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

Ben Gilbert 0:00 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.

David Rosenthal 0:06 I love it. We've got all the creatures here. I got the baby on the monitor.

Ben Gilbert 0:09 [laughing]

David Rosenthal 0:09 I got my fluffy dog, you've got your fluffy dog.

Ben Gilbert 0:12 Keep her off camera and think it never happened.

David Rosenthal 0:14 [laughing] Yeah.

Speaker 0:15 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?

Ben Gilbert 0:32 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.

David Rosenthal 0:46 And I'm David Rosenthal, and I am an angel investor based in San Francisco.

Ben Gilbert 0:51 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.

David Rosenthal 1:08 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.

Ben Gilbert 1:31 Yes, the House Financial Services Committee had a broad mandate well before crypto came around.

David Rosenthal 1:35 And Anthony is one of the handful of folks, as we talk about, that really actually use and understand this stuff in Congress. [chuckles]

Ben Gilbert 1:43 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.

David Rosenthal 1:55 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.

Ben Gilbert 2:13 I remember in high school watching him on TV.

David Rosenthal 2:15 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.

Ben Gilbert 2:24 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.

David Rosenthal 2:54 Christina, a lot has happened since we last recorded, right?

Speaker 2:59 A lot has. Thank you so much for having me back.

David Rosenthal 3:02 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.

Speaker 3:23 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.

David Rosenthal 4:20 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?

Speaker 4:34 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.

David Rosenthal 5:52 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?

Speaker 6:08 ... 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.

David Rosenthal 6:36 Our thanks to Vanta, the leader in automated security compliance software. If you're looking to join Vanta's 3,000, now 3,000-

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David Rosenthal 6:44 ... 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.

Ben Gilbert 6:59 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.

David Rosenthal 7:12 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]

Anthony Gonzalez 7:23 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.

David Rosenthal 7:30 [chuckles]

Anthony Gonzalez 7:30 So it is an honor to be here, and thank you for having me.

Ben Gilbert 7:33 When you say here, where is here right now for you? Because it looks like a very official setting behind you.

Anthony Gonzalez 7:38 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.

Ben Gilbert 7:52 That's great. And where is the congressional office building-wise?

Anthony Gonzalez 7:56 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]

David Rosenthal 8:03 [chuckles]

Anthony Gonzalez 8:03 ... 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.

David Rosenthal 8:14 But you guys do the real work.

Anthony Gonzalez 8:15 We like to think so. They treat us like little children, like: "Oh, that's cute, little House member."

David Rosenthal 8:19 [laughing]

Anthony Gonzalez 8:19 "The Senate's gonna really solve this problem."

David Rosenthal 8:22 [laughing]

Anthony Gonzalez 8:22 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.

David Rosenthal 8:29 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.

Anthony Gonzalez 9:07 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.

Ben Gilbert 9:26 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.

Anthony Gonzalez 9:44 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.

David Rosenthal 10:29 Both Ben and I just rewatched the, uh, Godfather movies, and, uh-

Anthony Gonzalez 10:33 Yeah

David Rosenthal 10:33 ... I forgot that Godfather: Part II, it happens right before the revolution.

Anthony Gonzalez 10:37 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.

David Rosenthal 11:20 Right.

Anthony Gonzalez 11:21 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.

David Rosenthal 12:02 Oh, wow!

Anthony Gonzalez 12:03 [chuckles]

David Rosenthal 12:04 Oh, wow, I didn't know that part of your history. [chuckles]

Anthony Gonzalez 12:07 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.

Ben Gilbert 12:16 Whoa, not too many father-son combos in that, uh, that club.

Anthony Gonzalez 12:21 ... 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.

Ben Gilbert 13:05 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.

Anthony Gonzalez 13:19 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.

Ben Gilbert 13:27 In the sort of, uh, circle of Cleveland area folks, you're not gonna be more than a connection or two away.

Anthony Gonzalez 13:32 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.

Ben Gilbert 14:05 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?

Anthony Gonzalez 14:23 I always say, when I look at my own background, I'm like, "None of this makes any sense." [laughing]

Ben Gilbert 14:26 [laughing]

Anthony Gonzalez 14:26 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]

Ben Gilbert 14:39 [laughing]

Anthony Gonzalez 14:41 I was not a kicker.

Ben Gilbert 14:43 Your dad must have been pissed about that.

Anthony Gonzalez 14:45 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-

Ben Gilbert 15:20 [laughing]

Anthony Gonzalez 15:20 ... 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."

Ben Gilbert 15:34 Oh, that must have been heartbreaking.

Anthony Gonzalez 15:36 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."

Ben Gilbert 16:12 [chuckles]

Anthony Gonzalez 16:13 You know, as an impressionable 16-year-old, "We'll consider it."

Ben Gilbert 16:16 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.

Anthony Gonzalez 16:29 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.

Ben Gilbert 16:40 Yep.

