From NFL to Startup COO to Congressman Regulating Crypto (with Rep. Anthony Gonzalez)

1. 0:00 – 2:24

   Cold open and setting the stage: Congressman Anthony Gonzalez joins Acquired

   1. BGBen Gilbert0:00

      I wonder if I can make it so you can't see her if I just hold her? [laughing] She's all wound up right now.

   2. DRDavid Rosenthal0:06

      I love it. We've got all the creatures here. I got the baby on the monitor.

   3. BGBen Gilbert0:09

      [laughing]

   4. DRDavid Rosenthal0:09

      I got my fluffy dog, you've got your fluffy dog.

   5. BGBen Gilbert0:12

      Keep her off camera and think it never happened.

   6. DRDavid Rosenthal0:14

      [laughing] Yeah.

   7. SPSpeaker0:15

      Who got the truth? Is it you? Is it you? Is it you? Who got the truth now? Is it you? Is it you? Is it you? Sit me down, say it straight, another story on the way. Who got the truth?

   8. BGBen Gilbert0:32

      Welcome to this special episode of Acquired, the podcast about great technology companies and the stories and playbooks behind them. I'm Ben Gilbert, and I am the co-founder and managing director of Seattle-based Pioneer Square Labs, and our venture fund, PSL Ventures.

   9. DRDavid Rosenthal0:46

      And I'm David Rosenthal, and I am an angel investor based in San Francisco.

   10. BGBen Gilbert0:51

       And we are your hosts. Today, we have a first ever for Acquired. Our guest is a United States Congressman serving from my home state of Ohio, Representative Anthony Gonzalez. David, Anthony has an incredible story.

   11. DRDavid Rosenthal1:08

       An incredible story. The original motivation was Anthony's on the House Financial Services Committee, and is probably one of, if not the foremost member of Congress working on understanding and regulating Web3, crypto, everything that's happening. You know, and beyond that too, the broader economy, [chuckles] the Fed, GameStop, Robinhood, we get into all of it.

   12. BGBen Gilbert1:31

       Yes, the House Financial Services Committee had a broad mandate well before crypto came around.

   13. DRDavid Rosenthal1:35

       And Anthony is one of the handful of folks, as we talk about, that really actually use and understand this stuff in Congress. [chuckles]

   14. BGBen Gilbert1:43

       Yeah, and, and not just because he's actually played around with it himself, but he ran a venture-backed start-up before serving in Congress. He went to Stanford GSB for grad school with David.

   15. DRDavid Rosenthal1:55

       That's where Anthony and I first intersected, and, you know, that's the... We talk about it all through this episode. His story is just incredible. His family immigrated from Cuba after the revolution. His dad was a steel entrepreneur [chuckles] in Cleveland, and, uh, Anthony ended up playing football at Ohio State.

   16. BGBen Gilbert2:13

       I remember in high school watching him on TV.

   17. DRDavid Rosenthal2:15

       He went to the NFL, he played for the Colts, he caught touchdowns from Peyton Manning, then he went to business school, and now is a U.S. Congressman. It's just incredible.

2. 2:24 – 6:59

   Sponsor: Vanta on fundraising in a changed 2022 market

   1. BGBen Gilbert2:24

      Yep. All right, excited to get into it. Listeners, if you wanna discuss this episode after we, uh, we wrap up here, join us in the Acquired Slack at acquired.fm/slack. Now, we are very excited to welcome back to Acquired, our presenting sponsor, Vanta, the leader in automated security and compliance. We are huge fans of Vanta and their approach to the whole compliance process, SOC 2, HIPAA, GDPR, and more, and we've got CEO and co-founder Christina Cacioppo back with us today.

   2. DRDavid Rosenthal2:54

      Christina, a lot has happened since we last recorded, right?

   3. SPSpeaker2:59

      A lot has. Thank you so much for having me back.

   4. DRDavid Rosenthal3:02

      One of the biggest things is you have raised probably the best round of twenty twenty-two so far, a hundred and ten million dollar Series B at a one point six billion dollar valuation from Craft, Sequoia, and a whole host of other great folks, including Ben and myself. Tell us about what raising this round in this environment was like.

   5. SPSpeaker3:23

      Right. So this round raised it at the end of April twenty twenty-two, which was different than the [chuckles] last round, which was raised in, call it, like, January, February twenty twenty-one. To go back a little bit to April, ice was definitely melting. People were starting to get real skittish, and you would see that because all of the questions were around the efficiency of growth, and so it was very clear the bar had changed. If you had to pick one metric for this round, it was burn multiple. So for every dollar of revenue you earn, uh, what did you spend to get that dollar? And I think twenty twenty-one, right, it was all just revenue growth. It was like, "Where does that compounded growth rate go?" I think that actually, those two metrics sort of speak to just what a different funding environment it was, what a differences there were in diligence, what investors really wanted to see, and what they would kind of stomach and not stomach.

   6. DRDavid Rosenthal4:20

      So obviously, you navigated that incredibly well. What about how you had set up the company, going back to the very beginning, kind of allowed you to be so successful in both of these two very different environments?

   7. SPSpeaker4:34

      We got to basically ten million dollars of revenue on, you know, a couple million dollar seed round, and that was by sort of just doing the basics well, charging annual contracts, doing so upfront, having something people wanted and were willing to pay for annually upfront, and I think that installed a lot of discipline early on. To this day, actually, I still get the cash balance in my inbox every single Monday. You see the impact of your decisions on a, on a weekly basis. Having worked in VCs, your actually best bet for getting venture funding is to have a business that doesn't need venture funding, and it was [chuckles] sort of that playbook, and then realizing we could pull it off, and then honestly, a little bit of, like, "Oh, huh, wonder how long we can push this? Like, can we get to two million dollars in revenue? What about five?" And you're like, "Well, ten?" That kind of DNA was set really early on, and culture, too. And then actually the adjustment for us more was twenty twenty-one, when it was like, "Okay, does not matter, like, spend market share, revenue growth, go." And so we did, you know, kind of like everyone else, step up and change pretty quickly, and I think that actually helped us, you know, kind of shift again in twenty twenty-two, and it was, for us, it was like shifting back to a motion we knew, whereas I don't know if that was particularly true across the board.

   8. DRDavid Rosenthal5:52

      Obviously, one of the great benefits of now having raised this round in twenty twenty-two is you are now a highly resilient company, and of course, the DNA that you've had all along. How has that shown up so far this year in your interactions with customers?

   9. SPSpeaker6:08

      ... because we serve other technology companies and often high-growth companies, right? So they're facing the same stuff. They're playing the same game on the field, and so they can sort of appreciate it, and they're like, "Oh, you guys will be around for a while," right? And not just kind of the business continuity thing, but given what you've raised, you're able to make decisions for the long term. And it's funny, I think it's just 'cause the customers are from, you know, the same milieu as we are. They get it. They appreciate it. We often don't even need to say it. They'll say it to us.

   10. DRDavid Rosenthal6:36

       Our thanks to Vanta, the leader in automated security compliance software. If you're looking to join Vanta's 3,000, now 3,000-

   11. SPSpeaker6:44

       Ooh

   12. DRDavid Rosenthal6:44

       ... plus customers to get compliance certified in weeks instead of months and build deeper, trusted relationships with your customers and partners, you can click the link in the show notes or go to vanta.com/acquired to get a 10% discount.

3. 6:59 – 9:26

   Meet Anthony Gonzalez in Washington: committee portfolio and DC reality

   1. BGBen Gilbert6:59

      Now, on to our interview with Congressman Anthony Gonzalez. And remember, this show is not investment advice. David, myself, and any guests may have investments in the companies we discuss, and this show is for informational and entertainment purposes.

   2. DRDavid Rosenthal7:12

      Anthony, welcome to Acquired. This is pretty surreal, given that, you know, we were, uh, classmates just a few years ago, and now here we are again, uh, reunited on the podcast. [chuckles]

   3. AGAnthony Gonzalez7:23

      Surreal for that reason. Surreal because I- I've heard you make that intro before, but never for me, uh, 'cause I listen to the show.

   4. DRDavid Rosenthal7:30

      [chuckles]

   5. AGAnthony Gonzalez7:30

      So it is an honor to be here, and thank you for having me.

   6. BGBen Gilbert7:33

      When you say here, where is here right now for you? Because it looks like a very official setting behind you.

   7. AGAnthony Gonzalez7:38

      So it is. I'm currently in, in my congressional office in Washington. I'm not sure when the, the episode will air, but we just had a series of votes, and, uh, we're done for the week. So got a couple hours, and, uh, before I head out, figured we'd jump on and have a little chat.

   8. BGBen Gilbert7:52

      That's great. And where is the congressional office building-wise?

   9. AGAnthony Gonzalez7:56

      It's basically across the street from the Capitol Building. My son, when he comes to work, he says, "You know, that's the dome where Daddy works." So [chuckles]

   10. DRDavid Rosenthal8:03

       [chuckles]

   11. AGAnthony Gonzalez8:03

       ... uh, just across the street on, you know, one side of the street are the House office buildings, and then on the other side of the street are the Senate office buildings. Theirs are, of course, much nicer and much bigger, but ours aren't bad either.

   12. DRDavid Rosenthal8:14

       But you guys do the real work.

   13. AGAnthony Gonzalez8:15

       We like to think so. They treat us like little children, like: "Oh, that's cute, little House member."

   14. DRDavid Rosenthal8:19

       [laughing]

   15. AGAnthony Gonzalez8:19

       "The Senate's gonna really solve this problem."

   16. DRDavid Rosenthal8:22

       [laughing]

   17. AGAnthony Gonzalez8:22

       I'm not sure that the country would agree with that. I don't think the country thinks either of us solve many problems, but that tends to be the dynamic around here.

   18. DRDavid Rosenthal8:29

       Well, we'll get into all that, but speaking of problems, things that you are highly involved in that are relevant to, I think, all Acquired listeners, you're on three committees in Congress, right? The House Financial Services Committee, which oversees all financial services in the country, and in particular, you're very involved with crypto, Web3, all of that [chuckles] regulation, uh, the, uh, SBF testimony, all of that fun stuff. You're also on the Science, Space, and Technology Committee, which oversees NASA, among many other things, and the Climate Committee. So we're gonna touch on all three of those here.

   19. AGAnthony Gonzalez9:07

       Great. Yeah, all fun committees. One of the fun things about being a House member is it's sort of a choose-your-own-adventure, where you can kind of pick whatever you want to work on and what you think is interesting and relevant to your district. I've found myself on three great committees that certainly will be relevant in [chuckles] the near and long term, so it's been a, an interesting few years, to say the least.

4. 9:26 – 14:05

   Family history: Cuban exile, Ohio roots, and 'sophisticated grit'

   1. BGBen Gilbert9:26

      Yeah. Well, because you teased it, of things that are interesting to you and relevant to your district, let's take that thread and extrapolate on it. So how did those things become interesting to you? And let's start all the way with sort of your family story and dating back to Cuba.

   2. AGAnthony Gonzalez9:44

      Yeah, so I'm the son of Cuban immigrants. My father immigrated here from Cuba. My mother was, uh, born and raised in Cincinnati, in, in her family, and our sort of path to Ohio is interesting in a sense. My grandparents, my Cuban grandparents, were honeymooning and trying to go from basically New York City to Miami. They were driving. The legend is that they ran out of money in Ohio, and so they had to stop for a little bit, figure out how to get home and finish out their trip, and so they made some friends and made a little money and then came back to Cuba. Never thought they'd come back. My grandfather had always wanted to have some sort of an American experience, 'cause he always admired the U.S., particularly our democracy. You know, even pre-Castro, it wasn't a beacon of democracy and freedom. It was known primarily for corruption.

   3. DRDavid Rosenthal10:29

      Both Ben and I just rewatched the, uh, Godfather movies, and, uh-

   4. AGAnthony Gonzalez10:33

      Yeah

   5. DRDavid Rosenthal10:33

      ... I forgot that Godfather: Part II, it happens right before the revolution.

   6. AGAnthony Gonzalez10:37

      Totally, and there, there's a book called Havana Nocturne, which is really interesting and sort of graphic description of how the mob, and Frank Sinatra, and all those folks spent a lot of time down in Cuba. But anyway, once Castro took over, my family was driven into exile. My grandfather was part of a pro-democracy movement. There were sort of a handful of movements, disparate movements, but he was part of a pro-democracy movement, and, um, once Castro took over, he, not directly but through one of his lieutenants, offered my grandfather a position to run one of the courts. It's basically like a district court in Cuba. My grandfather turned him down 'cause he kinda saw Castro for who he was, and that was the end. I mean, that w- you don't turn Castro down back then.

   7. DRDavid Rosenthal11:20

      Right.

   8. AGAnthony Gonzalez11:21

      Anybody who did was getting killed or, or put in prison. So they went into exile and basically kinda hid out in the jungles and around Havana until they got their visa processed and then ultimately, once the visas came through, flew here to the U.S. Did that legally, obviously. Came to Miami for a couple days, and then called the old school back that my grandfather worked at, and this was in Cincinnati, and he said, "Hey, can we have our jobs back?" They said, "Sure, come on up." And so they got a small little house in a neighborhood called Sailor Park, uh, which was a working-class, primarily minority neighborhood at the time, and that's where my father was raised. That's where he met my mother. They went to brother-sister schools, Catholic schools in Cincinnati, and, um, got married. Father went to Michigan. Boo.

   9. DRDavid Rosenthal12:02

      Oh, wow!

   10. AGAnthony Gonzalez12:03

       [chuckles]

   11. DRDavid Rosenthal12:04

       Oh, wow, I didn't know that part of your history. [chuckles]

   12. AGAnthony Gonzalez12:07

       Yeah, that was, uh, more contentious than I would've thought. When I was getting recruited, it was interesting, 'cause I ended up playing at Ohio State. He played at Michigan, so he, he went, went to Michigan, but he played for Bo Schembechler.

