. So we listened to the community and what they asked us. So they asked us to then go to the UK. So we launched inflation calculator for the UK. Okay. And we left it to the same architecture that we have. And so that was very easy. We're now getting asked to have an indifferent denomination. So we at the past or so far, today still, only do US dollar denomination. And we're looking to sort of see what are that. We've been actually been asked, can you put it in BTC in ETH terms, right? Ooh, okay. And I can see how it reacts against that. And so we want to then have a widget that we can then add. And you can compare versus Bitcoin versus ETH. And then you can then actually US dollar and see what inflation looks like. I think this idea that we changed the base denominator currency is completely new over the next, it has 20 years.

Like, okay, you know, first year, the fourth currency is dollar, sterling, euro. But now it's like, oh, wait, you can have any asset, I don't think they're really, they're any type of currency in the Bitcoin Ethereum. So that's huge for the future. Let's see. So we mentioned, you talked about personalizing inflation data. What type of actions can someone take when they have that personalized information? 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 that 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? 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 thought was is a flat coin, okay? And a flat coin is a stable coin, pegged to inflation, okay? So it 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 that you purchase on a regular basis. So it could some, is it the dollar, is it a basket of items for the whole world, for the whole US, or is it for the stable coin, I guess? Was it a basket of items per individual? 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've been on this journey, we've launched the product about maybe five months ago in the level of maturity.

We had an MVP, 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 an advantage of built products ahead of others. We have 40 companies and developers building on top of the true-flation 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 cases. I mean, you can always expect, right? So they're building prediction markets, right? So people can gamble on what the inflation is going to be. So like you could gamble on what their coffee's going to cost in the future. Yes, yes. So they've taken all of a sudden, we don't have coffee right now. We will have the coffee index up there, but you have already, they built out the cost of food.

What's food index? How's that going to change? 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 true-flation data. And at a cutoff time, that data counts, and then you win or you lose, right? So interesting. So they're actually the lottery prize. Yes. It's worth more or less because of inflation. This is opening up a whole another world, because before you weren't able to speculate on inflation, it was like, this is what it is. 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 coin production for farmers. And you're saying, why don't we hedge the production or consumption of anything?

And when that realization on that journey, how is that shift? How is that change like, as you join in or you jump in this inflation kind of like 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 now that we're actually aggregating all these different components that will add up to the CPI, and are leading indicators to the 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 oil, can we, based on the CPI basket? 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, I can actually buy that coffee at today's price, at the same price. I know I'll always get a basket or a bushel of wheat or I don't know what the terms are or the measurement, 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, and have huge treasuries for that. All of a sudden, we've democratized that and made that available to every farmer, every coffee drinker, you know, that would want to find individual. And so the process is that you believe that the price of, let's say, coffee is going to go up in the future or food, your food basket. So you're going to put dollars into a stable coin 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 the equity? How is that? Are you guys working on features for that? Yeah, we'll be working on features for that. We don't have those yet today, but I mean, ultimately, you'll be able to trade off that. We want to get to a point where you can then actually go and spend that in a payment network somehow. So, ultimately, this is a journey where you're in the marathon, right? But I mean, if you think about it, 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? Yes. You know, and we now have, you know, the Federal Reserve Chairman go up there and saying that cryptocurrencies are influencing their decision-making policies, right?

That's huge. And that's huge in the high course of 10 years, right? So that goal of separating state money is something that is still, I believe, core of an objective of what we should be achieving. I'm 100% agree. We got to, that's the biggest invention that Bitcoin came and brought to the world. The question I have for you is electrification. Electricity is what backs Bitcoin in my mind. How does that compare to the advancements in Web 3 and what you're seeing there? How are those similar? So, are they just two massive forces that have been introduced to the world that are going to change everything we know? So my view, Web 3 is just a marketing 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, and to smart contracts.

