David Marcus: How I Came to Lead PayPal; Why FB's Crypto Failed; How AI Fixes Inequality | E1001

1. 0:00 – 1:15

   Intro

   1. DMDavid Marcus0:00

      When I think about the Facebook adventure with Libra, I still call it Libra because it's a better name than DM, when I, I basically decided it, it was not worth fighting for it anymore, I felt really good, like, really, really good that we had tried everything in our power, and then some, to convince regulators and, and, you know, world powers basically, that this was something of merit and that the world needed. But, uh, it just wasn't going to happen.

   2. HSHarry Stebbings0:30

      What was the core reason it wasn't gonna happen?

   3. DMDavid Marcus0:33

      It, it was just really hard for regulators and others to accept that Facebook would be at the center of, uh, a protocol for money for the internet. And that's why we devolved so much power into this consortium that we didn't control, that we were just a member of. But that wasn't enough.

   4. HSHarry Stebbings0:53

      David, I am so excited for this. I heard so many great things from Dana at Matrix, from Shaq, of course, Frederic at Felix. But thank you so much for joining me today.

   5. DMDavid Marcus1:02

      Thank you for having me. It's great to finally connect.

   6. HSHarry Stebbings1:05

      Now, I'd love to go back to the very beginning. Um, you founded your first company, (laughs) I didn't know whether to say this, in the year I was born, in 1996.

2. 1:15 – 3:10

   How David Entered the World of Startups

   1. DMDavid Marcus1:15

      (laughs)

   2. HSHarry Stebbings1:15

      Um, how did you come to found your first company, David?

   3. DMDavid Marcus1:19

      Well, I think it was a series of events, uh, on, in my personal life, uh, as well as, uh, a deeply rooted, uh, frustration about, uh, a monopoly, um, you know, one of telecom and internet service providers in Switzerland, where I was at the time. Uh, but basically, uh, I was forced to drop out of college because of a family situation where, you know, the family lost everything, and then I had to go, uh, try to figure out, um, how to make money, which, uh, took me to working in a bank, which I really didn't like. Uh, but that's what you do with... when you're in Switzerland. Uh, and, um, and then after a year at that bank, uh, I decided I was frustrated enough with, uh, the state of the, the telecoms industry in Switzerland that was, uh, a monopoly basically at the time, and decided that, uh, knowing almost nothing, or actually nothing about, uh, the telecoms business, I was going to try to go and build a company to compete with, uh, the incumbent at the time. And, uh, and that's how I started.

   4. HSHarry Stebbings2:26

      David, there are so many things for me to unpack there. You said about losing everything. I hope it's okay for me to ask. My, my family did too, and it, it really, it gave me a ferociousness that I would never, ever let that happen again. Um, wha- w- how did it impact you seeing your family lose everything?

   5. DMDavid Marcus2:42

      Yeah, I think, you know, the s- same deal here. I think that, you know, I'm, uh, I'm actually thankful that this happened in my life, because I think it, uh, it, you know, put me on a very different trajectory that I would've been otherwise. So, uh, you know, it definitely, it definitely, uh, pushed me to rebuild from scratch at a, at, at a perfect age actually. So, you know, I'm actually thankful that, that this happened to me.

   6. HSHarry Stebbings3:07

      You mentioned also the entrance with the telecoms industry.

3. 3:10 – 4:05

   The Centrality of Markets

   1. HSHarry Stebbings3:10

      I'm a big believer in Warren Buffett's kind of suggestion of kind of the importance of markets and how even great entrepreneurs in bad markets, it's not a good outcome. Do you agree with the centrality of market where there are just some shit markets to operate in? And I respectfully say that with regards to telecom.

   2. DMDavid Marcus3:27

      Well, you know, at the time, you know, the, uh, uh, bear in mind that this was before broadband and, and all of that, right? So, uh, you, you already made, ma- made, made me sound older, uh, but, uh, but I'm going to do that to myself now. But, you know, at the time it was dial-up internet and switched telecommunications and, uh, you know, a, a call between Europe and the US was about $1 a minute, and, uh, and so that industry really deserved to be disrupted. And, uh, and it was a fun, a fun first, uh, first thing to do.

   3. HSHarry Stebbings4:01

      Can I ask, you also mentioned not knowing a huge amount about telecoms before diving in.

4. 4:05 – 7:04

   Is naivety good for entrepreneurs?

   1. HSHarry Stebbings4:05

      Do you believe that naivete is good for entrepreneurs?

   2. DMDavid Marcus4:08

      Oh, of course. It's essential because if you know too much for your own good, then you know all the things that are not possible. And, uh, and that basically prevents you from doing the things that everyone else think, um, are impossible, and, uh, and that's one of the hallmark of entrepreneurship.

   3. HSHarry Stebbings4:25

      I spoke to Frederic Court before the show and he said, "Ask David about how that experience founding GTN and the rides post that being acquired impacted how you think and operate today, and if there are applicable lessons to the downturn today."