   13. BGBen Gilbert12:16

       Whoa, not too many father-son combos in that, uh, that club.

   14. AGAnthony Gonzalez12:21

       ... No, a small handful, but he was great once I told him where I wanted to go. Luckily, he, he knew Coach Tressel. But in any event, we've lived there, and he started a steel company maybe the year before I was born, I think, that he runs to this day. And so that's kinda what I grew up in. I grew up in Northeast Ohio, which is, you know, the place I feel most comfortable in the world. That's kinda where, where my people are, if you will. Did a lot of sports and hung out at the office with him. You know, like most founders, he was working 12, 14-hour days. Uh, so if you wanted to see Dad a lot, you had to go into the office. I'd see him in the mornings. I wake up early, he woke up early, but, but otherwise, you see him in the office. You know, it's a hardworking, sorta hardscrabble kind of, uh, community that we take a lot of pride in, and, uh, that I'm, I'm honored to represent to this day.

   15. BGBen Gilbert13:05

       Listeners, as everyone knows, I grew up in the Cleveland, Akron area in Northeast Ohio, too, and, uh, my Uncle David is very involved in the city with the Greater Cleveland Sports Commission and the Convention and Visitors Bureau, and the way that they sort of describe the area is sophisticated grit.

   16. AGAnthony Gonzalez13:19

       So now that you've said that, I know exactly who you're talking about. It's so funny. I never put it together that Ben Gilbert and David Gilbert might be related.

   17. BGBen Gilbert13:27

       In the sort of, uh, circle of Cleveland area folks, you're not gonna be more than a connection or two away.

   18. AGAnthony Gonzalez13:32

       Yeah, no, for sure. Part of what I love about it is you, you feel like you, you kinda know everybody, and, uh, you know, if you're from there, it can be great. Like I said, I've always just been really proud of, of being from Northeast Ohio, and it's sort of who I am culturally and the things I'm interested in and whatnot, and so that's how I've, I've always been. And, and part of what has been so fun about Congress is, you know, you get to represent a community that you love and that you're from, and that, from my perspective, welcome to my family, 'cause we aren't from here. My father's not from this country. My mother's not from Cleveland. Big move for them, and, and ultimately, we've made it home, and it's been incredible for all of us.

5. 14:05 – 18:29

   From recruit visits to Ohio State: how a 16-year-old chose his path

   1. BGBen Gilbert14:05

      Well, Anthony, we were talking about you being the son of Cuban immigrants and the sort of unorthodox path to being a member of Congress. You had an even more unorthodox stop along the way, playing D1 college football and then playing in the NFL. How did that transpire?

   2. AGAnthony Gonzalez14:23

      I always say, when I look at my own background, I'm like, "None of this makes any sense." [laughing]

   3. BGBen Gilbert14:26

      [laughing]

   4. AGAnthony Gonzalez14:26

      It's certainly not linear. So growing up, I, I loved football. My father played football. He played at Michigan. I was actually a Michigan fan growing up until we went on a recruiting visit, and Lloyd Carr was the head coach at the time and thought I was a kicker. [laughing]

   5. BGBen Gilbert14:39

      [laughing]

   6. AGAnthony Gonzalez14:41

      I was not a kicker.

   7. BGBen Gilbert14:43

      Your dad must have been pissed about that.

   8. AGAnthony Gonzalez14:45

      I was a wide receiver. He wasn't with me. My mom was, and now that I have kids, I can understand how heartbreaking that must have been, right? 'Cause, like, I grew up a huge Michigan fan, and my dream would've been to go there. I go with my mother. You know, we make the drive up from Cleveland. It's not far, two and a half hours. I'd been there for games before, right? And like, "Oh, my gosh, this is it. I get to finally, you know, maybe be a part of this if they'll have me," and just completely ignored. And they paid attention to and really focused on four people from Cleveland, in particular, who I knew who I had just played against at my position, and I'm like, "Y'all didn't watch the game, clearly-

   9. BGBen Gilbert15:20

      [laughing]

   10. AGAnthony Gonzalez15:20

       ... because [chuckles] if you did, you'd maybe would at least say hello." So we were, I don't know, like, an hour and a half in, and I turned to my mom, and I was like: "I think I'm ready to go." And, you know, I was 16 at the time, and she's like, "Okay."

   11. BGBen Gilbert15:34

       Oh, that must have been heartbreaking.

   12. AGAnthony Gonzalez15:36

       Uh, yeah. Again, like, now that I'm a parent, I'm like, oh, my gosh, like, how could... How did she not burst into tears? I'd be mortified at it just for my kid, right? But the next week was Ohio State. Same thing, these, there were these things called Junior Days. This was before recruiting got crazy, and so, you know, I went to Ohio State, and it could not have been more different. Uh, we walked in. Coach Tressel grabbed us the second we got in, pulled us into his office. We had a private meeting. He kinda went through... This was only his second year on staff, went through sort of his priorities for the program, how he saw it, how he could see me fitting into it, all those sorts of things, like, exactly what you would do if you were trying to sell somebody. Then I walked out, I said, "Well, that felt a little bit better."

   13. BGBen Gilbert16:12

       [chuckles]

   14. AGAnthony Gonzalez16:13

       You know, as an impressionable 16-year-old, "We'll consider it."

   15. BGBen Gilbert16:16

       I know this is a tech and business podcast, but, you know, you gotta make it about the glory of Ohio State football for a minute here. I think what you're explaining is a microcosm that really outlines why the next decade-plus went the way that it did.

   16. AGAnthony Gonzalez16:29

       I think that's probably right. [chuckles] So, uh, Tressel lost, I think, once to Michigan in his second year and then never again, and they haven't won much until last year.

   17. BGBen Gilbert16:40

       Yep.

   18. AGAnthony Gonzalez16:40

       If we wanna look at causes, I think Coach Tressel is definitely on, uh, on the shortlist of, of reasons why the, the tide turned on that rivalry. So I get home from that Junior Day, and my dad, I wasn't sure how to tell him 'cause he went to Michigan, right? And so I just kinda played it cool. I was like, "Okay, yeah, you know, it was nice. It was fun." But they hadn't offered me a scholarship yet, and so a couple weeks later, there was this banquet in Massillon, Ohio, so big football town.

   19. BGBen Gilbert17:06

       Right near the, uh, Football Hall of Fame.

   20. AGAnthony Gonzalez17:08

       Yeah, right down the street from the Football Hall of Fame, and we had played Massillon. They do a dinner every year where they have a keynote speaker, and they invite the MVP from the opposing team for each game, so I was the invitee from our team. And before I go, my dad says, "Well, this is easy, son. If he offers you a scholarship, you just say, 'Thanks, but no thanks,' you know? We're going to Michigan, and, and that's that." And, um, I'm like, "Okay," but I knew kinda how I was feeling inside. So I get there. I go see Coach Tressel, and he was the keynote, and he comes up, and he says, "Anthony, we're gonna offer you a scholarship." And I said, "I'd be honored to play for you, Coach."

   21. BGBen Gilbert17:43

       [laughing]

   22. AGAnthony Gonzalez17:43

       Whoops, [chuckles] I botched the line.

   23. BGBen Gilbert17:45

       [laughing] Were you planning on saying that, or was it spur of the moment?

   24. AGAnthony Gonzalez17:48

       No, I was actually planning to, like, do what my dad said and, you know, maybe see if Michigan came around, but I rushed back before the dinner. I was like, "I really do need to think about it, but that is a generous offer. [chuckles]

   25. BGBen Gilbert17:58

       [chuckles]

   26. AGAnthony Gonzalez17:59

       And I loved my time at Ohio State, so we'll see," and then eventually, obviously, I went. My grandfather, uh, was an attorney, as I mentioned, and so was his wife, my abuela, and I was as close to them as anybody I've ever been close to in my life, especially my grandmother. Uh, she lived with us after he passed away, and her and I spoke daily until the day she died. And he always said, "If you wanna be an attorney, you should major in philosophy and English."... So I thought I wanted to be an attorney, and I felt like English would be a little boring,

6. 18:29 – 21:26

   NFL career, injuries, and the pivot to Stanford GSB

   1. AGAnthony Gonzalez18:29

      but I, I really liked philosophy, and so I took a couple classes and loved it. My plan was, I'm gonna major in that. If I play in the NFL, great, but then I'll go to law school. And I didn't change my mind until business school, until I got to the NFL in my third year. I was, I was hurt my entire third year, so to fast-forward, I got drafted in the first round, played two years, was fine. I wasn't, like, an MVP or anything, but, um, played well, uh, and was slated to take over for Marvin Harrison, who's a Hall of Fame wide receiver.

   2. DRDavid Rosenthal18:58

      In playing for the Colts, catching passes from Peyton Manning? [chuckles]

   3. AGAnthony Gonzalez19:02

      Yeah. You know, I always say, like, if Peyton Manning's your quarterback and you can stay on the field for 16 games, you're probably gonna have a good year.

   4. DRDavid Rosenthal19:08

      [chuckles]

   5. AGAnthony Gonzalez19:09

      Unfortunately, I, I got hurt in the first game and just never came back, and really never came back, period. So I just kept getting hurt. Like, I never got hurt my entire life, and then that third year in the NFL, I got hurt, and I got hurt every time I stepped on the football field thereafter, pretty much. And so between my third and fourth years, HBS did a program, uh, like a little business program that they used the case method on, and, you know, sort of like be a business school student for one week. And after the first day, I remember I called my, my mom, and I was like: "I know exactly what I'm gonna do when I'm done with this game. I'm gonna go to business school." At that point, I started studying for the GMAT, 'cause I hadn't taken a math class in, like, a decade. [chuckles]

   6. DRDavid Rosenthal19:47

      [chuckles]

   7. AGAnthony Gonzalez19:48

      Took the test, you know, later that year, put it to bed until my career ended, and when it was pretty obvious that was gonna happen, I finally applied to Stanford. I happened to... I did it actually from the locker room of my final preseason game, which is sort of weird, but, uh, like, I went out for the game, and I felt like I was... I just knew my body wasn't right. I was like, "I don't think I'm gonna play much longer."

   8. BGBen Gilbert20:10

      So you went back to the locker room, and you started typing up an answer to what matters to you most and why?

   9. AGAnthony Gonzalez20:14

      Exactly. Yeah. [chuckles] Yeah. I said, "I'm gonna need an hour and a half here, folks. I'm not playing. I'm just gonna bang out this essay."

   10. DRDavid Rosenthal20:21

       You were with the Patriots at that point, right?

   11. AGAnthony Gonzalez20:23

       No, I was with the Colts. I had the application finished, but I wasn't sure I was gonna submit it. Uh, but it was, like, right before the deadline for the first round. So anyway, so submitted it, and got in, and I still wasn't sure, so I'd signed with the Patriots. I went to New England, was hurt again. I, I think I had three surgeries in, like, six weeks when I was there, and, uh, Bill Belichick actually was the one who cer- unceremoniously fired me. He, he called me in, and he said, he said, uh, he said, "I like you, but you're hurt, and I can't have hurt people." And I was like, "That makes sense." [chuckles] So, um, he said, "If you get healthy, have your agent call me, uh, we would like to have you, but..." And I was actually smiling when he was saying this. And he's like, "You're smiling. That doesn't normally happen." I said, "Well, I think I'm gonna retire and go to business school." He said, "Where are you going?" I said, "I'm gonna go to Stanford." He goes, "It's a good school. Good luck." And so that was... He was the first person I told.

   12. BGBen Gilbert21:13

       Wow.

   13. DRDavid Rosenthal21:14

       Wow!

   14. AGAnthony Gonzalez21:15

       And then I didn't tell anybody for like three weeks, [chuckles] so, so I still wasn't sure. But, uh, eventually, I, I got around to it, and, you know, as good a decision as I possibly could have made, that's for sure.

7. 21:26 – 24:10

   Why run for office: 2016 as a catalyst and the call to public service

   1. BGBen Gilbert21:26

      So at this point in your life, did you have public office in mind, or were you thinking, "I'll also go to law school and be a lawyer?"

   2. AGAnthony Gonzalez21:34

      So my aspirations in college, like, if you were to ask Troy Smith, who was our, our Heisman Trophy-winning quarterback, who had the locker next to me, he was number 10, I was, I was number 11, one of my best friends. If you were to ask Troy what I'm gonna do, he's, he would say, "Oh, he's gonna be mayor of Cleveland," 'cause we used to talk about that. I wanted to be mayor of Cleveland, and that'd be the coolest job in the whole world, would be mayor of Cleveland. And so I've always sort of had this thought in my head of, of public service. Admittedly, you know, as life moved on, I thought I would do it after my NFL career or after a long business career. So I went NFL, went to GSB, was, was running a, a tech company before I got into Congress, and my thought was, you know, play that out for a long time. Run that out, have a family, make some decent money, take care of them, and then once the kids are grown, then go into public service. That was sort of my plan. What upended that was... Honestly, the 2016 election was probably the biggest thing that upended that, where I saw a situation where I just stopped recognizing politics in our country. It just didn't make any sense to me anymore. It seemed to me like we were headed down a pretty dangerous path politically, and so I really started thinking about, okay, what's the best way that I can be of use to the country in a moment like this? And ultimately came to the conclusion that I should just run for Congress, um, which is sort of a weird realization, but, but I thought if I did the right things, that I could probably win, and I felt the urgency from the standpoint of the country. And so that's ultimately... You know, after a lot of back and forth with my wife, 'cause this wasn't our plan when we got married at all, you know, was, "Hey, look, let's really talk about this and see if it's for us and if it's something that we should pursue." And again, it- I don't know that w- we were 100% like, "Yeah, this is definitely the right thing [chuckles] for us," but we did feel the urgency that the country was in a spot, and my community was in a spot, where going into service seemed like the right thing to do, and so we jumped in.