It's just, we call it blanket Web 3. Blanket Web 3, I like to know. And it's a new name, right? So it's fresh. Oh, people, it's politically correct to talk about Web 3. But if you talk about cryptocurrencies, who would have been like regulations to submit? I'm sure. It's like a Bitcoin energy usage. It's like, chill, it's OK. 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. And if you look, 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 aeronomics. It wasn't economics. It was aeronomics. Why? Because they built enough electricity supply 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, without being on the CIS, that's so hot, I can't work anymore.

And in Austin, same thing, right? We've got enough aircon to be able to work in an environment that we don't need to be out in the dry heat versus the humidity. And these problems, effectively, made this solution to make humans way more valuable, but productive. Productive, exactly. And like, they're off overall. So Web 3, how is it going to make us better? 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 proof of work industry has to bring down their electricity costs. All their loans. It's all about efficiency. And it's, how can I bring that down? And you tapping in, it's actually an electro-dollar, right? I mean, it's really, it's really that. And then the shift to proof of work, I mean, we just, from proof of work to proof of state that, for example, Ethereum had just done.

You know, they claim that it brought down worldwide energy supply by 0.2%. Which is a huge number. I don't know what energy supply is worldwide, but I'm sure you go to that. That Cambridge has a cool website. You can go and see how much worldwide supply is. And so they brought that down. But then, you know, the same people that complained about the electricity consumption in a proof of work network, you know, complain about, oh, now it's a security. Now you can't have that, right? So yeah, I see. He was like, because Ethereum nodes are all in the US. Now we're, we're going to the security. Why is it a security? Because it's supposedly deflationary. Because they're supposed to be burning more coins than they are minting new coins. Yep. And if you actually go, there's a website called ultra-stable.money, 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. No, I've been thinking the proof of work networks are, like you said, the electrode dollar is what Bitcoin is. It's value. And it's interesting because we're seeing that these energy companies, they don't actually want on my Bitcoin. And when you think about it, they don't want to use their own energy companies. They don't want to use their own energy on my Bitcoin because of the potential PR, the bad press for using energy to my Bitcoin. And you're multinational conglomerates, but you don't see the value of this energy dollar yet. And so it's going to take more years for that trend. It's a trend. It's a trend. But they have a lot of wastage throughout the production, the transmission, the extraction, sorry.

And then the transmission, and then the generation, right? Well, then that's the problem. There's this one group in demand. They said, hey, we have a coal plant. We can't meet demand of the grid because we can't get the coal plant started fast enough. So we can actually be that last reserve to make sure the grid doesn't go into blackout or plowing because the coal plant's not running to full capacity. But if they had a Bitcoin mine, they would already get running to full capacity. And then they could automatically put the power on the grid. But that right there might need to be too controversial. Controversial. Exactly. So it's like little things like that, even utilizing the energy resources. And is that because they have institutional investors, are they publicly listed companies? They're publicly listed, but it might be institutional investors. It could be the public about, oh, you're mining Bitcoin, that's using energy.

We have this false assumption of society. I think it probably plays into the true inflation as well as that there's not enough energy in the world. There's not enough goods in the world. And we were talking about how earlier, how someone could use the tools that you guys are building to really extend the, let's say, the ability for the world to grow above 78 billion people. What is, like, what did you see you? What is pulling us back from economic growth, economic prosperity for all? Is it just massive policies? Like, I mean, that's a hard question answer. Like, what do you see holding us back the most? Incomments. Incomments. Incomments. These are the incumbents today. And they're coming back. One of the ideas that I have is 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 criteria.

Under which all these big institutional funds, these legacy incumbent funds can invest into their stock. 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 past six, seven years. Like, ESG wasn't a thing in 2010. No. As much as it is today, right? It's taken everything you have by, and the funny thing is Tesla doesn't fit into the ESG criteria. But Shell, BP, all these big exon, all of these big oil companies, they're OK, they comply. So 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 what we're talking about with three. How did you get into it three?