Anthony Gonzalez 16:40 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.

Ben Gilbert 17:06 Right near the, uh, Football Hall of Fame.

Anthony Gonzalez 17:08 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."

Ben Gilbert 17:43 [laughing]

Anthony Gonzalez 17:43 Whoops, [chuckles] I botched the line.

Ben Gilbert 17:45 [laughing] Were you planning on saying that, or was it spur of the moment?

Anthony Gonzalez 17:48 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]

Ben Gilbert 17:58 [chuckles]

Anthony Gonzalez 17:59 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,

Anthony Gonzalez 18:29 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.

David Rosenthal 18:58 In playing for the Colts, catching passes from Peyton Manning? [chuckles]

Anthony Gonzalez 19:02 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.

David Rosenthal 19:08 [chuckles]

Anthony Gonzalez 19:09 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]

David Rosenthal 19:47 [chuckles]

Anthony Gonzalez 19:48 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."

Ben Gilbert 20:10 So you went back to the locker room, and you started typing up an answer to what matters to you most and why?

Anthony Gonzalez 20:14 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."

David Rosenthal 20:21 You were with the Patriots at that point, right?

Anthony Gonzalez 20:23 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.

Ben Gilbert 21:13 Wow.

David Rosenthal 21:14 Wow!

Anthony Gonzalez 21:15 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.

Ben Gilbert 21:26 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?"

Anthony Gonzalez 21:34 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.

Ben Gilbert 23:29 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?

David Rosenthal 24:10 Also, we should say, probably most people who were thinking that were not Republicans at that point in time, right? [chuckles]

Anthony Gonzalez 24:15 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.

Ben Gilbert 24:33 The highly secretive Investment Group of Santa Barbara.

David Rosenthal 24:36 We've been begging for years. Now we're making a public appeal here. Come on, guys. [chuckles]

Anthony Gonzalez 24:40 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.

David Rosenthal 25:50 What was the message that you landed on that you thought would work?

Anthony Gonzalez 25:53 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.

Ben Gilbert 26:34 I remember the day LTV Steel shut down that factory.

Anthony Gonzalez 26:37 Absolutely. Quick story on LTV. So LTV Steel had this massive factory just south of the city. Massive.

Ben Gilbert 26:44 Right off the highway. It was a big like... Y- you drive by it, it has a presence.

Anthony Gonzalez 26:47 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.

Ben Gilbert 28:49 And probably not the candidate themselves doing that.

Anthony Gonzalez 28:51 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.

David Rosenthal 29:13 What was the budget for the- for that first campaign?

Anthony Gonzalez 29:16 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.

Ben Gilbert 29:35 $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."

Anthony Gonzalez 29:44 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-

David Rosenthal 29:52 [chuckles]

Anthony Gonzalez 29:52 ... 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.

David Rosenthal 30:10 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?

Anthony Gonzalez 30:23 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.

Ben Gilbert 30:59 Strength leads to strength.

David Rosenthal 31:00 Right, it's like startups.

Anthony Gonzalez 31:01 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?"

David Rosenthal 31:32 Mm.

Anthony Gonzalez 31:33 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.

Ben Gilbert 32:57 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?

Anthony Gonzalez 33:37 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.

Ben Gilbert 34:42 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.

Anthony Gonzalez 35:05 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.

Ben Gilbert 38:24 Oh, my God.

Anthony Gonzalez 38:25 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]

Ben Gilbert 39:26 [chuckles] Yeah.

Anthony Gonzalez 39:26 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] "

Ben Gilbert 39:57 [chuckles]

Anthony Gonzalez 39:57 "That doesn't sound so good." [chuckles]

Ben Gilbert 39:59 Yeah. [chuckles] Right.

Anthony Gonzalez 40:00 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?

Ben Gilbert 40:55 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?

Anthony Gonzalez 41:06 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.

Ben Gilbert 41:18 That was the Russia stuff, right?

Anthony Gonzalez 41:19 That was the... Yeah, it was actually Ukraine, right? He tried to-

Ben Gilbert 41:22 Right

Anthony Gonzalez 41:23 ... 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.

Ben Gilbert 41:40 Hmm.

Anthony Gonzalez 41:41 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.

Ben Gilbert 42:46 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?

Anthony Gonzalez 43:01 ... 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.

David Rosenthal 44:11 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.

Anthony Gonzalez 44:20 Yeah.

David Rosenthal 44:21 You know, those places are not, uh, contiguously, uh, you know, geographically connected. [chuckles]

Anthony Gonzalez 44:25 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.

Ben Gilbert 45:14 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.

Anthony Gonzalez 45:45 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.

David Rosenthal 46:19 [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]

Anthony Gonzalez 46:41 Yeah, you know, we have similar friends, so I get the same memes that come, [laughing] that, that come to me.

Ben Gilbert 46:46 As Elon Musk said, is, uh, "I got a good meme guy," and it sounds like you both share the same meme vendor.