   3. BGBen Gilbert23:29

      So lots of people a- around that time were feeling like, gosh, I, the direction things are headed might be dangerous: polarization, the sort of lack of respect for institutions that we hold sacred, the seeming shift away from democracy is the most important thing to, you know, my own power is the most important thing. Most people probably couldn't say, "You know what I think I should do? I should run for office," and then most people who do say that don't have a prayer. So what were some of the things that set you apart, where you started being like, "Okay, I've met with this person, and, and that went well, and I think I can start to coalition-build in the Republican Party this way here locally"? How did that transpire?

8. 24:10 – 32:57

   Running a campaign like a startup: customer interviews, team-building, and fundraising ops

   1. DRDavid Rosenthal24:10

      Also, we should say, probably most people who were thinking that were not Republicans at that point in time, right? [chuckles]

   2. AGAnthony Gonzalez24:15

      Yeah. So I came to, like, a sort of interesting conclusion on that, but in terms of sort of how you get started, right? Like, I had never done anything like this. I, I had been running a startup in San Francisco.... that, uh, our good friends at IGSP, who, who David knows and, and, uh, would love to have on this show at some point if you can beg them on.

   3. BGBen Gilbert24:33

      The highly secretive Investment Group of Santa Barbara.

   4. DRDavid Rosenthal24:36

      We've been begging for years. Now we're making a public appeal here. Come on, guys. [chuckles]

   5. AGAnthony Gonzalez24:40

      Yeah, I know. Come on, Reese, and Tim, and Alex, get on here. So I was working with them and, and running a, a startup that they were an investor in. You know, so I knew the startup game, and I'd kinda been in that world, and so I felt like, well, this is somewhat like a startup. I've never run for anything, um, and I don't know how politics works, but, you know, I'll try to figure it out. And so I honestly used a lot of [chuckles] the principles that I learned from them in terms of how to company build around how to build a campaign and how to build an apparatus around it. And it started with doing a bunch of what I would call customer interviews. So I probably had 15, 20 conversations, uh, before I, I decided to run with people in and around politics i- in my district, just to understand, you know, one, you know, what are the motivations, what do people care about, you know, all those things. I thought I knew, but you have to test those hypotheses, right? And then to figure out whether my message would work. And so I went through that process and ultimately thought I, I understood my district in a very powerful way, and I thought I could craft a message that would work. Um, but that's not enough either, right? Like, you can have the best message in the world, but if you have no team and no ability to get it out, you're not gonna go anywhere.

   6. DRDavid Rosenthal25:50

      What was the message that you landed on that you thought would work?

   7. AGAnthony Gonzalez25:53

      Well, mine was primarily to focus on economic issues. So I think the takeaway that you saw nationally from the 2016 election was, oh, my gosh, the country is embracing this terrible politics, and this attitude, and the nastiness, and the vitriol, and the anger, and the division, and, you know, that's what people want right now. And my view was, at least what happened in Northeast Ohio, was fundamentally an economic story. And I knew that story very, very well, uh, because my father has been building a steel company in Northeast Ohio for my entire life, and I know that when he started it, there were, I don't know, something like five or six car manufacturing plants within 90 miles, and now there's one. And I know where they all went, and I know what happened to those jobs, and I know how the people feel about it.

   8. BGBen Gilbert26:34

      I remember the day LTV Steel shut down that factory.

   9. AGAnthony Gonzalez26:37

      Absolutely. Quick story on LTV. So LTV Steel had this massive factory just south of the city. Massive.

   10. BGBen Gilbert26:44

       Right off the highway. It was a big like... Y- you drive by it, it has a presence.

   11. AGAnthony Gonzalez26:47

       Yeah, you can't miss it. Uh, just like, just part of the city. And my dad always used to say when we were little, he would point at the smokestacks and he'd say: "As long as there's smoke coming out of there, everything's gonna be okay in Northeast Ohio. Just don't worry about it, because that means people are working." And I think, you know, at the time it was, like, 20,000 people working there. It's not precisely correct, but directionally correct. That thing's changed hands multiple times, gone through multiple bankruptcies. I think it's fewer than 500 people working there today. And so that kind of transformation is what I felt the real takeaway of 2016 was, and I wasn't seeing enough understanding of that or nuance on that. Uh, and so I ran on primarily an economic message and a unity message in 2018, which is when I ran, around, "Hey, look, we've got to work together. We're from Northeast Ohio. We should know that the way you solve problems is together. We're actually, like, a purple part of the state, typically, and so let's put all this chaos aside, let's start working together, and l- and let's start building our economy in a way that works for all of us." That was essentially my message. Obviously, there was sort of nuance in there and, and specifics, but that worked. But the second part of it, so then you get that message, right? And, and then the advice I was getting from people who've been in politics forever was, "You have to do two things. You have to build a great team, and you have to raise money. And if you can do those two things, you can probably have some success." And so I said, "All right. Well, I've run sales teams before, and I've... You know, I know how to manage revenue. That's not- it's not rocket science." [chuckles] "And I think I can build teams." So my current chief of staff was campaign manager at the time. I went and found, found him. I, I basically sat- we sat at a bar together for about three and a half hours until I got him to say yes. [laughing] I just had to wear him down, but he, he still hasn't left, so... And I think he's somewhat happy. But I th- my message to him was, "Look, like, I view this as a partnership. Sure, my, my name will be the one on the door, but we're partners in this, and that means a lot of things to me." And so we've had a good run together and, and a lot of fun. But like I said, on the revenue side, I built a custom Salesforce dashboard, [chuckles] um, which I, I don't think is common for, for congressional members.

   12. BGBen Gilbert28:49

       And probably not the candidate themselves doing that.

   13. AGAnthony Gonzalez28:51

       Uh, right. Yeah, no. And so I, um, I like Salesforce, and I'd used it in my previous company. So I built a little dashboard, uh, and had the contacts loaded in and, and tracked it the same way I tracked sales, and ultimately hit the fundraising targets. We built the team, and then you just work like mad. I mean, you're just everywhere. You don't stop until you win, and that was that.

   14. DRDavid Rosenthal29:13

       What was the budget for the- for that first campaign?

   15. AGAnthony Gonzalez29:16

       I was told I needed $2 million for the primary, and that's a lot. So I was- I was told I needed $2 million, and I was told I needed to make a big splash in the first month. And so I think we ended up raising roughly 600,000 in the first month, which was good. It was a good... You can only raise it in 5,000, well, $2,700 chunks.

   16. BGBen Gilbert29:35

       $2 million is a lot when you have to add a lot of little numbers together, but, like, it's not very much when you could just find a billionaire and be like, "Here, just fund the whole thing."

   17. AGAnthony Gonzalez29:44

       Yeah, but, you know, for a whole host of reasons, we've decided that that's probably not the best way to run our country. We spend, like, seven episodes on campaign finance, but-

   18. DRDavid Rosenthal29:52

       [chuckles]

   19. AGAnthony Gonzalez29:52

       ... the goal there is let's not let, like, all the rich folks band together and buy elections, essentially. So you gotta build support at a grassroots level, and, and ultimately, like I said, we're able to do it. A ton of work, but unbelievably rewarding, and, you know, from a professional standpoint, it's probably as much fun as I've ever had, to be honest.

   20. DRDavid Rosenthal30:10

       But I would assume there's a power law of campaign contributions there. But, you know, even if, let's assume all the top... And you need 1,000 people to give you that max campaign contribution, right?

   21. AGAnthony Gonzalez30:23

       Yeah, but, um, you also don't want your average number to be too high, right? Like, you, you want broad support, so it, it's important to not only have the sort of high donors, but also grassroots support. So I, I forget what our average campaign contribution was, but I think the goal should be to get that number actually pretty low, uh, 'cause it means your support is, is beyond just sort of wealthy folks in, in your area.... but there is something that happens in politics where people wanna back the winner, and they want momentum, right? And so part of the, the goal with the advice on, you know, you need to raise a lot of money quickly, is you're sending a signal to the market.

   22. BGBen Gilbert30:59

       Strength leads to strength.

   23. DRDavid Rosenthal31:00

       Right, it's like startups.

   24. AGAnthony Gonzalez31:01

       Absolutely. So you have this sorta, I need to signal to people, "Hey, this isn't just some jock who thinks he can trade on his football name," like, there's some substance here. And so the, the thought was, "Okay, well, let's raise as much as humanly possible quickly." And then once we did that, those first dollars are the easiest in some ways because it's friends and family. I put some in myself. You know, it feels more controllable. After you get that first slug in, that's when the real work begins, 'cause now people are looking, "Okay, who is that, and what is, what is he all about?"

   25. DRDavid Rosenthal31:32

       Mm.

   26. AGAnthony Gonzalez31:33

       And so then you're just continuously selling non-stop. We were leaving the house every morning at 7:00 a.m. I was finishing my follow-up emails around 11:00 p.m., and that was the schedule for, like, a year. But it was fun, 'cause you get to- first off, I'm just a competition junkie, so, like, I just love competing. It's [chuckles] it's just hardwired in there. Um, wish I could get it out sometimes, but that's just where it is. So there's that element to it. But the other part, and this is m- the more rewarding part, is you're connecting with the people that you're ultimately hoping to represent, and it's hard to explain this, but you learn so much from them, like an unbelievable amount. One of the things that always bothers me is when people say, "Well, voters are dumb." I'm like, "I haven't met a dumb voter." My voters are really smart. They're smart on a handful of issues that really matter to them, and when you talk to them about those issues, they know more than anybody. They certainly know more than me, and they educate, and that's how you learn. Now, are they experts on every policy issue? No, of course not, but the ones they care the most about, man, people are really smart on those issues, and they taught so much, and so that's where the, the reward comes from, is feeling like, "Oh my gosh, I, I better do a good job for these people 'cause they care so deeply about these issues, and I have to deliver for them." Um, and so that was, that was part of the reward and continues to be part of the reward, frankly, of, of doing this job.

9. 32:57 – 34:42

   Representing constituents vs national interest: political capital and judgment calls

   1. BGBen Gilbert32:57

      Yeah, so there's sort of this dual responsibility as an elected official, specifically to those people that you represent and you raise money from and you are inspired by, and you understand their plight in a big way. But also, you know, you sit on committees, and what those committees need to do is think in the best interest of everyone, not just the specific group that you represent. And as we transition here into talking about some of the, the specific topics of your committees, I wanna open with that question of, do those things ever come at odds, or do you usually feel like representing your specific group and the broad American public is something that basically always works out?

   2. AGAnthony Gonzalez33:37

      Yeah, so the way I think of it is like, how closely do your values align with your voters' values? And, and for me, the answer is most of the time. Um, so it's not hard, right? There are occasional moments when those things are at odds, and at that point, you have a choice, and your choice is, do I rely on my own judgment, which may cause me some problems back home, or do you just sort of do the politically expedient thing? And, and there's different schools of thought on that, honestly. But, you know, the, the way that I handled it was, to the extent that I thought I could do it, I always relied on my own instincts over the political expedience. I will admit, nobody can do that 100% of the time, or at least I didn't feel like I could, because you only have so much political capital, and I think you, you need to be careful about how you spend it. And it doesn't mean, you know, you never spend it. Uh, some people never spend it, by the way, and it's a really good way to keep getting reelected. Everybody handles it a little bit differently. But the good news on that for me is, like I said, like, for the most part, you know, 99% of votes, it never really felt like I was making that choice.

10. 34:42 – 45:45

    January 6 and the second impeachment vote: experience, reasoning, and consequences

    1. BGBen Gilbert34:42

       You're making decisions on a l- a lot of very important things r- right now, but I do think it's worth giving listeners context of, like, what your term has been like, and if you're willing, take us through that second impeachment vote and how you thought about it. And just so we don't bury the lead here, Anthony voted in favor of impeachment of the president at the second vote.

    2. AGAnthony Gonzalez35:05

       So just quick rewind, so the 2020 election happens, right? And from the time it ended until, say, January 6th, I had a deeply uneasy feeling and felt like things were, were gonna get pretty crazy. 'Cause I was seeing the rhetoric that was coming out of the White House, I was seeing how it was being reported, and I was hearing from my constituents, uh, how they were feeling, and to me, it was pretty clear. And I personally think anybody who's in this business, who knows how elections work, should have known it was clear. And so, you know, to me, I was thinking, "Man, hopefully, people aren't buying this because this is crazy." I remember talking to somebody very close to me, and they said, "Gosh, this thing was stolen." I said, "What country do you think you live in? This thing wasn't stolen." I said, "L- tell me where you think it was." And, uh, you know, they would give me this, you know, some of these explanations that you'd be hearing on, like, these QAnon boards and on, on Twitter and whatnot, and you could usually dispel them, but, you know, these were people close to me. But, like, your average person, you know, they didn't have full access to me, and I could barely get, get our message out. So I, I remember grabbing my chief of staff. I said, like, "Just find me a camera. Like, just get me in front of a camera. I need to start talking to people and telling them, because otherwise we're gonna have a problem. Like, there's gonna... Some- something terrible is gonna happen if, if people think this thing was stolen. I mean, this is the, the United States. If half the country believes the election was stolen, we're, we're gonna have a real violent outcome here." I was hoping to be wrong, but that's what I thought was coming. And lo and behold, you sort of fast-forward. As we get closer and closer to January 6th, the pressure builds, and on the morning of January 6th, uh, they told us, they said, "Hey, you gotta come in early. You know, just get here early. There's gonna be a big protest, and we-- and it'll be easier for you if you're here early." I said, "Okay." So early to me, I wake up at 4:00, so early to me is like, I'll go, you know, 4:30, 5:00 o'clock, and I'll get in.... and this was during the pandemic, when nobody was ever on the streets. Normally, from where I live, to get to the Capitol, it takes, like, fifteen minutes. Uh, this time, it took forty-five minutes, because there were buses and buses and buses from all over the country, and the, the Mall was already pretty well filled and packed with people and energy and activity. And signs, you know, you can read the signs as you're going in, signs I've never seen before that didn't make any sense to me, and I thought, "Okay, this is actually gonna be a lot worse than I, than I even thought." And so I, I tried to send my staff home, um, but, uh, but they stayed. They insisted. And we had already pre-released what I was gonna do, which was to certify the election. And so, you know, fast-forward a little bit, and we're in the, the House chamber, and I'm up in the balcony, 'cause I- I wanted to see a couple things. First, I wanted to make sure Pence did the right thing. I don't know what my plan was gonna be if he didn't, but I just wanted to make- [chuckles] I, I just wanted to make sure. And then the second thing, I just wanted to see if they would actually go through with these objections, 'cause I thought it was crazy. I thought it was the most anti-democratic thing I've ever seen in my life. Still feel that way. And so, you know, I'm sitting there. Pence does the right thing. Okay, good, and then Ted Cruz stands up and objects, and I was just disgusted. I was just completely disgusted, and so I said, "I gotta, I gotta get out of here." So I started walking out of the chamber, and I was gonna go back to my office, and then I could see the people start to breach, um, on... I looked out one of the windows.