Like, we're a Bitcoin earner. Do you just hear the whole journey? Or was there an aha moment for you? No, I mean, smart contracts was the aha moment, right? The fact that I could put more governance on chain and have the chain provide a consensus for smart contracts. To me, for that governance, that was awesome. That was really the aha moment. The reals, yeah, the reals. 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 spend 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. Is everyone? And the fact that you could do that seamlessly, instantaneously, no fees, just that to me was just awe-inspiring, right? And it changed how we do call it.

Yeah, it changed how we think about the world. And so now Web3 is changing how we move, how we get consensus, and how we run programs on chain. So trueflation, how much of that is what is the data on chain? Like how do you guys make these data pools or data sources? So we're not fully decentralized yet, but we're putting it all on chain, and it's all hashed. Every day, the numbers are all hashed. So everybody can go and check it, and it will can't get adulterated and changed. And that's cute. That's the 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 if they're cherry picking data. Well, you don't even know the weights. You don't know the allocations. Specifically, 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 spreadsheets. And so that was just a big set of feedback that we got. And the fact that we're actually aggregating 18 million price-hide items and tracking that versus the 60,000 that other institutions, so they're extra million. Yeah, it's insane. So one of the things I've heard about it, we have multiple price points for a lot of those 18-minute items. And what do you mean, like different types of price points? So like one item of one vendor is this much, if 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 the price of televisions are going down.

How is that affecting your index? Or how did you guys take that into consideration? Is that what does that mean for people looking at inflation? If you're waiting at TV, that you only buy once every five years, if you're waiting at, oh, if it was TV every year, or a new laptop every year, obviously, it's getting cheaper. Like how do you deal with that? So we build that into the equation. We then have a data team that go and look at the waiting and where we're getting to is within the next three to six months. We'll then be exposing all of that waiting and allowing token holders to then allocate and vote and help us structure the waiting. At the moment, we're working with bigger institutions. We're working with Penn State to help us with the real estate allocation and how we wait in property and how we get to a better algorithm that then computes what is the price change across the US for right, residential, commercial and the state, and things like that.

So that is huge. You guys are working with multiple partners to get all this data. I mean, how do you keep up with it? You got the stable point, you got the inflation, and like, come on. We're about 50 people across the field. We're all labs at the moment. So the truflation team is about 12 people. The new one team is the fact coin is also about the same. And then we've got people working on other projects as well that will be coming out soon. But I mean, I found that the other thing actually is the bigger an organization, the less effective it becomes. Because if you're more than eight people at a table, at a conference, or at a diner dinging tape, that you can then just be silent or not contribute. Or what are the action items out of this meeting? If your eight people is still pretty productive, if you don't come with a result of 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. 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. You need clusters. Because if you get too big, you get ineffective. You don't move fast anymore. And people can be like, ah, it's not worth my time. I'm not worth talking about too much. Oh, Jack will do it. I won't do it. I'll do it. So if somebody else will object, I just want to tell anybody, and I can push it out another week or something, whereas in the startup world, you can't afford to do that. Or in rapidly innovating economies, you can't do that anymore. And the advantage, I mean, a couple of things, right? You mentioned technology.

Technology is the savior of inflation. If we were to have had technology, so if we don't have innovation, we would have much higher inflation cost everything. We'd be much higher. The other thing that brought down innovation is the global economy. Globalization has helped bring down costs. Because ultimately, we can leverage more efficient manufacturing of one spot, more distribution of another spot, the sourcing of raw materials from another area. And we could leverage that bringing up economies of scale that allowed us to produce 100,000 TVs at a much slower unit cost so that we could all have better TVs. And I increased the rate of how many TVs we buy. And ultimately, the more trash. But we're recycling those TVs now, too, right? So there are a lot of raw materials inside the television, inside a mobile phone, that are being recycled. Do we use? And we reuse, right?