Anthony Gonzalez 46:51 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.

David Rosenthal 47:17 Yeah, of course.

Anthony Gonzalez 47:17 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.

Ben Gilbert 47:53 And you were on the Financial Services Committee at this point?

Anthony Gonzalez 47:56 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.

Ben Gilbert 48:01 Mm-hmm.

Anthony Gonzalez 48:01 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-

David Rosenthal 48:16 And you were actually, like, participating in DeFi and like...

Anthony Gonzalez 48:19 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]

David Rosenthal 48:32 [chuckles] Shocking! Shocking.

Anthony Gonzalez 48:34 I, there should be a, probably should be a rule against it, but there isn't.

David Rosenthal 48:37 Well, there's just no regulation at this point, right? Like, uh, b- back then.

Anthony Gonzalez 48:41 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.

David Rosenthal 50:10 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?

Anthony Gonzalez 50:27 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.

Ben Gilbert 51:44 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.

Anthony Gonzalez 51:56 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.

Ben Gilbert 52:55 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?

Anthony Gonzalez 53:11 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."

David Rosenthal 53:23 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.

Anthony Gonzalez 53:31 Where was Schoolhouse Rock!?

Ben Gilbert 53:33 I don't know. Everybody pause this, go to YouTube, search, uh, I'm Just a Bill, and then come back.

Anthony Gonzalez 53:39 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]

David Rosenthal 55:50 [laughing]

Anthony Gonzalez 55:50 Things that should take like, I don't know, six months, take, like, six years.

David Rosenthal 55:54 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]

Anthony Gonzalez 56:12 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-

David Rosenthal 56:40 [chuckles]

Anthony Gonzalez 56:40 - 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.

Ben Gilbert 56:57 Oh, I've been a part of, uh, companies closing financing. Yeah, you, you get it four seconds before the deal's done. [chuckles]

Anthony Gonzalez 57:02 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.

Ben Gilbert 57:51 And what is the tax?

Anthony Gonzalez 57:52 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.

David Rosenthal 58:16 Oh, yeah, like, the default is that you do. [chuckles]

Anthony Gonzalez 58:19 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.

Ben Gilbert 58:59 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.

Anthony Gonzalez 59:45 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.

David Rosenthal 1:00:50 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?

Anthony Gonzalez 1:01:08 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-

Ben Gilbert 1:01:29 Oh, yeah.

Anthony Gonzalez 1:01:29 Um, remember, so those were nasty places.

Ben Gilbert 1:01:32 We were all teenagers in, in them at the time, I think. [chuckles]

Anthony Gonzalez 1:01:35 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.

Ben Gilbert 1:01:56 Oh, and this was the era, I'm remembering, right, where, like, a bunch of people in Congress wanted to, like, end video games.

Anthony Gonzalez 1:02:03 Yeah.

Ben Gilbert 1:02:04 This was not a crazy sentiment in the country at the time. [chuckles]

Anthony Gonzalez 1:02:06 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.

Ben Gilbert 1:04:14 So what do you think the bite-sized early regulation will be, sort of on the steps to getting a more complete regulatory framework?

Anthony Gonzalez 1:04:22 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.

Ben Gilbert 1:06:02 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?

Anthony Gonzalez 1:06:38 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.

David Rosenthal 1:07:21 Uh, so many examples. I mean, like, uh, FTX being, like, the obvious one.

Anthony Gonzalez 1:07:25 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.

David Rosenthal 1:07:48 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.

Anthony Gonzalez 1:07:56 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.

David Rosenthal 1:09:07 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.

Anthony Gonzalez 1:09:22 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.

Ben Gilbert 1:09:58 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.

Anthony Gonzalez 1:10:19 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?

Ben Gilbert 1:10:48 Right.

Anthony Gonzalez 1:10:49 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.

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David Rosenthal 1:11:44 It's so great that all these enterprise and fintech products now, like, have UIs on par or better with consumer apps.

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David Rosenthal 1:13:03 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.

Ben Gilbert 1:13:24 Totally. That first time that an employee expenses a first-class ticket to Paris for a meeting that should have been an email-

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Anthony Gonzalez 1:13:47 It's super cool. Managers and finance teams can actually pre-approve spending instead of having to review expenses retroactively. Brex essentially just automates compliance, and it's easy for employees to understand what's allowed. Managers can then only focus on the anomalies.

Host 1:14:03 Yes, Brex is almost eliminating the need for receipts entirely. They've built exclusive connections with payment processors to automatically create the receipt, so employees don't even have to, like, save or look for receipts after spending, and managers don't have to nag them.

Anthony Gonzalez 1:14:20 Oh, I love it. [chuckles] Keeping track of receipts. That's- this is one of those things where you're just like, "It's 2022. Why do I need this receipt?" There should be data exhaust. This should all be done automatically, and Brex is doing it. It's great.

Host 1:14:33 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.