   4. DMDavid Marcus4:41

      Yeah, I mean, it was kind of a really crazy, uh, roller coaster at the end of GTN, um, because we basically got like, a very respectable investment bank, uh, pitching us to go public at, you know, m- multiples of, you know, billions of euros of market cap at the time. Um, and then a year later, more or less, we sold the company to a company that was, uh, listed on the NASDAQ, was worth about $3, $4 billion, which at the time was a lot. Uh, and, uh, and then, you know, we, we did that deal. We took a stock payment for the acquisition and, uh, I had a 12 months lockup, uh, to get, you know, my stock, uh, basically unlocked so I could sell it and, and, and be liquid. And the company went belly up on, uh, month 11 of that 12 months lockup. So, the, the first lesson that I, I, I got there was actually, you know, next time I'm selling a company, I'm definitely taking cash. So that, that was good for the, the following one. Uh, but, uh, but I think, you know, the, there's a, a real lesson in timing here and, and really, really being, uh, cognizant and eyes wide open about the, the timing and the luck that is involved with being at the right place at the right time and not missing the turn. That's a lesson that I think, uh, became really, really helpful as I started, um, building, um, Ekovax that then became Zong!

   5. HSHarry Stebbings6:15

      Can I ask, when you say, "Missing the turn," what do you mean by that, David?

   6. DMDavid Marcus6:19

      Well, it's just that, you know, I feel like we were in a pretty good position to actually, um, exit, uh, probably a year before but we decided to continue riding.... uh, that market that was, you know, red hot at the time, and this was the time where everyone was rolling fiber optic everywhere in Europe, and telecoms were red hot, and everyone was really excited about, um, incumbents being disrupted and newcomers in the space, which, uh, which, you know, was a, it was a, a telecom boom. And I, you know, we just, you know, missed the turn by a little bit but had we sold basically six months, nine months before, uh, I wouldn't have been in the situation I ended up being in.

5. 7:04 – 12:27

   Lessons from Zong

   1. DMDavid Marcus7:04

   2. HSHarry Stebbings7:04

      You then founded Zong, uh, in 2008, and you moved to the Valley. Why did you decide to move to the Valley, and, and can great companies not be built from Europe, David?

   3. DMDavid Marcus7:15

      (laughs) Well, first of all, the, the, the, the Zong thing is actually a much longer, uh, arc. Um, so I sold the company and then a couple of months later, I started a new company which was called EchoVox, which was basically the same company as Zong ended up being, we just, uh, uh, pivot, pivoted at, um, at I think the right time this time around. And basically, EchoVox was doing, uh, premium SMS products, um, so voting for Pop Idol and (laughs) all of the TV shows, downloading ringtones and wallpapers and games on mobile phones, and, um, and it did quite well. Uh, you know, the, the year that I, uh, had this big push with my board to move to Silicon Valley, I think we were on track to doing about $30 million of revenue. Uh, we have 3Xed our revenue and, uh, it was 2007 and basically the iPhone came to the market, and I came to the realization that, you know, if you have an iPhone that has access to the internet, all of the things that we were offering, uh, were going to be disrupted greatly. I mean, no one was going to actually pay $2 to download a ringtone or a wallpaper for a feature phone when you have access to the internet on, on a smartphone. And, uh, and that's what made me want to push, uh, really hard on my board, that wasn't very favorable or favorable at all at the time, to move to Silicon Valley and try to convert all of the connections that we had with all of these mobile operators into a payments product which, uh, Zong ended up, um, being the, the result of. So that's, that's the long arc of, of the next episode here.

   4. HSHarry Stebbings9:04

      Can great companies be built in Europe, David?

   5. DMDavid Marcus9:07

      Yeah, of course. Of course. Um, but it's a lot harder, um, and, you know, we, we've seen, of course, amazingly successful companies in Europe, um. But the reason I think it's harder is because, you know, if you start, let's say, in France, then you have an addressable market that is, you know, basically the worst size, right? Because it's actually too big for you to branch out early, uh, but too small for you to build a, a, a world or global defining company. And so you're kind of stuck in this world and every time you need to branch out and go to another market, it's a different culture, a different language. Um, definitely at the time, a different set of rules, and, you know, now again, a different set of rules. Um, and so, you know, it's hard enough to build a very successful tech company, um, and, you know, you just have more constraints, uh, and then also advantages if you're building in Europe. You have, you know, arguably less competition, less competition for talent, um, and so there are advantages. But, um, but it's definitely harder.

   6. HSHarry Stebbings10:18

      Can I ask, I, I always think we learn from our mistakes. What are the biggest fuck-ups you made with Zong and how did they impact your mindset?