The life-same, the supply chain is coming. I think when you said the globalization is key. I mean, that's what has led us on this 20-year journey of lower prices, lower costs. And now we've hit the wall of QE. And now it's showing us the poison to that pill, effectively, of cheap money for everyone. So this dollar-based coin, I want to go back to the stable coin you guys work on. What's the name of it? New on, new on. It's a new on stable coin. And I'm talking to me more about use cases of the stable coin today. And then also any type of regulation that might be affecting you guys in the future, what you're seeing, because it's allowed space right now. Stefan Rust: Yeah, I mean, so look at how money has been distributed. It's always centralized. You have a centralized institution that prints the money and distributes the money through large centralized incumbent organizations, private institutions, that then try to redistribute it to other smaller institutions that then are supposedly going to give incentive structures to drive adoption of this money into the marketplace.

And they're making investments, and that's like the funds, and they're supposed to hire people, or even a thing with goodwill. They get $20 million for a senior citizen working program and skill program. It's like, so the government's getting goodwill, the money to hire a senior citizen. Why don't we get the money straight to them? Yeah, how they can enjoy their lives. And I guess how many people along the stages keep a portion of it, right? So everybody gets, and the money goes from, 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, 100,000, 10,000. 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, and are ultimately keeping and have, that's why, if you go to 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, 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 location. And those are the prime real estate owners. So it's a bit funny how that happens, I don't know. Closer to the money, the easier it is, and like you said, the more work you have, because of your lower billing, $600, $600 an hour. I got a new, it's a great example. This is the IRA, it comes out, it makes removals, way more worth, way more. That means every removal law firm is going to make money, more money, every accounting firm is working with removals, going to make more money. All the new companies have all these new projects that no one needed the energy before. It's not lower than any other companies.

Now it's like, hey, here's another $800 million. It's like not a taxpayer. It's just like, it's just $800 million out of the QEA, but how much of that $800 billion or million is going into building solar panels, building wind farms, building water, generator 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 energy renewables as well, right? So I mean, it should be, it's the best energy we have. But that's it. If we don't build that infrastructure, we're not going to be able to, you know, to monetize the system. To monetize the system. And it's just going to be lawyers and accountants and institutions and consultants and analysts that are going to tell us what we should build one. We should. We should have a nuclear power plant.

You can pay me. Oh, we can't get the regulation. So one of the things that I've seen with financial education 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. Like they are able to make buy with the salary of, let's say, $50,000, $60,000, which is a great salary even today. How do they, how do you educate this group of individuals about the true wealth destruction that inflation has? Because when you think about eight percent, oh, that's a pretty low number. What we don't realize is humanism is really our hard understanding. 8% compounding is huge. So what do you see in education climate? Trueflation is, I felt like a poor product helped answer that. And that's why we wanted to do the personal calculator, right? I mean, well, will people spend the time to, you know, track all of their spending?

How many people actually track their expenditure? Number one. Right. How many people, and so, OK, let's say we now have tools to do that, right? The credit card company provides you a breakdown, you know, mince provides you a breakdown. You know, how many people that use those tools as well, right? And so how can we get, make it easier and easier to visualize what it actually means to you and what inflation, how inflation impacts you personally and what you can do against that? I mean, that's ultimately one of the dashboards we wanted to create. It does require effort. So people need to invest the time to do so. If you've got two or three jobs at the same time, it gets really difficult, right? Yeah. Well, and it's also a camp you don't prioritize it, because you don't realize either how it's affecting you or how you can do anything about it.

But one thing I found was, you know, I also think there's a role that our educational institutions need to take on, educate at a much earlier level how, you know, if I should 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 card? Well, I do a buy a 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? I think that would be super helpful, right? I mean, 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 that in the street line, versus going to a loan shark, you know, paying 20% a month or having it out on your credit card, having 20%, 30% a month, right?