    3. BGBen Gilbert38:24

       Oh, my God.

    4. AGAnthony Gonzalez38:25

       And you see the people start to go, and, then I flipped on my Twitter, and, you know, you could see, oh my, they've already gotten through the Senate. And so, you know, at that point, I thought, "Okay, I got- uh, the best thing for me to do is just get into my office." So I get into the elevator, you know, go through the tunnels, boom, and by the time I get back, um, the folks were already in the House. The, the rioters were already in the House, and they were trying to evacuate people, and basically, the session had been canceled. And so now you're sitting there going, "Okay, I don't know what's gonna happen, but it's not good. [chuckles] I know that much." And the basic instructions we got were, if you're not with the other members... They had hidden the other members in a sort of a bunker, if you will. "If you're not with them, shut off all the lights and be dead silent, 'cause we don't want, you know, we don't want you making any noise." I was like, "Okay." So [chuckles] I ch- you know, then I'm, like, sitting in my office and thinking, "Okay, you know, I should probably change out of these clothes so I don't look like a member of Congress, in case they bust through the door." [chuckles]

    5. BGBen Gilbert39:26

       [chuckles] Yeah.

    6. AGAnthony Gonzalez39:26

       So I threw on jeans and running shoes, and I'm thinking to myself, "Well, you know, I can still run a little bit, so if they get in here, I guess I'll just jump over 'em and sprint, and that's, you know, maybe that's my plan." And so we did all that, and then, you know, periodically, like, you would hear screams and yells and stuff, and I, I called down at one point, and I said, "Hey, there's somebody making a lot of noise in our hallway. You know, can you send somebody up? I don't know..." And the, the dispatch was like, "S- sir, we are completely overwhelmed. Just, like, do the best you can." I'm like, "Okay, um, [chuckles] "

    7. BGBen Gilbert39:57

       [chuckles]

    8. AGAnthony Gonzalez39:57

       "That doesn't sound so good." [chuckles]

    9. BGBen Gilbert39:59

       Yeah. [chuckles] Right.

    10. AGAnthony Gonzalez40:00

        So then I started trying to get ahold of folks at the White House, and just anybody I knew who might be there, saying, "Hey, he's gotta call this off. Like, this is... this has gone way too far." And he wouldn't do it, and it took him hours, I think almost three hours, maybe a little more than that. But when you're in a situation like that, three hours feels like 15 hours. I mean, you're just hoping to God that somebody does something responsible, and it just wasn't happening. And, and so, you know, my view remains that it's an unforgivable assault on the country, uh, and it was led by the former president. It was inspired by him, and ultimately, my view, which I think is coming out in this January 6th commission, is that he kinda liked it. He kinda liked what was going on, and I, I spoke to a number of people who were around him that day and came to that conclusion. And so at that point, you know, you have to ask yourself, you know, are you, are you willing to, to make that vote, that Impeachment vote?

    11. BGBen Gilbert40:55

        And to be clear, there, there was previously an Impeachment vote that you had not been in, in favor of, but th- this specific event is sort of what changed your mind to say, "Yes, I'm one of..." I believe it was six Republicans to vote to impeach?

    12. AGAnthony Gonzalez41:06

        I think we were 10. I mean, it, it may have been six senators, but, um, in the House, there, there were 10 of us. The first one, not to go back to it, but I certainly didn't condone the behavior, but I just... it just didn't hit my bar for impeachable.

    13. BGBen Gilbert41:18

        That was the Russia stuff, right?

    14. AGAnthony Gonzalez41:19

        That was the... Yeah, it was actually Ukraine, right? He tried to-

    15. BGBen Gilbert41:22

        Right

    16. AGAnthony Gonzalez41:23

        ... theoretically bribe, uh, Zelensky. Back to this current vote, as that was unfolding, admittedly, on January 6, I thought to myself, "I think they're gonna impeach him again." Um, Democrats controlled the House, so they control what, what goes to the floor. I s- I swear, I think they're gonna do it again, so I better start thinking about this.

    17. BGBen Gilbert41:40

        Hmm.

    18. AGAnthony Gonzalez41:41

        And I kind of went back and forth, not because I didn't think it was wrong or impeachable. I certainly did. The thing I was kicking around in my head was, what he did was clearly impeachable, but, you know, he has, whatever, six days left by the time, you know, the vote comes, or three days. It's like, is, is that really the right thing to do? Should we, should we censure him? Should we do something else? And, and ultimately, I came to the conclusion that not only was it the right thing to do, but we actually had to do it, for a whole host of reasons. But, uh, one of the main ones is because I think it's important that we send a message to every future president forever, that if you think for one second you can concoct this ridiculous plan and sic your supporters on Congress and the Capitol, resulting in a bunch of deaths and, and the total embarrassment of our country, uh, and a grave wound on the country, on the democracy itself, then you are gonna get impeached, and, and everybody needs to know that. And so that was ultimately the decision I came to, but admittedly, it was the hardest decision I've ever had to make professionally, for sure.

    19. BGBen Gilbert42:46

        Well, this is one of those where potentially your own interests are misaligned from what you believed was the right thing to do. I mean, did, did you know that in casting this vote, that would be the end of your ability to serve a subsequent term?

    20. AGAnthony Gonzalez43:01

        ... No, you know, honestly, I planned to fight it, so I knew it was gonna be hard. But ultimately, look, at the end of the day, I've made, I've made two oaths in my entire life, okay? I've made one oath to my wife [laughing] and I've made an oath to the Constitution. Those are the only two oaths, to my knowledge, that I've ever taken, and I don't plan to break either one. It really came down to that for me, is like I, I feel like I owe this to the country. I feel like I have to do this, and it's gonna be brutal, and it's gonna be terrible for me. And it was, but you gotta do it, and then you gotta fight for your political life. Uh, and ultimately, that was, that was the plan, and that's what, what I, I intended to do. But admittedly, after, you know, many months of sort of going through that process and, and really trying to figure out, independent of the politics, trying to figure out what kind of life do my wife and I want? Like, what do we want for our kids? What do we want for us? Where do we wanna be? What kind of jobs do we want? It was pretty obvious as our kids are getting older, that politics probably isn't the best place, and so made a very difficult decision again, which was to drop out of the, the campaign, and, and, uh, I'll finish my term out here in January, and we'll see what happens.

    21. DRDavid Rosenthal44:11

        You really had to live these two lives, right? [chuckles] Like, you're with your constituents back home in Ohio, but, like, you're also [chuckles] in DC.

    22. AGAnthony Gonzalez44:20

        Yeah.

    23. DRDavid Rosenthal44:21

        You know, those places are not, uh, contiguously, uh, you know, geographically connected. [chuckles]

    24. AGAnthony Gonzalez44:25

        No, and one of them is pretty expensive. So from a family perspective, it's just a really hard life. I think this is why originally I planned to, to get into politics much later when my, my kids were grown. You know, the reality is, to do this job correctly and to serve your constituents in, in the way that I think they deserve to be served, you probably have to be on the road north of a hundred days a year, for sure. Um, but you're probably looking at one fifty, uh, maybe close to two hundred in terms of days that, that you should be out. And so we as a family talked about, okay, you know, what do we want for our kids, and, and what do we want for our marriage? Um, ultimately, we, we decided that, uh, the best thing to do is, is to just step away, and I'll, I'll focus on, on my committee work, which I love. I love working on my committees, you know, making whatever difference I can in, in my last couple months before, you know, setting sail on, on the next journey.

    25. BGBen Gilbert45:14

        Well, it's not like the work you're doing in your committees is some, like, afterthought. That's the craziest thing, is like you had this very crucible moment in your term, and of course, that dominates a lot of the sort of conversations I'm sure that you have. But you still have the rest of your term here to serve, and you're doing things like proposing regulation for the future of crypto and Web3 and potentially the next generation of technology. So I'd love to talk a little bit about that, if you're open to it, and, like, what on earth a committee actually does.

11. 45:45 – 52:55

    How committees legislate crypto: hearings, coalitions, and why stablecoins come first

    1. AGAnthony Gonzalez45:45

       Yeah. What I say is, like, committees are where the real work happens. So, you know, you, you follow on Twitter, you see the votes and all that, all that's fine and good, but, like, real work actually happens in committee. That's where we have hearings, and we have real dialogue and debate, and, and you really talk policy. And in terms of crypto, so when I got here in twenty eighteen, well, early twenty nineteen, crypto was a topic. It was definitely something we were talking about, but it really didn't go into overdrive really until, you know, the pandemic, when folks were at home and markets were, you know, straight vertical. Um, you can all thank Jay Powell for that. [laughing] Jay should have slowed down a little sooner.

    2. DRDavid Rosenthal46:19

       [chuckles] Did you see, uh, my favorite... I think this is gonna be my favorite, like, lasting moment of the pandemic, was, um, somebody did a, a deep fake Auto-Tune video of Jay Powell, Janet Yellen, uh, Ben Bernanke, and somebody else, too, Rick Rolling it, like singing, like, Never Gonna Give You Up and, like, dancing around. [laughing]

    3. AGAnthony Gonzalez46:41

       Yeah, you know, we have similar friends, so I get the same memes that come, [laughing] that, that come to me.

    4. BGBen Gilbert46:46

       As Elon Musk said, is, uh, "I got a good meme guy," and it sounds like you both share the same meme vendor.

    5. AGAnthony Gonzalez46:51

       Yes, very similar meme vendors. So, you know, b- people really started paying attention to it congressionally i- in a sort of thoughtful way, I would say in twenty twenty, as the markets were going a little haywire. Frankly, when I got into it, I was, I was on a family vacation, uh, with my wife's family. They do an, an annual trip to Nantucket every year. And so we we were there, and I was listening to, uh, Modern Finance, which is Kevin Rose's podcast. I know he's been a guest on this show.

    6. DRDavid Rosenthal47:17

       Yeah, of course.

    7. AGAnthony Gonzalez47:17

       And he had something on Flamingo DAO, which, like, I had never heard of a DAO, period, certainly didn't know what Flamingo DAO was. And after that hour, or however long it was, I thought: "Oh, my gosh, I feel like..." You know, they talk about, like, getting red pilled or whatever, or orange pilled. That was my moment where I thought to myself: "Okay, I think I've just learned something or stumbled onto something that can be unbelievably impactful for society and helpful in, in solving a lot of problems that I currently see in with the Internet and in our capital markets and with access to financial products and all these sorts of things." It was really my aha moment.

    8. BGBen Gilbert47:53

       And you were on the Financial Services Committee at this point?

    9. AGAnthony Gonzalez47:56

       I was. I went through the paces on crypto to make sure I wasn't ignorant, but I hadn't really gone deep on crypto.

    10. BGBen Gilbert48:01

        Mm-hmm.

    11. AGAnthony Gonzalez48:01

        And then I spent a good chunk of the next few months going as deep as humanly possible and, and just learning about the different L1s, and what an L2 is, and what's the difference between these tokens, and, and how are these applications working, and-

    12. DRDavid Rosenthal48:16

        And you were actually, like, participating in DeFi and like...

    13. AGAnthony Gonzalez48:19

        Yeah, so the way that I did it was, you know, I'm on the committee, and I-- There's no rule against this, but I don't necessarily think I should be, you know, investing in crypto assets while I'm thinking about regulating them. [laughing]

    14. DRDavid Rosenthal48:32

        [chuckles] Shocking! Shocking.

    15. AGAnthony Gonzalez48:34

        I, there should be a, probably should be a rule against it, but there isn't.

    16. DRDavid Rosenthal48:37

        Well, there's just no regulation at this point, right? Like, uh, b- back then.

    17. AGAnthony Gonzalez48:41

        Well, yeah, it's a, a whole host of things that don't make sense. That's probably one of them. I kept reading these white papers and coming to a conclusion, which is, man, I can only... I feel like I can only learn so much. Like, I need to actually play with this stuff a little bit so I can figure out how these things work. If I'm gonna be knowledgeable in the space, like, I should at least have some sort of feel for it. I mean, it would almost be like asking somebody to, I don't know, like-... regulate cell phone companies, but you're not allowed to use a cell phone. [chuckles] You know, so in my head, I thought, "Okay, well, I don't think I should be investing, but I do wanna play around with it." So I took, like, a little margin, a couple hundred bucks or something, and started playing around in DeFi, and I quickly realized I couldn't do anything with my ETH 'cause the gas fees would destroy it. Did that for, like, a couple weeks, and then, and my plan, which I ended up doing, was I'll just give it all to the United Way when it's over. The United Way accepts crypto donations. And so I, I did that for a couple weeks. I forget how long it was, not too long, but ultimately learned probably more playing around with it than I ever could have just reading. And so from that, not only did I feel like I understood it better, but I also felt like I could, I could legislate in a, in a more thoughtful way. And so from there, we've kind of been going deep on it ever since, and it's been interesting. And, and we're getting to a point as a Congress, which is really nice, where I feel like we're getting close to finally legislating on it, specifically around stablecoins. We'll see if we get there, but I think that's, that's sort of the first bite of the apple, uh, coming off the, the Terra Luna crash.