   7. DMDavid Marcus10:26

      Well, I think, you know, one of the things that we did is, um, is we tried at some point to branch out of carrier billing, of mobile operator based payments, and basically enable people to, um, uh, basically link a credit card or debit card to their mobile number so they could do mobile payments and, uh, and m- and mobile operators would actually take a smaller cut. And, uh, and this was a bold move, uh, but it backfired at the time, and we almost lost the company, uh, if it wasn't for a, a very fortunate, uh, breakfast, uh, with, uh, with, at the time, the, the head of that platform at AT&T because we were competing head-on with a company that was called Boku that had raised way more money than we did, that was way more connected than we were. And this, uh, push that we made, uh, at that time, uh, was actually a little tone-deaf because of course they leveraged that to try to get us canceled from, uh, the programs that we were part of and that were essential to the company actually serving their customers, and, you know, Facebook was, you know, actually one of our biggest customers at the time. Um, and so we almost lost it all, um, because I didn't read the room, um, the right way at the time. And, you know, thankfully, you know, I was able to save (laughs) save the, the, the company by, uh, trying to basically engage with AT&T at the time and, and, and figure out a path out of that situation that was, um, taken, uh, uh, that was being taken advantage of. So, but that was a lesson. It's like, you know, you need to read the room and don't, you know, get over your skis, uh, especially when you're dependent on third parties.

   8. HSHarry Stebbings12:18

      I, I, I love that in terms of reading the room. I think it's so important with internally and externally. Uh, I, I'm, I'm hopping and so I'm sorry for kind of hopping through careers.

6. 12:27 – 16:46

   Lessons from PayPal

   1. HSHarry Stebbings12:27

      But Zong was then acquired by PayPal in 2011, and you joined as a VP.It was, you know, such a transformative institution. Um, when you think about like one to two of the biggest takeaways for you from that experience that really impacted your mindset today, are there some that stand out?

   2. DMDavid Marcus12:43

      So I think, you know, the first thing is, I was actually really passionate about PayPal. Um, so when the acquisition closed, instead of staying in our office in Menlo Park at the time, um, I asked to have a desk at PayPal and I moved immediately, first day. Um, and I wanted to try to figure out how to operate in this new environment at the company, uh, which is an unusual thing to do. Like, typically, you-- if you're acquired, you're trying to preserve the unit that you've built, like the company, and you know, not integrate yourself, uh, because it's a lot of overhead and complicated. But again, like, I didn't know what I was doing. I had never worked in a large organization like that before. Um, and so I went there and it became really obvious at the time that the company really needed to innovate on mobile aggressively, uh, and it didn't have a, a card present, uh, terminal at the time where Square was actually really, really capturing market share in the offline market. And so I decided that, uh, I needed to try to do something about it and, and in the span of six months or less, we basically had our product in the market, which was the, the first hardware product that PayPal had shipped. And you know, that changed the trajectory, I think, of what followed because, you know, a few months after I joined, Scott Thompson left to become the CEO. Scott Thompson, who was leading PayPal at the time, left to become the CEO of, um, Yahoo! And of all of the people who were on that leadership team at the time, I was probably the one really not wanting (laughs) that job. I was like, "Okay, now I'm going to go back to startup land." Uh, but, uh, but John Donahoe, who was, uh, leading, uh, eBay at the time, at th- this was at the time where PayPal was still part of eBay, asked me to actually take over the leadership role at, at PayPal, which, uh, was a, an insane steep learning curve for me, uh, going from, you know, managing 200 people at most to 16, 17,000 people, uh, literally overnight.

   3. HSHarry Stebbings14:53

      What was the hardest thing in that transition?

   4. DMDavid Marcus14:55

      The hardest thing was actually that I came into this really cold and not really knowing, uh, how a corporate organization functioned, um, which was kind of probably a blessing, uh, for me. But, but the, the hardest thing was actually the frustration of seeing so many people who were there, not because they believed in the mission or because they were passionate about a specific product or solving a specific problem, um, but just coasting there and, you know, being, uh, at the company and, and taking their paycheck home and, you know, punching in. And that was really hard for me, and so, uh, the culture of the company as well at th- at that time, like, it ha- it had lost a lot of its, um, innovation mojo and a lot of, uh, it- their best engineers were, were gone. There were, uh, a bunch, uh, left, but a lot of them had, had le- ha- had, you know, basically, uh, gone, uh, to, to other companies over the years. And so I started to-

   5. HSHarry Stebbings16:00

      Can you change a culture at that scale? It's so big then. Can you change culture then?

   6. DMDavid Marcus16:04

      Well, I think we did. Uh, it was very brutal. I, I mean, I kind of went with instinct at the time, uh, and I started changing everything basically in a fairly brutal way. And the reason I, I decided, um, I, I proactively decided to do it in a brutal way is I wanted it to be a shock to the culture so that it became uncomfortable, uh, to the people who wouldn't be, uh, a cultural fit for the company. That's when we basically acquired Braintree and, and Venmo and, and tried to bring that, um, that talent and that energy, uh, into the company.