Anthony Gonzalez 1:14:52 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.

Host 1:15:28 Has there been legislation that came out of the meme stock mania?

Anthony Gonzalez 1:15:32 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.

Host 1:16:22 It became a political casualty.

Anthony Gonzalez 1:16:24 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.

Host 1:16:34 And there was national media attention. I mean, I think I watched those hearings, like, live.

Anthony Gonzalez 1:16:38 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.

Host 1:16:49 [chuckles]

Anthony Gonzalez 1:16:49 And then I had the hearing, and every single member who spoke, they just absolutely eviscerated.

Host 1:16:57 I love it. [chuckles] You're just, like, what... reading in real time.

Anthony Gonzalez 1:17:01 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.

Host 1:17:08 [laughing] Oh, they were comparing you to the guy from Hit Man. [laughing] That's so great.

Anthony Gonzalez 1:17:13 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]

Host 1:17:20 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.

Anthony Gonzalez 1:17:27 Play Hit Man and be a meme stocker. Yeah. [chuckles]

Host 1:17:29 [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.

Anthony Gonzalez 1:17:44 He's a very nice man, but, uh, we've got some inflation issues.

Host 1:17:48 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.

Anthony Gonzalez 1:18:17 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.

Host 1:18:42 And did you and your teammates, like, did you resent this back in the day?

Anthony Gonzalez 1:18:45 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.

Ben Gilbert 1:20:05 That's, like, literally the number one person I'd wanna take swimming lessons from.

Anthony Gonzalez 1:20:08 Right. Exactly.

David Rosenthal 1:20:10 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.

Anthony Gonzalez 1:20:15 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.

David Rosenthal 1:20:59 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]

Anthony Gonzalez 1:21:15 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.

Ben Gilbert 1:21:46 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."

Anthony Gonzalez 1:22:06 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.

David Rosenthal 1:22:45 Yeah. This is insane. This is crazy.

Anthony Gonzalez 1:22:48 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?

Ben Gilbert 1:23:49 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?"

Anthony Gonzalez 1:24:03 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-

Ben Gilbert 1:24:32 Mm

Anthony Gonzalez 1:24:32 ... except for the ones they would have to keep for Title IX purposes, and so these athletic departments would shrink dramatically.

David Rosenthal 1:24:39 Right. You'd probably have, like, six to 10 programs per school. [chuckles]

Anthony Gonzalez 1:24:43 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.

Ben Gilbert 1:25:04 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.

Anthony Gonzalez 1:25:34 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.

David Rosenthal 1:26:55 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.

Anthony Gonzalez 1:27:15 Right.

David Rosenthal 1:27:16 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.

Anthony Gonzalez 1:27:26 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.

David Rosenthal 1:27:31 Exactly.

Anthony Gonzalez 1:27:32 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.

Ben Gilbert 1:27:46 Hmm. Maybe they're cutting in on the deals, that there's such a large commission or something.

Anthony Gonzalez 1:27:49 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.

Ben Gilbert 1:27:59 Mm-hmm.

Anthony Gonzalez 1:28:00 And that's where I think having some visibility on what those commissions look like would be helpful to the players, frankly, 'cause you would know, Hey, what the heck? You took thirty percent of me, but only five percent of him. Um, you know, what's going on here? So yeah, it's a broken market.

David Rosenthal 1:28:13 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.

Anthony Gonzalez 1:28:43 I don't think it is, though the activists inside of both parties think that's what it is.

David Rosenthal 1:28:47 [chuckles]

Anthony Gonzalez 1:28:47 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.

David Rosenthal 1:30:08 Like a monarch. [chuckles]

Anthony Gonzalez 1:30:09 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.

Ben Gilbert 1:32:18 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.

Anthony Gonzalez 1:32:27 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.

David Rosenthal 1:32:56 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.

Anthony Gonzalez 1:33:02 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.

Ben Gilbert 1:33:24 And why is it that they're won or lost in the primary versus the general?

Anthony Gonzalez 1:33:27 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.

David Rosenthal 1:33:44 Right.

Anthony Gonzalez 1:33:45 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.

Ben Gilbert 1:33:53 So that's the argument of, like, whoever then wins the Republican nomination in the primary is paved. The path is paved from there.

Anthony Gonzalez 1:34:00 Right.

David Rosenthal 1:34:01 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.

Anthony Gonzalez 1:34:14 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.

Ben Gilbert 1:34:38 This one little trick. [laughing]

Anthony Gonzalez 1:34:40 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?

David Rosenthal 1:34:47 They mail you a booklet. It's right there. Everything you need to know is right there. [chuckles]

Anthony Gonzalez 1:34:50 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?

Ben Gilbert 1:35:13 Right.

Anthony Gonzalez 1:35:14 And so that, that would be my biggest solution for individuals who are frustrated, is, like, you just gotta vote more.