    18. DRDavid Rosenthal50:10

        Do you feel like there's critical mass now of enough people in Congress, and maybe specifically on the Financial Services Committee, who, like, have done that work, who really understand it now? Or, like, you know... Or is it still in the, like, people are legislating on cell phone service without using a cell phone?

    19. AGAnthony Gonzalez50:27

        So we're past that on financial services. So, like, take a step back for a second. If you were just in Congress broadly, I would say ninety percent of members don't understand it at all. They've heard about it, but, like, they don't know it, right? Um, maybe their kids use it, grandkids, whatever, but they don't know much about it beyond that. The next five percent are people on my committee who are getting up to speed, who understand the basics and the building blocks. We've had a couple hearings now that have been really productive, I think, um, and had some great witnesses. And, you know, they wanna be thoughtful in the space, but maybe they, they feel a little hesitant because, you know, it's complicated. If you've not really gone deep, it's, it's hard to understand it. And then the final five percent are folks like me who have spent a ton of time on it and are now coming to some pretty clear views on what the right regulatory framework should be. And that may sound daunting, like you got ninety percent who don't know anything about it, but the truth is, that's how mo- most issues are around here. That's why I say that's where the real work happens. The committees lead because these are difficult, complex issues, and you need real expertise, and then if it's the right set of members and it's the right policy, they can pull the other ninety percent with them. I think we're getting to that point where that five percent is comfortable on both sides of the aisle to really engage in a thoughtful way.

    20. BGBen Gilbert51:44

        This is reasonably bipartisan in its, uh, support or lack of support. It's not sort of split left, right. It's kind of split on, uh, age or demographic lines.

    21. AGAnthony Gonzalez51:56

        Yeah, so that's what I've noticed. I'll say this, like, going in, right, like, just walking into the debate for the first time, Republicans tended to be more supportive than Democrats. I'm not sure entirely why that is, but as a general rule, Republicans were more supportive than Democrats. Having said that, within those two bands, the bigger break was on demographics. So the more senior a member, the more skeptical they're likely to be, and this makes sense, right? If you look at how crypto is used. And the more junior the member, and mostly by age as opposed to tenure, the more likely they're gonna engage in it and try to understand it, and that's largely played out. But as the weeks and months have gone on, even the more senior members have realized, "Hey, this is something we really, we really need to tackle." I think the President's working group, they put out a paper, which some of it I agree with, some of it I don't. The most meaningful aspect is that the White House signaled, "Hey, this is important, and we need to work on it," and I think that's really jump-started everybody. 'Cause we've had a whole bunch of hearings as a result, and now there's real legislation being debated.

12. 52:55 – 1:00:50

    Policy process 101 and the 'Christmas tree' problem: the infrastructure bill crypto provision

    1. BGBen Gilbert52:55

       Yeah, so let's zoom in on legislation being debated. We're gonna go Schoolhouse Rock! here a little bit, but how does something go from a vague concept of, we probably need legislation in this space, to becoming law, and what is the committee's role in that versus a general member?

    2. AGAnthony Gonzalez53:11

       So you'd be shocked at how many members seem to completely forget about Schoolhouse Rock! when they come here. [laughing] They just, like, unilaterally, say, "Well, I know how to fix this." Bam! It's like: "Yeah, do you have a co-sponsor? Is it bipartisan? No? Okay, sit down, please."

    3. DRDavid Rosenthal53:23

       For our, uh, international listeners who may not have, uh, been exposed to this, was it, uh, it was on PBS, right? Or I feel like it was all over the TV when we were growing up.

    4. AGAnthony Gonzalez53:31

       Where was Schoolhouse Rock!?

    5. BGBen Gilbert53:33

       I don't know. Everybody pause this, go to YouTube, search, uh, I'm Just a Bill, and then come back.

    6. AGAnthony Gonzalez53:39

       That's exactly right. To summarize the video y'all are about to just watch, the way something like a crypto bill would work, okay, is Congress sort of gets it in their head that, hey, we need to, we need to legislate in this space. A whole bunch of catalysts for crypto in particular, but that's sort of a conclusion we've all come to. And at that point, the committees will hold hearings, and usually, they're on a number of different topics related to the main, if you will. So we had one specifically on stablecoins. We had one specifically on CBDC. We had one on crypto markets just sort of broadly. And you go through that process, and it's, it's a pretty in-depth process, and every time you... If you're smart, you know, you're preparing for these hearings. It's multiple hours. You and your staff are trading questions back and forth, and as you develop your understanding, you start to come to some conclusions around what you want to do. My view is the best legislation is durable, and in order for something to be durable, it needs to be bipartisan, and it should be bicameral. Bicameral meaning House and Senate. So, uh, my perspective is always, you gotta give yourself a chance by starting with it, with some Democratic counterparts. So if I'm legislating on a bill, what I'll do is I'll find... And I'll base this on committee comments, so I'm listening not just to my own questions, but I'm listening to how other people are processing the information. And I'll say, "Okay, so these two people over here, I think I can work with on this." So then you just literally go up to tap them and say, "Hey, you wanna do something on this? I think sounds like we're in a s- similar place."... And from there, you know, your staffs get together, and y'all trade notes and legislation back and forth. And, and then ultimately, hopefully, you've come to some good text. You propose it. It will get a vote in committee if the committee chair wants it to. Once it goes through committee, it goes to the House floor, passes the House floor. Now it gets kicked over to the Senate. They can take it or not. Uh, most of the time, Senate ignores us, but sometimes they listen, and then in the Senate, they have to beat the filibuster, so they need to, to get sixty votes over there. We're, we're just simple majority in the House, and so a little harder to get things through that. But then from there, it goes to the White House, and President signs it into law, and away we go. As simple as that sounds, it's the most frustrating, chaotic process you can imagine. [laughing]

    7. DRDavid Rosenthal55:50

       [laughing]

    8. AGAnthony Gonzalez55:50

       Things that should take like, I don't know, six months, take, like, six years.

    9. DRDavid Rosenthal55:54

       Well, you were explaining to us, ah, last time we chatted in preparing for this, that, like, no bill ever is, like, pure of scope. It's, uh, Christmas trees, right? And stuff gets hung on it, and, you know, like, all sorts of-- so you may be wanting to regulate stablecoins and, like, all this totally unrelated stuff that gets added onto that. [chuckles]

    10. AGAnthony Gonzalez56:12

        Yeah, totally. So that actually happened to crypto, in particular on the infrastructure bill. So there was a big infrastructure bill that was passed not terribly long ago, one I worked on a lot. It was bipartisan, bicameral. It, it started in this group called the Problem Solvers Caucus, which is a group I'm a part of. It's a great group. For most people who are frustrated by Congress, they'd be encouraged by this. It's fifty Republicans, fifty Democrats. Uh, everything we do is bipartisan. It's a great group. It's all the members who you've never heard of but are actually very productive and, [chuckles] uh-

    11. DRDavid Rosenthal56:40

        [chuckles]

    12. AGAnthony Gonzalez56:40

        - stay off cable news but work hard. So Problem Solvers Caucus put the infrastructure bill forward, at least the principles. The Senate worked out the details, and then this is also frustrating. You, you get the bill, like, four seconds before it's voted on. It's not like you get the bill a week ahead of time.

    13. BGBen Gilbert56:57

        Oh, I've been a part of, uh, companies closing financing. Yeah, you, you get it four seconds before the deal's done. [chuckles]

    14. AGAnthony Gonzalez57:02

        Yeah, exactly. So politics isn't the only place with this issue. So the infrastructure bill gets through the Senate, and all of a sudden, you know, people are high-fiving, and then it's like, "Oh, wait a minute. There's a crypto provision in there? In the infrastructure bill? Why is there a crypto provision in the infrastructure bill?" Well, because we have to pay for the infrastructure, of course. And so somebody slipped in a, a little tax without really telling anybody, and ultimately, it came into the infrastructure bill and was signed into law, and that's sort of the Christmas tree version of, of how legislating works. And admittedly, the person who crafted that provision didn't intend it to be as wide-sweeping as it was. There was a thought that basically we were gonna label any developer working in crypto a broker, which would kill the industry, you know, if everybody has to register as a broker.

    15. BGBen Gilbert57:51

        And what is the tax?

    16. AGAnthony Gonzalez57:52

        Well, it would have been, if you are a broker, then you have to do XYZ, which would involve you registering, paying taxes, et cetera. You know, that was part of it, and the goal is to, is to get at something real, which is, you know, if you don't have good tax compliance in crypto, you know, that's another thing I, I probably realized when I was playing around with it a little bit, is like, if you're not careful, you can, you can break tax law pretty easily in, in this space.

    17. DRDavid Rosenthal58:16

        Oh, yeah, like, the default is that you do. [chuckles]

    18. AGAnthony Gonzalez58:19

        Yeah, the default is, right? And so, like, one of the first things I did was like, I need a software. Like, this is all on chain, so surely there's a way for this to automate and track for me. And I won't name the product, can't endorse a product, but, um, I found a particular, uh, software that I, I liked, that I used and helped me track all that stuff. But the motivation was a sincere one, which is, hey, we want to make sure that, that people aren't evading taxes, and actually, that's what it was. It was, it was gonna require... It wasn't a tax on the broker. It was gonna require anybody who was defined as a broker to provide tax information to the IRS, so it would, would have required developers to all of a sudden provide tax information.

    19. BGBen Gilbert58:59

        Which makes sense if you're not familiar with crypto, because that is the way that our USD-based infrastructure works, where if you have a brokerage account somewhere, you can just count on the fact that it's calculating all your taxes for you. It'll tell the IRS, and it'll send you a copy so that you know what to pay. And, of course, or at least you know what to include in your tax return, and because that's not mandatory in crypto, none of the brokerages do it, so it's actually a little bit difficult in many ways, uh, well, especially in DeFi, to figure out what your taxes are. But you face this other problem, where it may not be what we think of as, like, a brokerage or an exchange that is generating these taxable events for you, and so you would need every application developer to be spitting these things out, too, which is, as you mentioned, pretty untenable.

    20. AGAnthony Gonzalez59:45

        Right. And so the, the, uh, senator who proposed that had to, like, go down to the well of the Senate and basically say, "I did not intend for it to sweep in all these developers," and wrote, wrote letters and those sorts of things. And that's, that's actually important to do because that way, if anything ever goes to court, they could refer to that as, you know, hey, this was actually congressional intent. It wasn't to sweep up all the, uh, developers, but was to actually, you know, go after legitimate brokers. And so, you know, that was a- an aha moment, I think, for all of us, but certainly for the crypto community, uh, was that infrastructure bill. And so, you know, that's unfortunately how things do get legislated around here a lot. I am hopeful that with respect to crypto, though, that going forward, we'll be more thoughtful and do things like what I think is appropriate, which is to take sort of little bite-sized chunks as we understand them. Um, because the last thing you want to do is put something forward that you only sort of understand, and then ultimately, you cause a heck of a lot more problems than you intend to. And so that's the direction we seem to be going in crypto, and that's actually really encouraging and not normally how we operate around here.

13. 1:00:50 – 1:14:33

    A regulatory philosophy for Web3: 'do no harm' and pro-innovation clarity

    1. DRDavid Rosenthal1:00:50

       What do you think is, like, the right or the directionally right framework for regulation that should exist for crypto, given here we are in summer 2022? And then the second question is, like, what do you predict the coming months of regulation is going to look like, to the extent it's different?

    2. AGAnthony Gonzalez1:01:08

       Yeah, so what do I think it should be? I actually think we should look to the Clinton administration for how they handled the early internet.... And they orchestrated around the phrase, "Do no harm." So Bill Clinton rightfully, I think, came to the conclusion that, hey, look, there's a lot of weird stuff happening with this new internet thing, and, like, these chat rooms are weird. I mean, like-

    3. BGBen Gilbert1:01:29

       Oh, yeah.

    4. AGAnthony Gonzalez1:01:29

       Um, remember, so those were nasty places.

    5. BGBen Gilbert1:01:32

       We were all teenagers in, in them at the time, I think. [chuckles]

    6. AGAnthony Gonzalez1:01:35

       Barely teenagers, yeah. Um, I, I think my first AOL chat room I was in, I was definitely not a teenager, um, and shouldn't have been in there. But having said that, you know, there were some pretty terrible things happening online, and you could have made an argument that the right thing to do is to shut it down and tamp it down and control it and, and regulate it to death, basically.

    7. BGBen Gilbert1:01:56

       Oh, and this was the era, I'm remembering, right, where, like, a bunch of people in Congress wanted to, like, end video games.

    8. AGAnthony Gonzalez1:02:03

       Yeah.

    9. BGBen Gilbert1:02:04

       This was not a crazy sentiment in the country at the time. [chuckles]

    10. AGAnthony Gonzalez1:02:06

        No, this was kind of how people felt. And Bill Clinton actually provided the right leadership there, where he said that, you know, "First, do no harm. Let's let this thing breathe. Let's see where it goes. Uh, and then once we understand it better, then we can uh, propose a set of regulations that make sense for the space, given what it's becoming. It won't always be nasty chat rooms." And he was right. And so, you know, slowly but surely, we've- we worked up on the regulatory apparatus. Do we get it perfect? No, of course not. Congress is [chuckles] infinitely fallible. We never get everything perfect. But I think that was ultimately the right playbook for that time and space. I would argue the same mantra should exist today, which is: yes, are there things that are bad that happen in crypto? Absolutely. We talked on one, tax evasion. Does that happen? Certainly, it happens. Of course, it happens. As you said, it's probably the default. You have to decide that you're gonna pay taxes. And so that's something we need to work on, and there's other areas as well. But should the response be to destroy the entire industry before most people understand it and before it's even had a chance to really develop into anything? Certainly not. My view is the mantra should be: do no harm, and take bite-sized pieces as they become obvious, but don't overreach. And I suspect that's how Congress will behave. I do fear that the administration will take a more heavy-handed path, mainly because the SEC chair is pretty hostile at times in his public comments on crypto. That's, I think, where the, the give and take will be, but that's also why it's so important that Congress actually puts laws forward, even if they don't pass. But just by showing there's bipartisan support for a set of principles, that in and of itself will send a message to the regulators that, "Hey, we're actually pretty far away from where Congress is, and that's not a good place to be." 'Cause the last thing you want to do as a regulator, you propose a set of regulations, and then Congress just flips them on you. My hope is that the energy we're seeing, uh, which is becoming more and more bipartisan by the day, uh, will ultimately lead us more down that do no harm path, as opposed to the, the heavy-handed path.