   7. HSHarry Stebbings16:41

      And I, I, I think the challenges when you're often very far ahead or when you have that

7. 16:46 – 21:57

   Is the US empire crumbling?

   1. HSHarry Stebbings16:46

      scale, you tweeted recently, and I love this as a tweet. Um, uh, it was fantastic. "America will remain in the lead if it stop getting... if it stops getting its own way. You can feel nations pulling away from the US dollar." I was actually just messaging with Hugo Bower, our mutual friend, before this and he thought this was a good question. How could America stop getting its own way and what would that look like, David?

   2. DMDavid Marcus17:12

      Well, I think, you know, it's important to get back to why people like me and before me and after me, uh, came to this country to build innovative companies. The first one is the rule of law (laughs) , uh, and a leveled playing field. Uh, that's kind of the basics. But the most important one is actually the fact that if you're innovating and you're solving a real problem, then, uh, you know, basically you have an option of, of doing that and no one's going to stand in your way. So this meritocracy of you're coming to this country, you're innovating, you're building something great, um, and, and you're creating jobs in the process and you're in the lead, um, I think that, you know, that requires a certain set of conditions to be met. And I feel like right now, you need to come up with clear regulations when it touches, like especial- especially the industry that I'm in, clear regulations that protect consumers, but also that enables innovators to go build the things that are going to continue keeping the country, uh, ahead. Uh, and then I think there's, there are all kinds of other foreign policy considerations here, um, that, that are at play. Uh, but when you look at the tea leaves right now, it's really not looking great. It's, um, it feels a, a little bit like we're on, on the path of an end of an empire of sorts, and, um, and that's probably reversible, uh, if there's concerted effort to actually really focus on what America's done really, really w-... the best at, you know, in the world out, and is, is actually getting innovators to come here and, and, and innovate and build things, and at the same time-

   3. HSHarry Stebbings19:04

      What are the most significant s- What are the most significant signs that the tea leaves not looking great?

   4. DMDavid Marcus19:09

      Well, I mean, you look at, uh, you look at a number of companies that are now not being built, um, in the US. I mean, you know, one good example is actually the, the first customer that, that we announced at, at Lightspark, which is a bank, a European bank now, which is called Xapo, that company was actually in the US and they left the US because they didn't feel like they had the, uh, the, the regulatory clarity that they needed to continue investing here. That's just one example. Uh, but there are many more in, in this space that have left or decide to avoid the market because there's just no clarity of, of rules, of engagements, so to speak. Um, I think, you know, on the geopolitical side, you can see, uh, all kinds of countries that used to be allies of the US trying to pull away from the dollar and, um, and the f- the, the magnetic, um, force field, so to speak, of the dollar. Uh, and I think that's the result of. You know, overuse of sanctions and, and, you know, misalignment, um, internationally between the US and its, its former allies. And I think that's, uh, that's also a, a typical telltale of what's to come when you're, you're actually, uh, you have the reserve currency of the world and people are trying to pull away from it.

   5. HSHarry Stebbings20:27

      David, I think we're all going nuts. I, I think we're all focused on the minutiae, and it's like, hang on a minute, the Saudi-Iran deal that was struck in the last few weeks means that the US dollar's kind of been unpegged as a reserve currency for oil that it's had for so many years, destabilizing the power and prominence of the US dollar, and no one really is talking about it.

   6. DMDavid Marcus20:50

      Yeah, I mean, I-

   7. HSHarry Stebbings20:51

      Is it not crazy?

   8. DMDavid Marcus20:51

      Yes, I think, um, I think you bring up a good point, which is, it's not only, you know, losing the competitive edge that the US has with bringing the best innovators and the best minds to the country and keeping them here. Uh, it's also, uh, you know, really pulling away from the dollar, but it's also China and a bunch of other countries trying to reset the, the, the order, the, the world order, the way it actually, uh, has been, uh, in our lifetimes, for sure.

   9. HSHarry Stebbings21:21

      How do you see them trying to reset the world order?

   10. DMDavid Marcus21:25

       I think that, you know, the, the reality is the US was the main, uh, the main broker of, uh, of the world order, and, you know, the, the giant at the table, and, uh, and, you know, they've left a certain vacuum, I think. You know, we've left, as a country, a certain vacuum that is now trying to be filled by other nation-states that are vying for this position of being in the lead.

   11. HSHarry Stebbings21:50

       Uh, can I- Speaking of, kind of being in the lead, I, I wanna go to another of your fantastic tweets. Um, clearly I'm a fanboy of your

8. 21:57 – 23:54

   Why Lightspark is Different

   1. HSHarry Stebbings21:57

      Twitter stream. Uh, but you said, "So much of entrepreneurship is believing in what is unbelievable to others, and then doing whatever it takes to manifest it into reality." Let's put that on you and Lightspark. What do you believe with Lightspark that's unbelievable to others?