Ben Gilbert 1:35:20 Now, for our next sponsor, we have our good friends at Tiny-

David Rosenthal 1:35:24 Woo!

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David Rosenthal 1:36:43 Me too

Ben Gilbert 1:36:43 ... 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.

David Rosenthal 1:36:56 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?

Ben Gilbert 1:37:39 And they just don't fit that venture return profile. You think they might when you make the investment, but it turns out that's not how it plays out.

David Rosenthal 1:37:45 Well, enter Tiny. So-... Tiny's figured out they are in the perfect position to solve this. They can come in, acquire the company, VCs get their money back, and founders get to take control back. Tiny has no interest in running your company. They want you to do that. You go back to running it profitably for the long term, and then together, you and Tiny both take big dividends out of it, and they have no interest in actually exiting the business. So they've done this now with several companies so far this year, where a VC-backed company was doing that, you know, kinda over five million in recurring revenue, thirty to forty percent operating margin or potential to have thirty to forty percent operating margin. Tiny can come in, acquire a business like that, make the VCs whole, and just reset the capital structure, and then management, if you like, you know, founders or whoever's currently running the business, you continue running it profitably and with totally aligned incentives. Like, this is exactly what Berkshire does when they acquire a company or even like Walmart did that we talked about with the early stores, where they were partnerships. Tiny owns the business, but they set up structures that make it fully aligned and worthwhile for you as a management team and employees to stay and continue running the company profitably. So if you're running a business like that, which we know many of you out there in the Acquired community actually are, or say you're a VC board member of one, we know there are a bunch of you out there as well, uh, or even if you just know a business like this, think it would be a great fit for Tiny, shoot them a note at hi@tiny.com and just tell them Ben and David sent you.

Ben Gilbert 1:39:17 Our thanks to Tiny.

David Rosenthal 1:39:19 So maybe let's now bring it to American industrial policy. I mean, over the time you've been in Congress, the view has shifted so much of globalism is an unfettered good to, holy crap, we may have some issues with our supply chain and, like, American industrialism and offshoring. You've lived all this. What's your journey been?

Anthony Gonzalez 1:39:41 Yeah. So, you know, again, I come from a maybe a slightly different perspective because of my father's background, my family's background, building a steel company in Northeast Ohio and, and seeing what has happened to the industrial base in the Midwest, um, and what that's meant for our communities. You've seen poverty creep into places. You've seen what were once very vibrant neighborhoods start to decay, and, and a lot of hopelessness and, and opioids and all kinds of terrible things come in their place. And so when you see that, I think it forces you to, to take a step back and say: Okay, what should we really be doing here? And, you know, to me, I, I think there's sort of three buckets that I think are most important. One is to build a sustainable economy, one a dynamic economy, and then also a resilient economy. And I would say sustainability gets probably the most publicity right now, and, you know, that's obviously important, but the dynamism is absolutely critical, and, and by that, I mean basically, I think the US should lead in every critical technology from now until eternity. So, like, I want the best AI systems and machine learning systems.

Ben Gilbert 1:40:43 Dynamic literally meaning changing, so w- whatever the next big wave is, that we are leading that big wave.

Anthony Gonzalez 1:40:49 Yeah, because that's where the economic value's gonna be created, and that's also where the jobs are gonna be created for the most part, right?

David Rosenthal 1:40:55 Like FTX being based in the Bahamas, like, is not good. [chuckles]

Anthony Gonzalez 1:40:59 Yeah, drives me crazy. And they're not the only one, right? And so whatever we need to do to attract builders and founders and engineers and, and talent to be in this country, to be educated, and to build the most critical technologies of the future and the supply chains that underpin them, I think is massively important. And then on the resiliency side, I think this is where, you know, sort of the goal was efficiency forever, and I think COVID, more than anything, probably highlighted to the world what maybe Northeast Ohio realized a long time ago, which is, if you just optimize for efficiency, you're gonna hit a trade-off at some point. For us, it was jobs. During the pandemic, it was supplies and PPE.

Ben Gilbert 1:41:39 Yes, the more you squeeze margin, and the more you make it so that you can get every last drop out of the towel, the less resilient you are to any sort of shock in the system.

Anthony Gonzalez 1:41:49 Absolutely. And, you know, we're dealing with it again on the inflation side, which I think is still largely a holdover from sort of COVID disruptions. But, you know, so what, what should we do going forward? Do I think we should reshore everything? No, I don't. But, you know, in this world where I believe it's us versus China and Russia, and sort of US values, norms, and ideas versus the Chinese Communist Party values and ideas, I want as many critical technologies and supply chains, domestic or with our friends, as possible. So, like, I'm happy to offshore, I don't know, T-shirt manufacturing. You know, if we run out of T-shirts, that would be unfortunate, but if a war broke out, we would probably survive.

Ben Gilbert 1:42:31 And you're identifying that, like, it's not mission critical, whereas like semiconductors, for example, mission critical.