    11. BGBen Gilbert1:04:14

        So what do you think the bite-sized early regulation will be, sort of on the steps to getting a more complete regulatory framework?

    12. AGAnthony Gonzalez1:04:22

        My view is stablecoins are probably the, the most straightforward to figure out. And part of it, you know, comes from the Terra Luna issue, right? And I think what that did was, one, it awakened members of Congress to what can happen when things go wrong, right? But... And this was a happy surprise. It also forced members to confront, Okay, what is this algorithmic stablecoin thing, and how is it different from a fiat-backed stablecoin? And what, if anything, should we do about that distinction? And so I've been really encouraged by how well members have articulated that distinction and have grasped that distinction. And so what I think you'll probably see is some sort of law that enshrines a, quote, payment stablecoin. Uh, that language has been used in a couple different bills. Um, a payment stablecoin as essentially a fiat-backed stablecoin. And then my preference would be that we're silent on algorithmic stablecoins, and, you know, we'll figure out what exactly that is later. Is it a security? Is it something else? Is it a commodity? I don't... You know, I, I don't think there's actually a clear answer to that, um, because they're all different, right? Um, and they all have different properties, and they, they don't all work the same. I would say let's focus on fiat-backed stablecoins, 'cause I think we all actually agree on that, and intellectually, that's not that difficult. Fiat-backed stablecoins, you're really talking about, what's the reserves? What are the reserve qualities? What are the auditing requirements? What sort of attestations do they need, and what sort of redemptions and consumer protection things do you want to build into that? If you can answer those questions, you can probably define something that looks like a fiat-backed stablecoin. Algos are much harder.

    13. BGBen Gilbert1:06:02

        Yeah. And in my mind, there's sort of two high-level purposes that regulation in this space could serve, and I'm curious if you think that I'm sort of describing this right or h- thinking about it right. One is protection for the American consumer or the American investor. Uh, when something goes dramatically wrong, we look at it, and we go, "Ooh, we don't want that to happen again." We pass a law that makes that thing illegal. Two is giving comfort to developers that they can innovate without doing something illegal. And is that sort of how Congress thinks about it, too, or are those actually the same thing?

    14. AGAnthony Gonzalez1:06:38

        I think they're the same thing, or I think they're h- they're heavily correlated, for sure, right? The overwhelming majority of, of the innovation happening, folks want to do it responsibly. Very few people are out there building these amazing products and services with the goal of stealing, right? There are some criminals out there and pump-and-dump schemes and, and nasty things, and we should go after them with the full force of law, right? Um, and there are laws on the books that exist that give the authority to do it. But most innovators in this space want to build transformative, amazing products, and they want to do it at scale, but they're scared to do it in the U.S.... uh, because our regulatory environment is so uncertain.

    15. DRDavid Rosenthal1:07:21

        Uh, so many examples. I mean, like, uh, FTX being, like, the obvious one.

    16. AGAnthony Gonzalez1:07:25

        FTX is the best example. Sam Bankman-Fried basically grew up on Stanford's campus, and he's building a tech company outside the US. It's, like, the craziest thing. Imagine that for a second. That never would've happened in, in Web2 or Web1 or whatever, right? If you're in Silicon Valley, that's where you wanna be to build this tech company, and today he's l- he's going basically everywhere but here to build that company. We hope to get him back.

    17. DRDavid Rosenthal1:07:48

        Which obviously, like, you know, there's nuance, of course, but, like, pretty clear that's not in America's best interest. [chuckles] Like, we want that company here.

    18. AGAnthony Gonzalez1:07:56

        No, of course not. No, and that's my interest in it. Like, I, I believe fundamentally in the innovation, and I believe that it's powerful, and it's gonna create a ton of jobs and economic might and power, and, and it's gonna be important technologies for the world. For every technology like that, not just crypto, I want that here. I want that developed here. That's gonna create jobs. It's gonna provide opportunity. It's gonna do all sorts of things that, that most Americans think are positive, um, for our country and our democracy, so that's m- my primary motivation. You know, part of how you protect consumers and provide that clarity on regulation is by proposing things that hit both sides of it, and do things like defining what a stablecoin is, what a payment stablecoin is. Essentially, you provide that definition because, from my vantage point, in a world where these are proliferating around the entire country, I need to know that if my farmers get paid in stablecoins, that they're solid. I can't have my farmer getting paid in Terra Luna, and all of a sudden, the thing goes to zero. You know, if these are gonna be hitting the payment rails, and people are going to be relying on them to pay their bills, feed their families, et cetera, we need to know that they're solid, and that's consumer protection, but it's also pro-innovation.

    19. DRDavid Rosenthal1:09:07

        Oh, tot- I mean, it's happening. Like, AngelList, you can invest via stablecoins now. Like, we have LPs in Kindergarten Ventures that, you know, make their capital contributions in stablecoins. [chuckles] Like, w- we need that to be actual money, you know, to go into startups.

    20. AGAnthony Gonzalez1:09:22

        Yeah, so Sam Bankman-Fried, he was in Washington not terribly long ago, and he said they've done acquisitions using stablecoins. He said they, when they buy companies, they use crypto for the reasons you would think, because it's quicker and easier, and third, th- and the cost is lower. But when it's done right, I think we'll see more and more and more of that. But if we drop the ball on this or we're too heavy-handed, or, or we, we go way further than we're capable from an understanding standpoint, we're more likely to get it wrong than right, and that's why, in my view, first thing, let's just do fiat-backed stablecoins, 'cause we can pretty much figure that out.

    21. BGBen Gilbert1:09:58

        Right. We have all the benefits of the instant settlement, no need for a trusted intermediary, there's gonna be less fees, all this stuff, but, like, we understand what the value is tied to, and we have a lot of other things that depend on that system of what that specific one USD denomination is tied to, so th- th- there's a lot of comfort that can come from that while getting all the benefits of the innovation.

    22. AGAnthony Gonzalez1:10:19

        Yeah, totally, 100%, and, like, the way I think about some of the other stuff, like, again, like the algos, I'm not... Hopefully, people aren't saying, "Oh, he hates all algos." I don't, but to me, like, the, it's not clear what that's gonna turn into and what the right response is, and so if I don't feel like I understand something from a policy standpoint, my reaction is I should be silent on it from a regulatory and policy standpoint. Until I understand it, I probably shouldn't be regulating it, unless it's hurting people or destroying people, right?

    23. BGBen Gilbert1:10:48

        Right.

    24. AGAnthony Gonzalez1:10:49

        But that's why I say, I think we largely understand fiat-backed stablecoins. Let's start there, um, and then we can sort of take our, our bite-sized pieces as, as we develop.

    25. BGBen Gilbert1:10:58

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    26. DRDavid Rosenthal1:11:44

        It's so great that all these enterprise and fintech products now, like, have UIs on par or better with consumer apps.

    27. BGBen Gilbert1:11:52

        Let's take a step back. So you remember who they were when they launched out of YC in 2017, blanketed billboards across San Francisco, New York. Brex was mainly just a corporate card for startups then. Black cards, high limits, fast online setup, no personal guarantees. You can see why it grew ludicrously fast. So where are they now? Well, they kept reimagining different financial systems for growing and scaled companies 'cause there's a lot more to spend management than just the one sort of piece of plastic that was the entry point. And on top of credit cards, they built something really interesting. It's a new end-to-end spend solution that has a completely different philosophy than everything that came before it. So what does this actually mean? Brex is helping companies create a culture of financial discipline that accelerates their business. So like you, Brex's founders love the trust, teamwork, and ownership mentality that startups embody. For example, David and I, just a high-trust working relationship. There's not a ton of bureaucracy. But Brex noticed that as companies scale and get big, including their own, those things can kind of fade away, which means new policies get implemented that are really blunt instruments and create inefficiency.

    28. DRDavid Rosenthal1:13:03

        Oh, man, we're about to record our Amazon episode, that this was, like, a core tenet of Amazon. As it grew, Jeff had to be like, "No, [chuckles] we are throwing out, uh, corporate infrastructure. Two-pizza teams, nothing can be bigger." It's just natural, like, law of gravity as a company scales, and unless you fight it, that bureaucracy is gonna creep in.

    29. BGBen Gilbert1:13:24

        Totally. That first time that an employee expenses a first-class ticket to Paris for a meeting that should have been an email-

    30. SPSpeaker1:13:30

        ... trust is gone, the big hammer of policy comes out, the company clamps down. So enter Brex. It replaces the command and control model with a super smart delegate and empower model. So Brex makes it easy to spend within policy from the beginning.
14. 1:14:33 – 1:17:48

    Beyond crypto: China, meme stocks, and what Congress did (and didn’t) fix

    1. SPSpeaker1:14:33

       Yep. Well, our huge thanks to Brex. To learn more, you can go to brex.com/acquired or click the link in the show notes. All right, let's stay in committee, but move on from crypto. What percentage of your time on the House Financial Services Committee is spent on crypto? Let, let's say over the whole course of your term.

    2. AGAnthony Gonzalez1:14:52

       Over the whole course of my term, I would say probably a third. I've done a ton of China work, and that was, like, the bulk of my first year in Congress, was doing things to fix our international financial institutions, like the World Bank and the IMF, uh, which had been largely overrun by China. And so I did a ton of stuff for reforms there, and that took a lot of time and energy. But the areas I focused the most on: China, cap markets, so I did, like, a lot of different things around the GameStop, you know, meme stock craze, which was interesting and fun, especially following it on WallStreetBets, and then crypto. Those are probably the three areas that I spend my most time.

    3. SPSpeaker1:15:28

       Has there been legislation that came out of the meme stock mania?

    4. AGAnthony Gonzalez1:15:32

       No. You know, I was actually disappointed in that because we did a ton of hearings on it, and the Democrats proposed some things. I don't say this as a partisan comment, by the way, it's just the reality. Republicans do the same junk. So we could have done some things maybe in a bipartisan way that I think would have been smart. Uh, the main thing we could have done is passed a bill to shorten the settlement time from two days to one day. That would reduce the risk in the system overall and probably would have prevented what Robinhood ultimately had to do, which was halt trading. But rather than do that, what they ended up doing was they took a whole bunch of things that they had wanted to do for the last decade, and they put them into a bill, and it passed the House. It'll never go anywhere in the Senate, and so nothing changed. Again, that sounds like a hit on the Democrats. I'm not trying to hit Democrats. I'm sure if and when we retake the House majority, we'll do the same thing. Um, it's just kind of the frustration of Washington.

    5. SPSpeaker1:16:22

       It became a political casualty.

    6. AGAnthony Gonzalez1:16:24

       It did. That happens, unfortunately, with a lot of issues. The reason that one was so frustrating is because we actually did real work on it. I think we had four hearings on it, um, so we spent a lot of time trying to understand it.

    7. SPSpeaker1:16:34

       And there was national media attention. I mean, I think I watched those hearings, like, live.

    8. AGAnthony Gonzalez1:16:38

       Yeah, that was probably the most fun hearing or interesting hearing. So, like, I had two computers up. We did it remote. I had two computers up. I had m- my personal computer up, which had the WallStreetBets forum.

    9. SPSpeaker1:16:49

       [chuckles]

    10. AGAnthony Gonzalez1:16:49

        And then I had the hearing, and every single member who spoke, they just absolutely eviscerated.

    11. SPSpeaker1:16:57

        I love it. [chuckles] You're just, like, what... reading in real time.

    12. AGAnthony Gonzalez1:17:01

        And they were getting me, too, like, like the guy from Hit Man, the show or the video game and the movie. They're like: "Who let this guy in? He looked..." Like, whatever his name is.

    13. SPSpeaker1:17:08

        [laughing] Oh, they were comparing you to the guy from Hit Man. [laughing] That's so great.

    14. AGAnthony Gonzalez1:17:13

        Yeah. They're like: "Who let Hit Man in? This guy's an idiot." And then I started asking questions, like, "Wait a minute, he's got it!" [chuckles]

    15. SPSpeaker1:17:20

        Okay, there we go. This is your career after Congress. You can go play Hit Man in, you know, uh, the next video game. Yeah.

    16. AGAnthony Gonzalez1:17:27

        Play Hit Man and be a meme stocker. Yeah. [chuckles]

    17. SPSpeaker1:17:29

        [chuckles] You've got a built-in audience. All right, let's move out of financial services. I, um, [chuckles] I don't want to make you, uh, bash on Jay Powell even more than, uh, he's already... You know, poor guy, he's already [chuckles] in the depths right now.

    18. AGAnthony Gonzalez1:17:44

        He's a very nice man, but, uh, we've got some inflation issues.

15. 1:17:48 – 1:28:13

    NIL and the NCAA: fixing an unfair rule and the Wild West after legalization

    1. SPSpeaker1:17:48

       Yeah, seriously. Fun little sidebar before we move on to, um, science, space, and technology and American dynamism, but I guess it's sort of related. You, given your background, have been highly involved with the revolution really that's happening in the NCAA right now and college athletics and the name, image, and likeness bill for college athletes can now take sponsorships. Uh, the repercussions of that have been wild. [chuckles] Tell us a little bit about what's going on there.