   2. DMDavid Marcus22:13

      Well, I think that what we believe here is that the world desperately needs a protocol for payments or for money on the internet. And when you think about the early days of the internet, you actually had this HTTP 402 protocol that was supposed to be a request for payment, uh, and was supposed to be built, but never was. And, um, and that's our core belief. Our core belief is you need an open, interoperable, dirt cheap protocol for payments or money on the internet that settles in real time and enables people to move value around the world on the internet the same way that they send an email or a text message. Um, so that's what we believe in, and, um, and, you know, that's what we're trying to facilitate here at Lightspark.

   3. HSHarry Stebbings23:00

      Can I ask, when we think about, kind of, believable... Sorry, you believing, in terms of you believe it, but unbelievable to others, there is a point in entrepreneurship when something's just not working. How do you think about the balance, and for entrepreneurs advising them, the balance between sticking to your vision and believing what others don't versus actually, it's not working and they don't believe you for a reason?

   4. DMDavid Marcus23:23

      Well, I think that's, you know, that's, that's a l- th- there's a long way to answer that question, (laughs) so I'm going to stick with the short version. The first one is, you need to feel good about having tried everything when you pull the plug, uh, and I think that's important. But you also need to be able to read the room, read the metrics, understand if you've launched a product that doesn't find product-market fit and you've iterated on it, like, for, uh, a long while, that, uh, you need to change what you do or stop.

9. 23:54 – 25:24

   Why Facebook’s Crypto Failed

   1. DMDavid Marcus23:54

      Um, I think, you know, in our case, when I think about the Facebook adventure with Libra, um, I still call it Libra because it's a better name than Diem. Um, but, uh, when we, when, when I, I basically decided it, it was not worth fighting for it anymore, I felt really good, like really, really good, that we had tried everything in our power, and then some, to convince regulators and, and, you know, world powers basically, that this was something of merit and that the world needed. But, uh, it just wasn't going to happen, uh, and, uh, a-

   2. HSHarry Stebbings24:32

      What was the core reason it wasn't gonna happen?

   3. DMDavid Marcus24:35

      I think it, it was just really hard for regulators and others to accept that Facebook would be at the center of, uh, a protocol for money for the internet, um, and, and actually that any private company would be at the center of that. And that's why we devolved so much power into this consortium that we didn't control, that we were just a member of, but that wasn't enough. And I think that the, the political... It was very political, to be clear, and I think the political pressure, uh-... on regulators to not enable a company with the reach of Facebook to actually be at the helm of such a project was just, uh, insurmountable.

   4. HSHarry Stebbings25:20

      Can I ask, in terms of choke points there, that was a choke point for Libra.

10. 25:24 – 32:12

    The State of Crypto Today

    1. HSHarry Stebbings25:24

       What do you think are the single biggest choke points for crypto today? On one side for crypto, and then on the other side for the regulators?

    2. DMDavid Marcus25:33

       Well, I don't know about the regulators piece, but I would say that, you know, as far as crypto is concerned, um, you know, the, the industry has lost a number of banks that were really, uh, providing services to crypto companies that were essential. So, the on-ramps between the, the fiat or legacy rails to crypto, uh, is absolutely essential, and, um, and, you know, a lot of these banks are now gone, and so that's, that's a problem. That's a, a very significant problem for the entire industry.

    3. HSHarry Stebbings26:10

       What happens as a result? What's the fallout from the de-banking of crypto?

    4. DMDavid Marcus26:14

       So, I think that, you know, the, the interesting thing is this can go two way, two ways. Um, one is there can, there can be new institutions that, you know, appear, and th- there are a number of, number of new banks that are coming up. Uh, one is called Lead Bank that is led by Jackie Reses, actually, uh, s- someone, uh, that if you h- you didn't have on your podcast, you should have on your podcast at some point.

    5. HSHarry Stebbings26:39

       Do you k- do you know who asked this question, David?

    6. DMDavid Marcus26:41

       No.

    7. HSHarry Stebbings26:42

       Jackie Reses.

    8. DMDavid Marcus26:43

       Oh, well, there you go.

    9. HSHarry Stebbings26:46

       (laughs)

    10. DMDavid Marcus26:46

        (laughs) There you go. So, leading, uh, question, and leading and, and resulting, uh, desired answer, which is like, you have new institutions that are seizing the opportunity of serving the crypto industry, and, uh, and I think that'll happen. Uh, I think the alternative is actually that you push the entire industry to be on the fringe and on the margin, and all of these transactions become peer-to-peer and more opaque to regulation, uh, which is absolutely the worst outcome for everyone involved, including consumers and others, because it, it basically gets out of the purview of the regulators. So, I think, I think it's important that this industry works hand-in-hand with the rest of the industry and with regulators to actually reach the right outcome, and, uh, and it's important that we let innovators innovate.