David Rosenthal 1:42:37 [chuckles] TSMC is, like, pretty freaking important.

Anthony Gonzalez 1:42:40 Yeah, absolutely, and by the way, like, if China moves on Taiwan, that's a big problem for us, especially if we have a national security issue. You know, those are the sorts of things, but on top of that, I think, you know, we have to get some of these raw materials going here as well. And that can be uncomfortable because there's environmental impacts, but, you know, what I would say to my folks who are more concerned about that is, by and large, this isn't a hundred percent true, but by and large, the United States has higher standards around our manufacturing and the cleanliness and sustainability of our manufacturing than other parts of the world. So like a ton of steel made in the United States is gonna be made with less energy intensity than most parts of the world. Not all, but most, and certainly China. There's no silver bullet, but I think you solve a variety of your goals if you want a dynamic, resilient, and sustainable economy by bringing a lot of this production, in particular, the most critical pieces, uh, back home or with our, our most trusted allies.

Ben Gilbert 1:43:36 It's such a prisoner's dilemma on the sustainability versus dynamism front because... Okay, let's just simplify the problem and say the US spends more money to make-

1:43:49 ... steel, the very same steel, but does way less pollution. Well, China does way more pollution to make cheaper steel of the same quality, and I know those things aren't necessarily true, but let's just assume that it's a clean boxed problem.

Anthony Gonzalez 1:44:04 Right.

Ben Gilbert 1:44:05 Well, we all live in the same atmosphere, and so if you take it as a given that they're gonna keep doing that as long as we're willing to keep buying it, then, like, are we actually helping the sustainability goals by saying, "Hey, let's not produce here," because that would be a way to contribute to solving the problem by being the leader and the first mover?

Anthony Gonzalez 1:44:24 Yeah. So that's why I think from a policy standpoint, it's so important that we, at the government level, invest in the R&D necessary to literally invent the answer to that question. It's like, uh, my belief is the answer to the prisoner's dilemma is we have to invent the answer. [chuckles] Like, it doesn't exist today. There's no obvious answer to that. You are literally in a, in a prisoner's dilemma. Unless we find a way to develop cheap but also sustainable steel, we're gonna forever be in that particular box. And so some legislation that I hope will pass very, very soon, [chuckles] um, that I, that I'm working on would basically fund demonstration projects for clean steel to do literally exactly this problem. Uh, and I think, you know, steel is one thing, but we- y- you know, that's on the manufacturing side, but you could also look at agriculture, transportation, uh, energy generation. Most of those sectors have similar trade-offs to what you just described, and my view is the only way we can really do it on a global scale is if we make the green alternatives so cheap and reliable that everyone everywhere would say, "Hey, this is the best thing to do for all sorts of reasons." Now, that's way into the future, [chuckles] what I just described. That's probably a twenty to fifty-year journey, but I don't know how to solve the sustainability goals otherwise, because there's a stat, I think something like fifty percent of the people born in the world in the next fifty years will be born in Africa.

Ben Gilbert 1:45:49 Wow!

Anthony Gonzalez 1:45:50 Well, how do those economies power themselves? They power themselves largely on fossil fuels.

Ben Gilbert 1:45:54 Right.

Anthony Gonzalez 1:45:55 And they're developing economies, so what are you gonna tell them? "Hey, sorry, you have to take this really expensive steel, and your people have to stay impoverished?" Absolutely not.

Ben Gilbert 1:46:02 And it's deeply oppressive to say, like, "We spent the last hundred years expounding unbelievable amounts of energy to build this incredible nation that we live in, but sorry, the atmosphere is super polluted now, so none of you are allowed to do that, and we're gonna use military muscle to make sure that's true." That's oppressive. You need to innovate your way through this problem.

Anthony Gonzalez 1:46:20 That's my personal view. Yeah, uh, you said it better than me. My, my view is that the answer to this is i- it's a market design question, but it's also an innovation question. Um, and I think our responsibility, again, at the governmental level, is to make sure we're funding that R&D so that we get there. No private enterprise can underwrite a fifty-year [chuckles] R&D project. The payoff's not there.

Ben Gilbert 1:46:43 Well, this is our argument on the TSMC episode, is that only government-scale investment actually could have a prayer of succeeding and creating the next TSMC elsewhere.

Anthony Gonzalez 1:46:54 And TSMC was a government-seeded, you know, company. Yeah, I mean, and Congress, we're, we're about to pass this CHIPS Act, which is a bit controversial, but its goal is to reshore semiconductor manufacturing here in the US by providing subsidies and grants and all kinds of incentives to get folks to build fabs here. Happens to be that Intel has announced a massive investment in Ohio, so I'm pretty excited about that and want to see that get done. Totally agree, and, you know, that's what we've always done, is in- innovated our way out of problems.

Ben Gilbert 1:47:24 Exactly.