And who has your best interest in mine? The reality is, is that you don't know as a consumer, you're just, okay, I'm a credit card, I'm not going to pay it off this month. Well, I can hit, if you can, for some interest. Well, there's another guy on the street that will offer you 10% or just guy, no, who he is, and talk to him. Exactly, because that's, that's a critical mindset, or I don't know, that's, we need to educate at high school level, so I don't mean that can, come at a college level, I mean, you have just earlier that we could, in real world practical examples, versus, you know, yeah, how does that impact work? You know, some maths, you learn maths around examples, what would it take, you know, sort of, that's the mathematics you need to do. Yeah, the real world example, like, when you're a math class, you should be figuring out how to use this math to determine your cost of goods or how to get a mortgage.

Like, that's all things you can determine. It's all math. It's all math. It's like, what's the price per square foot in this real world, man? It's all correlated to real world purchase decisions. Exactly. So with Luke on the labs, you guys raise money, let's talk about that journey. Can you explain to me when you started, like, how the process was, how many pitches you got to do, where people think you're crazy, or people were like, I love this idea, talk through that, because I think it's something that, 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 a wealth. So how is that process for you? It's not easy, well, that's for sure. Nobody believes in the beginning. Everybody's super skeptical, and you need to overcome that, right?

I mean, I had the advantage that, for the good labs, when we launched that we, I had a good team, I had a track record, and I had a lot of experience in being able to prove that I have execution capability. 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 to sustain and hold through, really tough times, that you will go through, that 50,000 knows you'll get before you get a yes, right? The skepticism, everybody's got advice. They tell everybody tell you how to do this better and that better. But when you're actually, you're the person in the arena, you know, you're the one finding the bull, the bull's going to come out at you, and they might have some other 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 mean, you don't know that. You need to be the one in charge of your story. Exactly. And because people, like you said, they'll say, no, no, no, no, no, no, it's like, you believe they're so strongly. So I guess, what is that belief for you in the Bruno Lab's social inflation? Why do you do what you do? Because I just want to protect people's purchasing power. That's my mission. I believe global economic trade is going to create a happier planet because with exchange of goods and services for a certain value, drives interaction. Interaction creates communication. Communication creates a better understanding for both parties. 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're doing in the Bruno Lab's, putting more governance as it relates to economic benefits to everybody, is the way you go about it. Oh, 100%. It's the granular approach, but also has the macro. Exactly. And it's what, like you said, these forces that affect us, that we don't really know yet, blockchain is going to help us quantify that. Exactly. I will 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 2023, three years ago, about how we can tokenize the planet. OK, tell me what it is. So can we tokenize the carbon credits, right? Can we tokenize the carbon? If you plant a mangrove tree, mangrove trees have been verifying a scientifically proven to be a great absorption of carbon dioxide.

And so, OK, if you plant one, should you get, oh, the life cycle of that carbon tree, should you get, of the life cycle of that mangrove tree, 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 is that, why don't we let the big guys get the carbon credits and build their carbon circulation plants? Why isn't everyone have the same ability to, you know, they give, that's their job. They're going to go plant mangrove trees. And the reason why you want to do that for a job, per se, because you don't have the credits, the government credits, 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 institution. And so you look 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 of course, they're big consultants. They're approved by the big institutions, or the 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. For that three trees that we have at home, that we planted to do good, right? It's not worth it. It's just, it doesn't work. So how can you democratize that, or consumerize that, and make that available to anybody? My brain models did on-chain that were allowing to be authenticated, valid, and at any moment.

And then allowing people to take action in incentives and center structures are huge. And that's, I think, what is to this change? We have the web three, and with SRIP DOES, we now have the ability to control incentives. So at the very, like, we all wake up in the morning, and we have this plan of action, not because we set these incentives up for us and what we're wanting to do and how we're going to spend our time. Actually, in a good example of that, directly to consumers are things like, you know, you call them city, but they make, but they are a very clear, experiential manifestation of the incentive program. It's like sweat coin or a second, right? Where I walk, I walk to work, I earn coins because it's clocked my step, per step I do. You know, so there are all these new ideas that all of a sudden, with a phone, you can now earn money without doing anything, right?