    11. HSHarry Stebbings27:43

        I mean, th- that was kind of my point there. When you look at Coinbase receiving notice from the SEC, uh, a- and all they've done brilliantly to be partners to the SEC and collaborate, why would you bother if you're an entrepreneur? Why not go to the outskirts, do an FTX, bluntly? Is there a benefit to holding hands with regulators anymore?

    12. DMDavid Marcus28:03

        Well, I don't know about holding hands, but engaging in earnest, um, and trying to reach the right outcome, uh, the right balance between protecting consumers and, uh, stimulating innovation, I think is absolutely essential. And I think, you know, Brian Armstrong has done a really, really good job at balancing this, uh, and from the get-go, decided that he wanted to play by the rules, and has been desperately, uh, demanding clear rules, uh, from the various regulators. And, you know, certainly, I think over the long run, if you're playing the long game, that's the only way, and I think, uh, I think, you know, they're going to be a very successful company because they think about it, uh, over the long run, and, uh, and they're not taking shortcuts, so I think that's the right way to build a, a, a longstanding company.

    13. HSHarry Stebbings28:54

        David, if you were in charge of the SEC state, and you're setting the regulation, what would you do?

    14. DMDavid Marcus28:59

        Well, I think that the clarity is the most important thing. You need to give clear rules so that companies that are playing in the industry know exactly what is okay and what is not okay, and right now, uh, basically it's regulation by enforcement, and it, it doesn't help because there's n- there's just not a clear rule set of, you know, what is okay and what is not. So, I think that's the, that's the first and, and, and biggest priority here.

    15. HSHarry Stebbings29:30

        Do you think they're close to providing clarity? Do you think we will see that?

    16. DMDavid Marcus29:35

        I certainly hope so, but, you know, if we're staying on, on our current path, I don't think it will happen soon, um, but I hope that, uh, I hope that the entire industry gets, uh, gets a lot of clarity. I think, you know, there, there are interesting things happening on the legislative side, so notably the, the House Financial Services Committee, uh, is working, uh, on a number of proposed bills that I think would clarify, uh, a, a little bit of, you know, the, the, the, the murky waters that we're in right now. So, I, I think there's hope but, uh, but, you know, those things take a long time, and it's, uh, it's really complicated to get consensus across the aisle.

    17. HSHarry Stebbings30:16

        Can I ask, what worries you most for the next one to three years when you project forward in terms of kind of the crypto industry that you operate in?

    18. DMDavid Marcus30:24

        Well, I don't think about it that way. I think that what I'm, I'm ... (laughs) so let me turn the question a little bit. I, I think what I'm enthuse- enthusiastic about, uh, in our space is actually the fact that we have basically gone out of that speculative phase where it was really easy for anyone to create a token out of thin air, and, uh, and go for these, uh, you know, get rich, uh, quick schemes, right? I think we're done with that, or almost done with that, and, uh, and I think that's why you see a lot more innovation coming back to Bitcoin as well, because people have come to realize that actually building real products that solve real people's problems, uh, is the way to leverage the technology and, uh, and build something of value versus taking a shortcut and listing a token and dumping it on the public retail market. So, I th- I'm actually really enthusiastic that we're in this new phase, uh, and I think a lot of really good innovation and products will come out in the next few years.

    19. HSHarry Stebbings31:26

        Speaking of kind of great products to come out over the next few years, who do you think will be the winners and who do you think will be the losers in the next wave of crypto?

    20. DMDavid Marcus31:34

        Well, I- I mean, you know, back to my earlier point, I think the winners will be, uh, people and teams that are able to build products and services that solve real problems, uh, versus just financial engineering, uh, and, uh, and trying to- trying to make a quick buck. And so I think the former category will be the defining and winning category of the industry in the next few years.

    21. HSHarry Stebbings31:58

        I- I think when I project out, there's one other thing I- I have to talk to you about, which is kind of, you know, the future of AI. And you've tweeted, uh, a lot about this, again, uh, stalking your Twitter feed. Um, what are you most excited for with it? Let's start with the positives.

11. 32:12 – 36:13

    AI & Wealth Inequality

    1. HSHarry Stebbings32:12

    2. DMDavid Marcus32:12

       Well, I think that this is the beginning of a new compute era. A new... It's- it's a new computing platform, you know, and I- I don't think a lot of people are talking about it that way, but it is exactly that. It's a new computing platform that will enable a new wave of innovation to be unleashed and- and- and new- new wave of companies to be built around it. And- and it's really, really very exciting. I think the- the ability for you to basically have these super powers at your fingertip, um, is- is really remarkable and, uh, and it's a nonlinear step change here.

    3. HSHarry Stebbings32:51

       Uh, can I ask, how are you integrating into your teams and your products with Lightspark?