Anthony Gonzalez 1:47:25 I don't know if it's the American way. I think it is, but it's, it's the Acquired way, at least. Let's put it that way. [chuckles]

Ben Gilbert 1:47:29 It's definitely the human way. Like, human beings are unbelievably good at growing and surviving, and so, like, I think humanity will sort of, like, continue to bump up the- against the edges of its environment until it innovates a way to continue to, like, spread and prosper.

Anthony Gonzalez 1:47:46 Yeah, and I'm totally bullish on our ability as a species to do that, and I'm, uh, particularly bullish that America's gonna lead the way because I think we have the best system for it. Like, the free enterprise system's unbelievable. If you want evidence, think about how awful our politics are, but how strong our economy is on a relative basis. [laughing] You know, we should be in a much better position, um, than we are politically, but, you know, that, that's the power of free enterprise, is you set the incentives up, and you turn people loose, and they create some unbelievable things. So my question is, what do entrepreneurs and investors, like, do? [chuckles] Like, if you agree that reshoring the dynamism part of the American economy needs to be reinvigorated, let's take Ohio. Like, are new steel startups gonna get started in Ohio? Like, what, uh, what's the right way to approach this? Or is it legacy companies? Is it a combination of both?

Ben Gilbert 1:48:36 I think it's all the above. So, like, y- you know, governors all over this country want their states to be more dynamic and, and want their economies to be stronger. They want to attract more people generally. You know, in Ohio, I always think the way to approach it is to leverage the existing assets that you have, and, you know, most people don't know this, but Columbus, Ohio, in particular, is starting to develop a pretty nice tech scene. Um, so there's a, a company called Drive Capital, uh, which was started by Mark Govoni, uh, who some of y'all might know, and his fund is doing incredibly well, and they've had a handful of IPOs in the last few years and some solid acquisitions, and, and as a result, you're seeing this burgeoning tech scene, more on the software side, in Columbus, Ohio, and a lot of it's in the insurance space. We happen to have a, a incredible insurance industry in Ohio as well.

Anthony Gonzalez 1:49:18 Turns out Nationwide people know a lot about how to create new insurance products.

Ben Gilbert 1:49:23 Exactly. So you, you have this sort of nice little flywheel building around software and insurance and technology, and then the capital and expertise is there with Drive Capital. Layer the Intel investment on top of that, right? And so we'll have some giant fabs and, and investment happening right outside of Columbus. It's a trite term, but you can see sort of a silicon heartland sort of dynamic taking place. What we'll, we'll need to do is, is find a way to become great at advanced manufacturing and chip manufacturing and all those sorts of things, and, and we're gonna actually have to build the facilities and, and the support services around them. You know, that's gonna happen in Ohio, and that's really exciting. That's just the Columbus area.

Anthony Gonzalez 1:50:03 ... Northeast Ohio, Ben, as you know, you know, the Cleveland Clinic and University Hospital are two of the most innovative medical facilities in the world. And so, you know, I think we need to do a much better job as a region, uh, connecting the innovations that are happening inside the walls of those two great, uh, institutions out to the broader ecosystem. But, you know, I think if you sort of look at the pockets throughout states and see, okay, what assets do I already have, and how can I leverage them, and what's, you know, fast-growing, high-growing, um, I think you can start to piece together a strategy. Take a step up at sort of a national level, and I think you need to have the incentives put in place such that, you know, as we transition away from fossil fuels and towards more clean energy, that we're doing as much of that development and manufacturing here as possible, that we're mining the minerals here, and that we're building sustainable supply chains around that. That could be anywhere. That's sort of how I think about the economic challenges that we have.

David Rosenthal 1:51:00 It's interesting, right? I mean, it's kind of this dynamic has always been true, but now that Silicon Valley, you know, mindset is, is really a diaspora at this point across the country and the world, obviously. You know, one of the things I always thought, and then, you know, when, when you and I, Anthony, were there, lived firsthand, was that, like, Stanford really got this from a policy perspective right in a way that, like, no other university ever has. Which is just, like, to my mind, I always boil it down as the simple idea that, like, if you push the innovation out of the university, let people make money on it, you will do better [chuckles] as a university than if you try and hold it within.

Anthony Gonzalez 1:51:42 Right.

David Rosenthal 1:51:42 And that, that to me, like, is a big part of the story of Silicon Valley.

Ben Gilbert 1:51:46 I mean, famously, Stanford only took 1% of Google when it was a Stanford r- you know, graduate research project, when most universities want 25, 50-plus percent of anything. They, they call it tech transfer, that it's not even like, "Oh, it was your idea in the first place, and, you know, we'd like a piece of it 'cause it was developed here." It's like, "Oh, we're transferring it out into a company." It's right there in the language.