I mean, yeah. By doing your day to day? By just doing your day to day. And how can we game and find more of what we do on a day to day basis? And then it comes down to what is society values, like the value creation, and then how do we, and so on, like, we value planning, and then we choose versus, you know, walking. Walking. So that is, this is a beautiful market. So what are the problems? What are the problems with this case, like holding it back? We have three in general, or lagoonal labs. And what constraints do you guys see in the marketplace? So it's the resistance to new, and resistance innovation. I think full-stop if I would summarize it, that would be it. And the reason I see that is, we have today, people running the world 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, by attrition, they've worked their way to get to where they're at, just because they stood around and hung around while on this. And they're the ones deciding on how, and of course, they don't want change, because they're professional. And they all went to the same schools, by the way. They all went and worked at the same departments of the same offices and the same industries. So they're all together. And so they don't want change. Because they don't, it's changed so them doesn't bring any immediate. What's the benefit? And it means I have to work more. I have to understand something we do. I don't want to lose my job. I think my self-observate. And so that, to me, is something we really drastically need to change quick, because we can't become complacent.

We need to innovate, because otherwise, somebody else on the planet will do so. We'll do so with our more jobs and scaling. When it comes to developers, how is that availability, all the developers in the world with three developers? I mean, they're hard to come by. I said, what do you see in programs to make more Web 3 developers? What are you guys doing or seeing in the development world? So a couple of things. One is, there are about 26 million developers worldwide. About 18,000 of them are active on a monthly basis in Web 3. So that's less than 1%. So there's a big portion. And we're really building out the Gunal Labs to attract developers and come up with economic models that incentivize developers to provide value to a blockchain. Instead of just building on the blockchain and getting a grant and running away and doing something else.

So how do we do that? And so how do we incentivize developers? And where do we go to find developers that are interested in writing programming? So development, software, development, it's complex. A lot of people think, don't just ease. Just build that. It's like, yeah. I still have this work. I have the time to just work. 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. And there's a reason why they call engineers, meaning that's why it's like you 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 ducts I need to manage to flow over air, I don't know.

There's some really technical problems that if you don't solve in the application, it makes it unusable, that space. And those are infrastructural problems, right? And that needs to be solved. And so anyway, where do you go for those and how do you attract them into the Web3? And the advantage that we have in Web3 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? Lawyers, product managers, marketing guys that are shouting down their neck to get this down, blowing and build this and build this widget and only increment the improvement. I don't change anything. Just improve it, increment something, right? I mean, now it's, don't change my business law, but yeah. They have always developers, 70,000 people, they hire them not because they need to do products, they're working on cool things, because hey, your job is developers, you just always make little changes.

And what that means is that you incentivize to make new changes, bring on, incentivize to optimize old systems or to maintain all systems. And I think that's a lot of what happens in 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 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 is out there, and it's verifiable and trustable. And I think you go, I mean, innovators dilemma, a book comes to mind, right? It's 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? And if I change my business model, then ooh, that could impact my investors who are going to be worried about going back into a new business, right? And so it's definitely a dilemma. And tech companies have been going through that all time, right? I mean, we've seen a huge transition between all the tech companies. And if you don't innovate, you die. Yep, right? And you experience that. There's no government bailouts, there's no, you know, you die, you crash and burn, and that's the way you go, right? And that's how it seems to be for everyone in the market, whose small business, you know, when it comes to larger guys, it's almost like they're too big to fail. Exactly. And they're the ones that get bailed out. But anyway, we progress from that. But I think one thing that, to me, is that, as an innovator, you have to get distribution faster than the incumbents get innovation.