    4. DMDavid Marcus32:56

       There are a number of things that we're thinking about, notably around plug-ins and, uh, around, you know, how do we make our documentation and integrations a lot simpler? Uh, but of course, you know, we- we are providing accounts to everyone who works at the company so they can actually use it and, uh, and get those super powers. And, uh, and so it's kind of interesting. I feel like right now it's not... It- it's really great, um, at breaking down steps for coding for people who don't know how to code really well, uh, but it's not yet great at coding. It's good at coding, but not great. Uh, I think the next few versions will be really great at coding, which is also where potential problems might come from, but I think the- the ability of, uh, those large language models to actually build themselves into other products and leverage other APIs is going to be a fascinating thing and, uh, you know, potentially scary thing as well but, like, I'm- I'm more on the fascinating side for now.

    5. HSHarry Stebbings33:58

       Can I ask, one thing that I think everyone's kind of agreeing on is bluntly the ability for ten people to create billion-dollar companies again with the leverage that AI and kind of co-creation that will be enabled by AI. Uh, how do you think about income equality and how that will be impacted by the future next three years of AI?

    6. DMDavid Marcus34:18

       I mean, look, I think it cuts both ways. Uh, I feel like on- on the inequality, it- it's also going to be a great equalizer because think about all of the people out there that can't even defend themselves, uh, or have the ability to write the- the right letter to be sent to the right governmental body or company to look after their own interests right now and typically get steamrolled over and over again, uh, by the system. Now they have, you know, an ally that can, you know, actually write these letters and fight for them and do all of these things. That's just one example, right? But there are millions of others. I think that actually a lot of people who didn't have access to fancy attorneys and- and the likes will- will- will find a lot of value here. And- and I also think that, by the way, if you have an idea of a product that you want to build, to your point, uh, having those super powers at your fingertip, uh, is going to enable many more people to start companies and, um, and- and build new things that wouldn't have been possible for them to build before. Um, so I- I'm- I'm a kind of glass half full person when I think about this. I think that it's- it's more of a democratization of tools, uh, that were available to a few, uh, that is now available to almost everyone. And you can see that actually, you know, I think the last number I saw was that, you know, ChatGPT, uh, had over 100 million users, uh, and- and got to this number without network effects, like direct network effects, which is stunning. Um, and that shows that it's a mass market product.

    7. HSHarry Stebbings36:01

       Can I ask, David, how do you think about your relationship to money? I know it's a bit of a weird one, but you mentioned losing it earlier. I think it's a very important question to ask. And we spoke about income equality there and your positive attitude on

12. 36:13 – 37:32

    David’s Relationship to Money

    1. HSHarry Stebbings36:13

       life. I'm just intrigued how you think about your own relationship to money now.

    2. DMDavid Marcus36:18

       Well, I mean, when you ask that question, the- the first thing I think about is, you know, I'm- I'm- I'm dedicating the rest of my life to making money work better and move, uh, move the way it should move, like bits and bytes on the internet. So that's... Uh, from that standpoint, it's a def- definitely a fusional relationship with, uh, trying to make money work better. Um, so I think, you know, from that standpoint, uh, it's, uh, it's ve- it's a very relevant question. Um, uh, you know, on the more personal side, you know, I'm a capitalist and I think that, uh, if people solve big problems for a large number of individuals or companies, um, and they do so tr- through a great deal of sacrifices and efforts, that they should be reward- rewarded for that. And I think, uh, I think it's great that, you know, people come from nothing and- and build, uh, very successful lives by, uh, trying to be focused on solving these problems. I think it's inspiring and it's, uh, it's a- a virtuous cycle that I hope, uh, continues, uh, way after we're all gone.

    3. HSHarry Stebbings37:24

       I was trying to find an easy way to fit that in, but I thought, "Fuck it, just go direct." Um, (laughs) uh, I want to move into a quick fire, David. So I say a short

13. 37:32 – 43:43

    Quick-Fire Round

    1. HSHarry Stebbings37:32

       statement, you give me your immediate thoughts. Does that sound okay?

    2. DMDavid Marcus37:35

       Yeah, sounds good.

    3. HSHarry Stebbings37:36

       So will we be in a better or a worse macro position at the end of this year?

    4. DMDavid Marcus37:41

       Worse.

    5. HSHarry Stebbings37:42

       Why?

    6. DMDavid Marcus37:44

       Uh, because I think that it's going to be... We're in this situation where you have to land, uh, uh, a plane that is full of, uh, full of jet fuel, uh, and it's coming in heavy when it comes to balancing the runway, inflation risks, and not blowing up our entire long tail of banks, uh, that are absolutely essential to the economy, and I think it's going to be a, a really tough balancing act for the Fed. Um, and, uh, and I think that, you know, the- the- the chances are greater that we will end up, uh, being in a recession. Is it going to be a longstanding one or a short one? I don't know, but I think, uh, I think we're- we're not out of it by any stretch of imagination, and I hope I'm wrong.