    2. AGAnthony Gonzalez1:18:17

       So it's pretty messy right now. You know, my view on, on name, image, and likeness, and this goes back to my time at Ohio State, was it never made sense to me why college athletes were the only people in America who couldn't do anything with their name, image, and likeness. Literally, everyone else in the country can do it that I'm aware of. Maybe some military officers can't, I have no idea, but I think even they can. But college athletes, as far as I knew, were the only ones. Didn't make sense to me then, still doesn't make sense to me.

    3. SPSpeaker1:18:42

       And did you and your teammates, like, did you resent this back in the day?

    4. AGAnthony Gonzalez1:18:45

       A little bit. Not in like a, you know, a, a negative way necessarily. I mean, look, like I always say, college athletics was one of the greatest experiences of my life. I got way more out of Ohio State than they ever got out of me. You know, I did, I did the best I could while I was there, and I, I, I hope I contributed, uh, admirably, but, but that experience was invaluable, a- and I wouldn't trade it for anything in the world. Having said that, you know, there is something that happens to you when you see a bunch of people wearing your jersey in the stands, and you see your autographs on eBay selling for, you know, whatever amount of money, and you're thinking to yourself, "Well..." Two things: One, like, w- I'm not getting any of that, um, uh, but that's my jersey, [chuckles] and, and that's a picture of me with my signature. And so that does affect people, and again, not in a way that to cheapen the experience, not to say, "Hey, this is BS, you know, I didn't get anything out of this." We all had an amazing experience.... but that doesn't mean that everything was perfect, right? And so this was always something that, that I thought, you know, it makes sense for people to be able to do, and not just for the football players, by the way. So my wife was a swimmer at Stanford. She's, she's a college swimmer. Stanford is one of the most expensive places in the country to go to school and to live. She's on the swimming team. She's not allowed to teach swimming lessons to help pay bills.

    5. BGBen Gilbert1:20:05

       That's, like, literally the number one person I'd wanna take swimming lessons from.

    6. AGAnthony Gonzalez1:20:08

       Right. Exactly.

    7. DRDavid Rosenthal1:20:10

       There are a lot of families in Atherton that would pay a lot of money for a Stanford swimmer [laughing] to teach their kids how to swim.

    8. AGAnthony Gonzalez1:20:15

       Exactly, and, you know, they probably did, despite the rules. But the rules at, uh, for forever said you couldn't do anything with this, nothing with name, image, and likeness. So whether you're a star football player at Ohio State or a star swimmer at Stanford or, you know, a, a backup long snapper at, you know, pick your college, a- anywhere, you just can't do anything with this. Um, it didn't make sense to me, 'cause I thought you could monetize it. And so a couple years ago, the state of California passed a bill that would legalize it in the state of California, and that set off a whole chain reaction where states all over the country started passing laws, but they were all different, and to me, that was chaos. You know, you want a whole host of things, but at minimum, you want an even playing field for everybody across the country.

    9. DRDavid Rosenthal1:20:59

       Right, 'cause then you get into a situation where, like, uh... Well, let's just stick in football for a moment. Like, quarterback goes to USC, well, now that that person can make a lot of money by doing that. Quarterback goes to Ohio State, they can't make any money by doing that. Like, that, that's a market distortion. [chuckles]

    10. AGAnthony Gonzalez1:21:15

        Exactly. I think it's an awkward way to make a college decision, is like, which state has passed the law that I like the most with respect to marketing rights? And so what we proposed was, "Hey, let's do a national standard. Let's have one standard and legalize it, provide the economic right for the athlete, no matter who you are, uh, but build in some guardrails around inducements and recruiting and, and those sorts of things." And so that was, that was our intent. Uh, that's what we've proposed now for two Congresses, uh, have it bipartisan.

    11. BGBen Gilbert1:21:46

        And just so people understand the history of this, it's not like there was something federally making it illegal. It was that the NCAA said that, "You can't do this and be a part of one of our programs," which are all the biggest programs. And so with Congress passing regulations, it's basically superseding and saying, "Look, like, you can't prohibit these people from doing this thing."

    12. AGAnthony Gonzalez1:22:06

        Exactly, and so we've been pushing that legislation for a few years now. Ultimately, what happened is the NCAA lost a court case at the Supreme Court last year. It was about a year ago today, and since then, they just said, "We'll make name, image, and likeness legal, but we won't enforce it, and so we'll, we'll stay completely out of it, essentially." And so that's set off what, to me, looks like the Wild West. So now what you're seeing are these things called collectives, and what a collective is, is it's a group of boosters that don't have an official affiliation with the university, and they are raising, quote, "marketing dollars," um, to go buy players on behalf of, of the team.

    13. DRDavid Rosenthal1:22:45

        Yeah. This is insane. This is crazy.

    14. AGAnthony Gonzalez1:22:48

        Yeah, it's nuts, um, and you're seeing it in, in the recruiting. You're seeing, you know, quarterbacks sign these, quote, "NIL deals" for $8 million. Problem with that, a, a couple things. One, I've not seen any of these deals, and nobody has, but here's what you would- should look for if you were to look at one of those deals. Number one, what commission is the person who brokered the deal taking? My guess is they're taking a big commission. So if you sign an NFL contract, your agent... The most your agent can make is 3%. That's via collective bargaining and the rules of, of the union. Marketing deals have unlimited cuts, but normally it's around 20%. My guess is these NIL deals are coming with pretty big haircuts that look more like 20% than 3%, but there's no way to know, 'cause there's no transparency, and everything's just sort of happening in this chaotic situation. Um, on top of that, it's just al- it's goofy for the team, right? Like, if you're the coach, now you're hoping that the collective that you have no association with buys the right players?

    15. BGBen Gilbert1:23:49

        It really handicaps the coach. Like, the coach can't go and, and convince a player and say, "I know for sure I have this thing for you." They're, like, at the mercy of a, a collective and gotta make a call and say, uh, "Do you think you could go up to this number for this player?"

    16. AGAnthony Gonzalez1:24:03

        Exactly. To me, the model is in a place where if Congress doesn't step in and, and find some sort of way to stabilize this, the whole thing will probably just go professional, which maybe, like, a lot of people think it should, and, you know, that's maybe an argument for another day. But, but in that world, here's the trade-off that you make if it goes full professional. In that world, the way most schools would react, I suspect, is they would cut every single sport that doesn't make money-

    17. BGBen Gilbert1:24:32

        Mm

    18. AGAnthony Gonzalez1:24:32

        ... except for the ones they would have to keep for Title IX purposes, and so these athletic departments would shrink dramatically.

    19. DRDavid Rosenthal1:24:39

        Right. You'd probably have, like, six to 10 programs per school. [chuckles]

    20. AGAnthony Gonzalez1:24:43

        At most, right? Yeah, I mean, you'd probably... You know, you'd have a football team and a basketball team, and you'd have a women's basketball team, and then you'd probably have field hockey. I think there's a lot of people on that team. I think synchronized swimming has big numbers. Like, you'd just- You'd be m- making choices that I would argue aren't in the best interest of, of your entire student athlete body. Um, and so a lot of opportunity would go away.

    21. BGBen Gilbert1:25:04

        And for folks who don't know, I- like, I'm pretty sure when I was at Ohio State, I remember the stat that us and the University of Oregon, by virtue of, of Nike using it as their testing ground and, and the incredible rabid fan hood for the university, I think the football program paid for every other sport, thus making the athletic department itself profitable and could contribute back to other things in the university. But I think us and the University of Oregon were the only countries in the nation at that time that actually could do that.

    22. AGAnthony Gonzalez1:25:34

        Yeah. Uh, I think there's more that are profitable now, but the general structure is football and men's basketball make the money, and they pay for everything else, is generally how it works.... maybe we should have that discussion, but there is a trade-off, like there is in everything, right? And, and the trade-off is the opportunity for the men's track and the women's track and the softball team and the field hockey team and, and my wife's swimming team, and all these, right? Like, all of a sudden, those are on the chopping block. And, you know, when you talk about how do we expand opportunity in our society, and how do we make sure that institutions are more receptive to people from all different backgrounds, in particular, really difficult backgrounds, in particular, minority backgrounds, one of the best ways is through sports. And so if you're gonna kill the college model, you're gonna kill that opportunity right alongside of it. That is the trade-off. Um, and again, like, people can come down wherever they want on that issue, but I think we need to be eyes wide open as we think through this. And for me, the conclusion has always been, look, like, I don't know what the answer to that question is. I do know that NIL is pretty straightforward, and I know that, you know, people should be able to market themselves. And if a college swimmer anywhere in the country wants to teach swim lessons to help pay for school, 'cause, by the way, they're not on scholarship, so they're taking on student debt just like everyone else, if that's true, then we should let them market themselves, and I don't think that's controversial.

    23. DRDavid Rosenthal1:26:55

        It's crazy the amount of dollars that are involved. I mean, the most crazy thing to me from all of it is that, like, it's almost like college programs are, like, half pregnant right now in that, like, it's got all of the money and structure of a, like, professionally owned, [chuckles] you know, for-profit sports organization.

    24. AGAnthony Gonzalez1:27:15

        Right.

    25. DRDavid Rosenthal1:27:16

        But, you know, like, these collectives of boosters, like, they don't own equity in Ohio State. [chuckles] You know? Like, they're just- like, it's wild that they're putting up this money for, I don't know.

    26. AGAnthony Gonzalez1:27:26

        Yeah. I also don't think it's sustainable, right? Like, what do you get out? You don't-- There's no economic return to it for them.

    27. DRDavid Rosenthal1:27:31

        Exactly.

    28. AGAnthony Gonzalez1:27:32

        It's a psychological return and the notion that you get to be more connected to your team, and you're gonna win more games, and that's wonderful, but the people paying that money don't make anything off of that, as far as I can tell. Maybe they do. I don't know. I don't think they do.

    29. BGBen Gilbert1:27:46

        Hmm. Maybe they're cutting in on the deals, that there's such a large commission or something.

    30. AGAnthony Gonzalez1:27:49

        No, I think [exhales] the collectives are set up all as nonprofits. Um, I think the people who are making money off the deals are the agents, would be my guess.
16. 1:28:13 – 1:52:37

    American dynamism and industrial policy: resilience, semiconductors, and innovating out of climate trade-offs

    1. DRDavid Rosenthal1:28:13

       Well, speaking of opportunity in America, let's talk about science, space, and technology and, and kinda, you know, American dynamism in Kathryn Boyle's terms. You know, you, you mentioned China competitiveness, that you were involved in, actually, in the, the Financial Services Committee, but, um, yeah, I'd love to hear from you. You know, may- maybe the right way to start is, you know, you, you've said this before, you know, plenty elsewhere, um, you know, kind of what you see as the great political battle of our time and how it's not [chuckles] Republican versus Democrat.

    2. AGAnthony Gonzalez1:28:43

       I don't think it is, though the activists inside of both parties think that's what it is.

    3. DRDavid Rosenthal1:28:47

       [chuckles]

    4. AGAnthony Gonzalez1:28:47

       So to me, I think we're at, at a crossroads in our country, but also globally, and I think the breakdown is, do you believe in American democracy or not? And that's not a question of, do you believe that the democracy's working perfectly? Uh, clearly, the answer to that is no. There are almost no people I know who think our government's working exactly the way that it should, and so we should fight for meaningful reforms to make sure it's more reflective of, of the people we serve. Absolutely. When I say there are people who have lost faith in America, and why I think the real divide is who believes in American democracy and not, is I think on both sides, what I've seen increasingly is people inside the parties, when things don't go their way, when they don't get the out- the outcome they like, their immediate reaction is to destroy and tear down something. Could be a building, could be law, could be the court, could be anything, right? It's sort of the take your ball and go home, this thing's totally broken, we need to burn it down and start over with something else. I see that on the left, and I see it on the right. I think that's poison. It's poison for a whole host of reasons, one of which is, I think we need to take a step back and remember how incredible the American idea and American democracy has been for the entire world. Prior to our founding, governments were not [chuckles] of, by, and for the people. Governments were of, by, and for the government.

    5. DRDavid Rosenthal1:30:08

       Like a monarch. [chuckles]

    6. AGAnthony Gonzalez1:30:09

       Yeah. Outside of a handful of, like, Greek city-states back in the day, democracy was a new idea and was an experiment, and for the first time ever, we placed the sovereignty of the individual at the center of society. And government's job, if you go back to the founding, was basically to protect the rights of the individual. The individual was sovereign. The government was beholden to the individual. That's a beautiful, beautiful, and powerful idea. And, oh, by the way, we don't just believe that for people inside our own country. The belief is that all people have dignity, all people have these rights, and as a result, we need to lead with those values globally. And if you believe that, then, of course, you have self-government, of course, you have a democracy. You wouldn't have an arbitrary monarch ruling over you because the people are sovereign. And from that, look, we've created more wealth, more prosperity, lifted more people out of poverty, freed more people, and oversaw the longest sustainable peace in world history. That's not to say we're perfect. Again, of course, we're not, and, of course, the founding wasn't perfect, right? We had the Three-Fifths Compromise, which I think is the original sin of the country. A whole host of things that we've gotten wrong. But compare that to the alternative, which is sort of the a- authoritarianism and Chinese communism and the sort of divides there, and I think it's a pretty clear answer, uh, as to what the right path forward is. And so when I see people tear down our democracy, whether it's, again, right or left, I think that's a dead giveaway to China. It emboldens the Russias and the Chinas of the world, and you hear it in their rhetoric, you see it from their propaganda arms, and all it does is cheapen democracy and, and our leadership in the world globally. And so to me-... That's the real divide. You know, look, like, faith in democracy isn't given, it's earned. Uh, and so people in positions like mine need to do a much better job of fighting for things that are relevant for our people, and ignoring the most extreme voices, and, and take the, the, the necessary political risks to, to bring us back. But it's n- also not just on us, right? So, like, the beauty but also the burden of democracy is it's a participation sport. So you actually have to show up [chuckles] as an American. You have to vote, and not just once every four years.