David Rosenthal 1:52:07 Right. Uh, Jensen Huang was a grad student at Stanford, as we talked about, [chuckles] while he was starting NVIDIA, and, like, there's a Jensen Huang Building at Stanford, and it's not 'cause Stanford took equity in NVIDIA in the early days, you know. [laughing]

Anthony Gonzalez 1:52:20 Yeah, and, you know, like, the inertia behind some of these really good, important early decisions, um, is incredible. Once you get it right, these flywheels develop, and, and they're, they're just so powerful. Uh, they're powerful for your community, they're powerful for the country, and we, we need as much of it as we can get.

Ben Gilbert 1:52:37 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?

Anthony Gonzalez 1:52:48 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-

Ben Gilbert 1:53:06 [laughing]

Anthony Gonzalez 1:53:06 ... 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.

David Rosenthal 1:53:52 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]

Anthony Gonzalez 1:54:07 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?

David Rosenthal 1:54:45 Yeah. Capital allocation is, uh, the number one most important skill of a CEO, many people would argue, so [chuckles] ...

Anthony Gonzalez 1:54:52 Yeah. Yeah, uh, that's certainly the, uh, the Will Thorndike perspective, right?

Ben Gilbert 1:54:56 Absolutely. Oh, we should plug Will's new thing here.

David Rosenthal 1:54:59 Oh, yeah.

Ben Gilbert 1:55:00 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.

David Rosenthal 1:55:11 Yeah. As part of our friends over at the Colossus Empire.

Anthony Gonzalez 1:55:15 That's good for me. I gotta pick that up.

David Rosenthal 1:55:16 Oh, yeah. It's, it's really good.

Ben Gilbert 1:55:18 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.

Anthony Gonzalez 1:55:29 TransDigm is Nick Howley's company.

Ben Gilbert 1:55:31 Yep.

Anthony Gonzalez 1:55:31 I know Nick well.

Ben Gilbert 1:55:32 Oh, nice. Yeah, it's Will interviewing Nick.

David Rosenthal 1:55:34 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]

Anthony Gonzalez 1:55:45 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.

Ben Gilbert 1:55:53 Yeah.

Anthony Gonzalez 1:55:54 He's awesome. Yeah, he'd be a good guest. He'd be better than me. You should, you should get him.

David Rosenthal 1:55:59 [laughing] This has been pretty good.

Ben Gilbert 1:56:00 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]

Anthony Gonzalez 1:56:29 That's a great question. I mean, I- admittedly, I'm kind of thinking of the same thing.

Ben Gilbert 1:56:33 Don't give away your best ideas, but maybe your second best. [chuckles]

Anthony Gonzalez 1:56:36 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.

Ben Gilbert 1:58:11 Amen. I 100% agree with that. That is, that is true good wisdom from the ideas be folks and many others, so...

Anthony Gonzalez 1:58:19 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.

Ben Gilbert 1:58:51 Well, Anthony, it's a bummer that, uh, we're all gonna lose you as someone representing us, but I, I got to say, it's gonna be nice to have you back building stuff again.

Anthony Gonzalez 1:58:58 Yeah, I'm excited to finish it out, but I'm, I'm excited to, to get back out there. It's a great big world out there. I just got to find my place in it. [chuckles]

Ben Gilbert 1:59:05 Well, Anthony, thank you so much.

Anthony Gonzalez 1:59:07 Oh, thank you. This has been fun and an honor, and I appreciate you having me on.

Ben Gilbert 1:59:12 With that, listeners, our thank you to Vanta, Brex, and Tiny. If you are interested in any of these sweet, sweet discounts that they are offering, or to sell your business to Tiny or explore even what that could look at, the links for all of those things are in the show notes. After you finish this episode, come discuss it with the other 12,000 smart members of the Acquired community at acquired.fm/slack. Many of you know this, but we have something called an LP Show. If you want more, you can go to any podcast player and search Acquired LP Show. Our next episode is an interview in partnership with the Solana Foundation. We had longtime listener, seriously longtime listener, like 2016, Austin Federa, join us for a primer on the state of the crypto and Web3 ecosystem today.

Anthony Gonzalez 2:00:00 It's actually gonna be a great companion episode to this episode.

Ben Gilbert 2:00:03 Totally. I mean, it's frankly very helpful just to understand what is the terminology that everyone's using, what does it mean today, how are all of us sort of sharpening our pencils on better understanding what this landscape looks like, what's useful, what did we think was gonna be useful but didn't really play out? So, uh, that will be live soon in the public LP feed that you can find at any podcast player, and if you want that episode early, it is already live for paid Acquired LPs at acquired.fm/lp, or by clicking the link in the show notes. Lastly, if you are looking for that next great move in your career, check out acquired.fm/jobs. Those are all curated by us here at Team Acquired, and, uh, we hope to hook you up with an opportunity that, frankly, we think is really interesting. So with that, listeners, we will see you next time.

Anthony Gonzalez 2:00:55 We'll see you next time.

Speaker 2:00:56 [singing] Who got the truth? Is it you? Is it you? Is it you? Who got the truth now? Huh! [upbeat music]