    7. HSHarry Stebbings38:33

       Do rates go even higher?

    8. DMDavid Marcus38:35

       Uh, I think the rates will go a bit higher before they'll stop, uh, raising them.

    9. HSHarry Stebbings38:41

       How do we stop more bank runs?

    10. DMDavid Marcus38:43

        Well, I think, you know, they did the, the backstop provisions that, uh, should calm the markets, but, uh, hopefully, it- it holds. I think, you know, the psychological effects of people, uh, learning, uh, in, uh, in an accelerated fashion about fractional reserve banking, uh, is, uh, is I think a long-term benefit but a short-term risk to the system.

    11. HSHarry Stebbings39:06

        Why make the move to LA to build Lightspark rather than Silicon Valley?

    12. DMDavid Marcus39:11

        Well, I think, you know, after 16 years in the Bay Area, it was time, uh, to be here, and, uh, and it's great. Honestly, uh, I didn't know whether it would actually work out, but, uh, we've been able to convince amazing talent to move here. Uh, a lot of talent actually left the Bay Area during the COVID years, and, uh, and felt even more compelled to come to LA versus going back to the Bay Area. It's a more vibrant city. There's a lot more to do. Um, and, uh, and I think it's a differentiating factor for us, and it's, uh, it's been good. And on the personal front, it's, uh, I think, a much better place to live, um, than Silicon Valley.

    13. HSHarry Stebbings39:50

        What's the biggest lesson you have in terms of hiring the best talent across many different companies?

    14. DMDavid Marcus39:56

        It's really not to compromise. Um, I've seen many young entrepreneurs or early entrepreneurs, uh, they need to f- fill a role, and instead of taking another month or a couple of months to find the right candidate, just hire the person in front of them because they need someone to do the job, and I think that compounds to a pretty mediocre place really quickly. And so I think not lowering the bar no matter how long it takes to find the right talent is a really key lesson for me.

    15. HSHarry Stebbings40:28

        So is hire fast, fire first bullshit?

    16. DMDavid Marcus40:32

        Yeah, that, too. Uh, but- but more importantly, hire the right people. Like this, you don't have to fire them.

    17. HSHarry Stebbings40:38

        How have you changed most as a leader over time?

    18. DMDavid Marcus40:43

        Well, I mean, look, I'm kind of an unusual animal in the sense that I started as an entrepreneur, I went into corporate stuff, and I stayed in it for a decade. And, uh, and some of my friends joked that they thought I would be in and out in a year, uh, and, you know, I stayed, I stayed in PayPal for almost four years, and I stayed, you know, seven-plus years at, at Facebook, which was an incredible, incredible run, um, there. Just I had so many amazing lessons and amazing people like Mark to work with and- and others. Um, and, and I feel like, you know, I've learned to do both things, so it's kind of an interesting thing. I've learned to do things at large scale, uh, and I find myself, uh, really back in my element, uh, in building something from scratch again as an entrepreneur again. And, uh, and I think, you know, I- I have, I- I've benefited from spending so much time in, in large-scale organizations. I've learned so much. So, you know, I'm- I'm really excited to put all of this to work at Lightspark here with- with my team.

    19. HSHarry Stebbings41:56

        What was the biggest lesson from working with Mark at Facebook?

    20. DMDavid Marcus41:59

        I mean, I think the lesson for the world is don't bet against him because he is one of the, the smartest, instinctive people I've ever worked with. Um, and he also is very competitive, and I think, uh, the one lesson as a, as a leader, I think, is that he is the best listener that I've ever worked with. He's never touching a phone in a meeting. He will always listen intently to whatever people are saying. He will rarely interrupt people. And he's never afraid of asking questions, e- even if they may come across as things that he should know. And I think he... Because of that, he's just one of the fastest, best learners out there, and so he can learn about a space better than I think anyone I know. Um, so that's kind of an interesting lesson.

    21. HSHarry Stebbings42:58

        Final one for you. We do this show in 2028. Where are you, and where's Lightspark then next five years?

    22. DMDavid Marcus43:06

        So in five years, uh, we're here in LA. So we haven't moved. (laughs) And, uh, and I think, you know, Lightspark ideally, uh, is a, a successful entry point to this global and now thriving open protocol for money on the internet that the Lightning Network is going to be.

    23. HSHarry Stebbings43:28

        David, I wanna apologize for jumping around quite so heavily, uh, as I did that. You've been fantastically patient with me. Thank you so much for joining me, and, uh, I can't wait to meet in person having heard so much from Shaq.

    24. DMDavid Marcus43:40

        Likewise. Thanks, Harry.

    25. HSHarry Stebbings43:42

        You are a star, my friend.

Episode duration: 43:43