Distribution faster than the incumbents get innovation. Exactly. Because the incumbents already have the distribution. And if they understand how to innovate and then get the diss, and so the incumbents are going to do everything in their power to slow down any kind of innovation that might threaten their distribution mechanism. Or versus adopt it. And I've been involved in a lot of different, I mean, I've got to evolve very early on in the mobile industry. And I remember mobile app developers were the disruptors, right? They were trying to build apps on the phone, right? This was when Nokia was trying to sell, you know, phones that could 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? Because they weren't able to build these 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 connected to that. Because they started shifting from an engineering-based organization into a more structured, financial, and politically driven marketing orientation organization. And so as a result, what's the spreadsheet? What's the ROI of that innovation of building a flat screen? And I'm going to base the ROI based on the historics. Based on the pattern of our traditional phone, I can then calculate that if you're doing a flat screen or we launched that two years ago, nothing worked. 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. And I think that's the innovators 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 cycle?

And your product needs to be amazing. Yes, I think it's an incumbent. Your product is the status quo. What's the defective? And it's not the best that's not in this world. Someone has a new product. The tech guy, they have to be 10 times better, which is that we're 30 times faster than the government collecting the state of the trivelation. But nobody appreciates tech companies deal with us all the time. And so how do they go about doing it? They generally do acquisitions. So they let small, innovative companies blossom, Google, but YouTube for a billion dollars. I mean, think of that. I mean, everybody thought they were crazy, right? And all these lawsuits had to clean it up. And they made it now today. But they saw something at the time that nobody else saw. Facebook bought Instagram. They bought WhatsApp. 2018 billion dollars they paid for WhatsApp.

50 employees. Everybody thought they were crazy. But look at WhatsApp now. It's the worldwide messaging platform for everybody, right? And it's mobile. But at the time, everybody thought Facebook was crazy. But they saw something that nobody else saw. Instagram is just a picture. It's just a place to share pictures. And now it's part of their feed. It's part of their product. And then everybody criticized them. Oh, and now they're too powerful, right? Adobe just bought Figma. Yeah. Why are they buying Figma? Because everybody's moving away from that Photoshop framework. And then nobody's using their cloud service. So everybody is using Figma, though. Why they use Figma? Because we need it in websites. Websites are more important than 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 look, Luna Labs?

You're building two tools for people. How do you view that experience being 10 hours better? What, I guess, how do you think about making the experience? It has to be 10 hours better, right? And so we felt that with Truflation, we can already do it 30 times faster. We're already doing it a million times better. Because we've got 18 million data points, items that we track versus the 60,000 that other institutions track. And so we felt that that's definitely a 10X improvement. And we felt that not many people have tackled that problem. 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 more what you looked, how you got to charge people, right? Still people ask us that question all the time. And it's like, our moment is how did Google build them out?

They started off with aggregating more websites and crawling more, more websites than anyone else. And so how do we make a great user experience with the data that we're aggregating? And we had to convince a lot of investors, right? This is core tech. I need core tech, right? So what do they need like core tech? So they mean sort of, OK, what's the core underlying algorithms that you're going to be building that's going to be unique to your service if you don't open source that? What is the infrastructure that you're going to be building, in terms of hardware aggregation, software components that are going to 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 can go and find who and which investors suits you.

But if you have a clear vision, you're not going to know some investors will like what you're doing. And it's latching on to that. Because those 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. Is that clear vision as an entrepreneur, as if someone raising money, if anyone, you don't have a clear story vision. I wasn't like, well, you don't know where you're doing either. Reality is real, our emperors are no close on. And we don't know what we're doing, but you have to be able to have that understanding. I'm only going to be able to be able to leave my team to this success, and I'm going to execute and I have done it before, and I continue doing the future, exactly.