    7. BGBen Gilbert1:32:18

       Right. And, and not only do I have the right to vote, but, like, I kinda should know what I'm voting on, so, like, I kinda need to do some work to make informed choices.

    8. AGAnthony Gonzalez1:32:27

       Yeah. The one question people ask me a lot is, "Hey, you know, how do we fix this?" The first question I ask is, "How many of you have voted in primaries?" And usually, like, one hand goes up. The, the numbers are around 20%. Around 20% of voters vote in primaries. Well, the primary is where the battle is for most races. Most congressional districts, certainly in this country, are heavily gerrymandered, and, you know, a lot of these Senate races are really come down to, you know, who, who's gonna win that primary.

    9. DRDavid Rosenthal1:32:56

       I mean, you were saying in your own journey, like, it was all focused on the primary, right? All the fundraising, like, that was the battle.

    10. AGAnthony Gonzalez1:33:02

        Yeah, and you, and you run hard, and you fight hard for every vote, and, and you represent every constituent, not just, you know, Republican primary voters. But ultimately, you have to appeal to the people who vote if you wanna get elected. And if we could move our primary electorate participation from, like, 20 to 50, I actually think our politics would moderate, and they would improve dramatically, more so than most people realize.

    11. BGBen Gilbert1:33:24

        And why is it that they're won or lost in the primary versus the general?

    12. AGAnthony Gonzalez1:33:27

        Well, in congressional districts, 'cause they're so gerrymandered, so they're all ranked. Uh, my district's like an R plus nine, which means generic Republican versus generic Democrat, the Republican has a nine-point lead. You know, every district has it. Mine's actually... A nine-point lead is a lot. Mine's one of the least gerrymandered in the country.

    13. DRDavid Rosenthal1:33:44

        Right.

    14. AGAnthony Gonzalez1:33:45

        You actually see a lot in, like, the teens, and twenties, and forties [chuckles] um, where it's, you know, an R plus 57. It's like, it's like nobody can win.

    15. BGBen Gilbert1:33:53

        So that's the argument of, like, whoever then wins the Republican nomination in the primary is paved. The path is paved from there.

    16. AGAnthony Gonzalez1:34:00

        Right.

    17. DRDavid Rosenthal1:34:01

        If you think about it, in general elections, the media is making such a big deal about X, Y, Z, House seat or Senate seat, and it's like, well, you're talking about, like, three or four seats in the entire country. [chuckles] What does that mean for the rest of the seats? Like, those are givens.

    18. AGAnthony Gonzalez1:34:14

        Right. And you know what else just happened? We all just got our maps redrawn, and what happened is fewer districts are now toss-ups, so there's basically fewer at play, and the existing districts are now more extreme, and so it's like the worst of all worlds. So [chuckles] we have fewer competitive seats, and the ones that we have are, are gonna have more extreme candidates, unless, and here's the, the hack, unless people actually show up and vote.

    19. BGBen Gilbert1:34:38

        This one little trick. [laughing]

    20. AGAnthony Gonzalez1:34:40

        Yeah, this one thing that you need to do. Like, get engaged. Actually follow the primary and look, and it's like, do I like this candidate or not?

    21. DRDavid Rosenthal1:34:47

        They mail you a booklet. It's right there. Everything you need to know is right there. [chuckles]

    22. AGAnthony Gonzalez1:34:50

        Yeah, and like, it- everybody's on Twitter. Get on there and look at the things. Like, it's, it's really easy, I think, to figure out, like, I resonate more with this person or that person. And nobody's gonna be, you know, 100% the way you want, o- of course, but I think you'll be able to quickly figure out, okay, who's gonna be a productive representative and who's maybe has other motives?

    23. BGBen Gilbert1:35:13

        Right.

    24. AGAnthony Gonzalez1:35:14

        And so that, that would be my biggest solution for individuals who are frustrated, is, like, you just gotta vote more.

    25. BGBen Gilbert1:35:20

        Now, for our next sponsor, we have our good friends at Tiny-

    26. DRDavid Rosenthal1:35:24

        Woo!

    27. BGBen Gilbert1:35:24

        ... and they've got something new to share with us today. As longtime listeners know, Tiny is the Berkshire Hathaway of the internet, and has built and acquired a collection of truly wonderful internet businesses. Their story is just incredible. Andrew Wilkinson started the design agency, Metalab, in Victoria, BC, and they became one of the premier design firms in the world, building UIs for Slack, Coinbase, Tinder, Headspace, Patreon, you name it. At the same time that they were having all the success building that business, Andrew and his partners, Chris and Jeremy, started to think about investing and became totally obsessed with Warren, Charlie, and Berkshire. They thought, "Wait a minute, we know there are a whole bunch of businesses out there just like Metalab, that are wonderful internet businesses doing 5 million or more in recurring revenue at something like 30 to 40% operating margins, but don't make sense for venture capital because there aren't M&A buyers for them, and they can't get to the scale required for an IPO." If you put aside the VC approach of needing to play for that exit, who wouldn't wanna own a portfolio of businesses just like that? And that's exactly what Tiny went out and did over the past 15 years. There's just incredible successes: Dribbble, Pixel Union, Creative Market, 8020, Girlboss, AeroPress, which I used this morning-

    28. DRDavid Rosenthal1:36:43

        Me too

    29. BGBen Gilbert1:36:43

        ... All of these are now Tiny businesses run by their own independent managers, just like, say, Brooks Running within Berkshire Hathaway, and producing incredible cash flow for Tiny and the managers themselves.

    30. DRDavid Rosenthal1:36:56

        So what's new? Well, it turns out, over the past, you know, decade-long bull run, that a lot of wonderful internet businesses that should have been Tiny-type companies mistakenly took venture capital instead because it was so easy to get [chuckles] and now have a proverbial monkey on their back looking for an exit. Well, Tiny has realized that they're actually in a great position to fix this situation for everybody. I mean, I've thought about it. So many people have talked about this. This has always been, like, the problem in venture capital, is 30-ish percent of the portfolio of any VC firm are, you know, companies like this that end up being good companies but just aren't gonna get to scale for an exit. So what do you do with them?
17. 1:52:37 – 2:01:15

    What’s next for Gonzalez: finishing legislation, investing vs operating, and founder advice

    1. BGBen Gilbert1:52:37

       Well, Anthony, on a closing note, let's bring it back to you personally a little bit. You're not running in the next election, so what, what do you think the future holds for you as you focus on the next chapter of your life?

    2. AGAnthony Gonzalez1:52:48

       It's a good question. Um, uh, admittedly, um, my primary focus is, is finishing strong. I have a handful of pieces of legislation that I'm, I'm still pushing, uh, that I'm, I'm hopeful we can get across the finish line. That's the primary focus. But I am starting to kind of go through my notes again and reread my, my business school notebooks-

    3. BGBen Gilbert1:53:06

       [laughing]

    4. AGAnthony Gonzalez1:53:06

       ... and, kind of go through experiences. I keep notebooks at, uh, at all times, so it, it's kind of fun to go through and relive some of those experiences, building businesses, but also at, in business school. And, you know, I, I think I'm, I'm still trying to work through do I want to be an investor, or do I want to be an operator? I've done operating, and I, I enjoy it. I enjoyed the heck out of building our campaign team, which is sort of like a, a startup in a way, and I enjoy the investment side. And, you know, like, for me, what I'm trying to figure out is, like, who in my life do I admire, and what kind of businesses do I, I want to build? You know, like, I think of the IGSB model, and I, I just think it's fundamentally an incredible model. The success is outrageous. Uh, for those of you who listen to the Altos Acquired episode, it's probably most similar to that.

    5. DRDavid Rosenthal1:53:52

       It's a truly incredible story. It came out of... It's called the Investment Group of Santa Barbara, but it also came out of Stanford GSB, and, uh, you know, really just two folks and a very small handful of people over 50 years, like, have compounded at numbers that are, you did- unbelievable. [chuckles]

    6. AGAnthony Gonzalez1:54:07

       Yeah, it's just crazy. And basically by sort of doing the Buffett model but with high-growth companies, right? Be super concentrated, don't get outside your circle of competence, and, you know, focus on the underlying economics of the business. And what they would say is, "We also only work with people we like and admire." That is probably my top priority as I, as I move forward, is I want to be in a position where I love the people I work with, I admire the people I work with and for, and I'm working on exciting new challenges. That's sort of where, where I think I'll be the most effective, and, again, whether it's operating or investing, I guess time will tell. Um, but I guess we're also all just a little bit of both at, at the end of the day, right?

    7. DRDavid Rosenthal1:54:45

       Yeah. Capital allocation is, uh, the number one most important skill of a CEO, many people would argue, so [chuckles] ...

    8. AGAnthony Gonzalez1:54:52

       Yeah. Yeah, uh, that's certainly the, uh, the Will Thorndike perspective, right?

    9. BGBen Gilbert1:54:56

       Absolutely. Oh, we should plug Will's new thing here.

    10. DRDavid Rosenthal1:54:59

        Oh, yeah.

    11. BGBen Gilbert1:55:00

        If you like the outsiders and you liked, uh, our book club with Will back in the day, uh, he's got a new podcast called 50X. That's, uh, the first episode, I think is with the CEO of TransDigm, which is a, a great episode. David and I got a early sneak peek.

    12. DRDavid Rosenthal1:55:11

        Yeah. As part of our friends over at the Colossus Empire.

    13. AGAnthony Gonzalez1:55:15

        That's good for me. I gotta pick that up.

    14. DRDavid Rosenthal1:55:16

        Oh, yeah. It's, it's really good.

    15. BGBen Gilbert1:55:18

        It's unbelievable how they've grown a truly excellent manufacturing company, both organically and by acquisition over the years. It's an impressive story.

    16. AGAnthony Gonzalez1:55:29

        TransDigm is Nick Howley's company.

    17. BGBen Gilbert1:55:31

        Yep.

    18. AGAnthony Gonzalez1:55:31

        I know Nick well.

    19. BGBen Gilbert1:55:32

        Oh, nice. Yeah, it's Will interviewing Nick.

    20. DRDavid Rosenthal1:55:34

        We have a very vocal... Uh, it's a small minority, but a very vocal small minority of Acquired listeners who are just, like, campaigning for a TransDigm episode. [laughing]

    21. AGAnthony Gonzalez1:55:45

        Nick would be great on the podcast. I don't know if you've ever heard Nick speak, but Nick is incredible. Uh, he's super fun and entertaining and, like, gregarious. He's a Cleveland guy.

    22. BGBen Gilbert1:55:53

        Yeah.

    23. AGAnthony Gonzalez1:55:54

        He's awesome. Yeah, he'd be a good guest. He'd be better than me. You should, you should get him.

    24. DRDavid Rosenthal1:55:59

        [laughing] This has been pretty good.

    25. BGBen Gilbert1:56:00

        We'll, we'll add it to the list, and, uh, and listeners, go check out 50X.... All right, so we won't make you answer what, what you're gonna do next, though. But, but I, I'm curious, where would you steer founders? I think there are a lot of people out there right now who, always, who are listening, who want to found companies, but I think especially, you know, if these ideas that we've been talking about with, with Catherine, with you, of American dynamism, you know, resonate. Where do you think founders should go poke around and, uh, dig to start companies? [chuckles]

    26. AGAnthony Gonzalez1:56:29

        That's a great question. I mean, I- admittedly, I'm kind of thinking of the same thing.

    27. BGBen Gilbert1:56:33

        Don't give away your best ideas, but maybe your second best. [chuckles]

    28. AGAnthony Gonzalez1:56:36

        Yeah. Well, I mean, this isn't gonna be that profound, but, um, to me, like, I, I look for industries that have enormous tailwinds, and, like, where is the growth gonna be? And then where can I fit inside of that, if at all? So, like, there's probably gonna be enormous growth in vaccine development and pharmaceuticals. I know nothing about it. I hope everybody does phenomenally well in that space. It's just not gonna be for me. [chuckles] Okay? So, um, outside my circle of competence, I love everyone in it, not for me. But, you know, are there ways to marry my experiences on decentralized systems and, I don't know, sports or entertainment? Probably. Is that what I'm gonna do? I have no idea, but I do think there's some interesting tailwinds, uh, on the decentralization side. There's certainly interesting tailwinds on the climate movement, right? And how do we decarbonize the economy and do it in a way that's responsible, not just for our people, but for, for, for the entire world. It's probably the biggest theme, uh, frankly, that, you know, I, I think is probably a 50-year theme, but definitely for the rest of my career, I think we'll be working on that. And so where are your skills gonna be the most valuable, and, and where do you have the ability to do the best job? Um, which is sort of an obvious point, but I think it's an important one. I think a lot of times people think, "Oh, there's a lot of money to be made over there, I'll go over there." But if you're not a good fit for that, you're just gonna be, you know, fighting uphill. That's what I would tell founders. You know, focus on the things that you can be the best in the world at, that have a bunch of tailwinds behind them, uh, and surround yourself with people you love and admire. The times that I've gotten it wrong in my life is when I've put myself in positions where I'm not with people I love and admire. When you're in that position, things can break down, and, and, uh, they break down quickly.

    29. BGBen Gilbert1:58:11

        Amen. I 100% agree with that. That is, that is true good wisdom from the ideas be folks and many others, so...

    30. AGAnthony Gonzalez1:58:19

        For sure. The most fun times I have in my career and the most meaningful are, are always with people I love, and it's not even like-minded people. It's, like, people from all different backgrounds and creeds and colors, and you come together in these interesting environments, and you build something amazing. Uh, and it's so fun and interesting, and you learn so much. That, to me, is where the development is. It's in those uncomfortable moments. Anybody can go be comfortable. It's sort of where can you push your own limits, uh, and do it with people you love, that I think that the growth comes, and that's what I enjoy the most.

Episode duration: 2:01:15