That's why you should give me capital. And it's all about the guys that give you the money, they're capital allocators. 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 going to make some bets, but they're risking and they're betting on the people. And you think they're when they're making a bet, they're more betting on the people, and they are the technology or the idea, or I guess, you know, still goes together. I think they go together, yeah. But I mean, it's can the people execute on the idea and the technology that they, because actually, I think more of the people, I'd say it's maybe a 60 to 77 waiting to the people and then a 40, 30, 30, 40% to the technology. Because the people are the ones who end up building the store around maybe, 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 in your way. You may shift, right? The market shift, all of a sudden, can you pivot? Can you pivot? Can you grow a story, can you grow? And can you grow off the same theme? You know, the other thing is, you know, at the time, everybody thought inflation was only going to be transitory, when we launched inflation. Oh, one of the three months inflation's going to be gone. So how are you going to be relevant, right? And we heard that a lot, too, right? That's right. So how many knows did you get, if you had to ask me before, you got all your yeses to fill out the round? Are we talking 10-nose, 100-nose, 1,000-nose? No, it's definitely a more than 10, less than 100.

I mean, it was definitely in the 10s, 20s, 30s, maybe 30-nose. Thanks. But I was very lucky to get a yes very early on, and a super-committed yes. So you think that's a key for the money? It just gives you momentum. You have the support, the backing, and the credibility. So was that a yes with a check? We're just a yes. I'm going to commit a term sheet, maybe sign a document. Or how did that yes come about, if you don't mind sharing. So the yes came, there were two yeses, right? So the yes for trueflation came about with a term sheet and a commitment and network, right? And so we're opening a lot of doors and helping. And that got us going. And we still got all those, but at least we got a lot of doors to the right people really quickly. And that helps.

And then with the good of labs, we originally found a investor that had committed a significant check size to, because we just had an exosprecheat. And this concept of a flat coin. And that was, I said, OK, we'll back you. Based on your background, we'll back you. And so we got that. We then had to come up with the story and the plan. And we walked them through every sort of weekly, monthly updates. And so we would just update how far we come this month. And this is what we're thinking, this is where we're going. And they saw that progress. And we executed fast, right? And so that's what they liked a lot. That's, I think that's a very key portion we don't have for a single. So I talk, I'm not on execution. And reality is, it's better to not have any meetings for a week, show what you can do, and then have that meeting and know what you want.

And the investor is like, hell yeah, let's do it. And it's, yeah, show. So I have a statement that I stole from a really close friend that I worked with in the mobile ecosystem a lot. But code beats, code beats PowerPoint. Code beats PowerPoint, I love it. So if you have code and you can show a demo, it's much stronger than a business plan on PowerPoint. Exactly, yeah. Because the code is like, oh, this is actually the future set. It's tangible, immediate. And I can see you build something. You've invested your idea to try conceptualize, take your concept, and put it on to just easy to connect the dots to the conceptualize, but it's hard to execute and make better experiences. And that's why the incumbents don't do it. That's why it's like, give me a plan. Show me the Excel spreadsheet. What's the ROI?

What's the investment going to be? What's the cycle? And so you have to go through this whole rigour reward and rigour, I don't know what that word is, that's not right. 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. So you just finished marathon, and now you're actually going to start, you're an entrepreneur. 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 off, look, he's really going to know this. I mean, if you do it very regularly, people get a bit upset that they'll know this. But ultimately, you're under this sort of safe umbrella of a bubble of the corporate. Most of all, what else do you want to share with the community or not the podcast?

Look at it outside. Check out out, you know, takeouttruthlation.com and you know, check out Laguna, l-u-g-a-l-a-g-u.n-a. And check out our product. And if you're interested, if you're a developer, build, we'll provide you with all the support we can to make your product a success around what we're trying to do. And we're going to be able to connect with you, personally, with the best social media. So Twitter, S-Rust, 99, SR-UST, 99. And then I'll telegram, St. Matville. Hell yeah. Well, thanks again, guys, for listening into the Digital Gold Podcast. This is episode one of season two, and we're excited to be back. I'm glad to be pilot. OK.