They Laughed at Bitcoin… Now They Fear It (Uncut) 02-27-2025

They Laughed at Bitcoin… Now They Fear It | Mark Yusko on Blockchain Disrupting Finance

The internet disrupted media and commerce. All the value that was in ABC, NBC, CBS went to Netflix. All the value is mom and pop stores went to Amazon.

This entire 30 year period has seen a massive shift, but it’s tiny compared to financial services. Financial services is the biggest industry in the world. It’s a 7 trillion with a T, and the T word is such a big number that people are numb to it, right? Well, what blockchain does and what Bitcoin as the perfect use case for blockchain as perfect money, what it does is it disrupts that fundamental industry, and we go from trust to truth.

Hi, and welcome to Speak Up. I am your host, Anthony Scaramucci, and we are joined by a good friend and a mentor, actually. I would call Mark Yusko a distant mentor of mine.

And you say, well, why is that? Well, Mark Yusko got to Bitcoin ahead of me, and through his educational seminars, it boosted my confidence in joining him in this asset class. He is the founder of Morgan Creek Capital. Many thanks for being with us.

And Mark, let’s start with your odyssey, if you don’t mind, because do you still have your fund-to-funds business or you don’t have your fund-to-funds business? I mean, it exists. It’s a small fraction of what it once was, but I’m in my chapter three, Anthony. So the odyssey is, I grew up actually wanting to be Mr. Brady, right, from the Brady Bunch.

I wanted to be an architect. Got to college, that was not for me. Tried, dabbled a bunch of different things, ended up graduating pre-med, didn’t go to med school.

And in 1985, if you graduate pre-med and don’t go to med school, two jobs, healthcare consultant or pharmaceutical sales rep. I am not 6’5 and handsome, not gonna be a pharmaceutical sales rep. So got an offer from Anderson.

Actually, it was Arthur Anderson back then before Anderson Consulting. But the guy who I was gonna go work for said, you know, you’ve taken no business classes. Why don’t you go to business school? I’m like, you can do that right out of undergrad.

So I went to University of Chicago, got a business degree. And then I just took the first job that was offered. It was actually, worked for an insurance company.

I did bond management for a while. And then I went to an equity firm in Chicago, actually in Evanston, run by two professors. Actually, the original quant shop run by professors.

Before Ross and Roll, before all the others, Gene Lerner and Bill Breen ran the silver shop. We had a billion dollars back when a billion dollars was a lot of money. And I got the call.

So some know that Lew Holtz was coach at Minnesota, lifetime contract, unless Notre Dame called. Notre Dame called, so he went to Notre Dame, had a great run, won the last championship actually. And I was working at this asset manager and I got the call.

Notre Dame wanted someone to come help Scott. So alma mater back there, I went, did that as the number two guy at Notre Dame for five years. And that was beginning of my chapter one.

So chapter one, I worked for not-for-profits as an allocator. And I came down here to North Carolina in 1998, took over as the CIO. And then at the time I was dubbed, back when she was popular, the Madonna of hedge funds.

So I was, and why was that? Well, I was the guy who got up on stage back in 98, 99 saying, hey, I think the markets are getting a little frothy, I think you should get hedged and you should allocate to people like Julian Robertson and others. Long story short, from 2000 to 2002, it worked out really well. We didn’t lose any money.

Rest of the world was down 25, 30%. And some families came knocking and said, hey, come work for us. They said, I don’t really wanna work for one family, but I could set up a shop and we could work for multiple families.

And back then it wasn’t a thing. There was one other firm, couple of ex Goldman Sachs guys in Philly had taken some consulting clients. And so I like to say, I coined the term, although it’s a fluke, OCIO, in that outsourced chief investment officer didn’t fit on a slide.

So I shortened it to OCIO, caught on. We grew that business quite nicely. And that was starting in 04.

The problem was suddenly everybody got in that business. So the Stanford team and the Duke team and all these other teams left and started businesses. And ultimately Goldman, it’s always Goldman, Goldman came in and said, you know what guys, we’ll do it for free.

And so we were going up against Goldman and like, no, they won’t do it for free. You will pay them way more than you’ll pay us. But so that business became less fun.

So we shifted this back, the first time we got to know each other into the fund of funds business. So we created a fund. I only knew, I only had one trick in my chapter two.

So chapter one, work for not-for-profits. Chapter two, I built Morgan Creek Capital Management and about five years in, we switched to running a fund called the Endowment Fund, you know, catchy name. And it kind of pioneered, it was actually the fastest growing fund in Merrill Lynch’s history, raised a lot of money through Merrill Lynch and introduced people to alternatives and the endowment model of thinking.

And then that business got kind of cruddy as you know, the hedge fund of funds business got crowded. And so- It’s a typewriter business, Mark. We’re in the typewriter business, you know.

Something else came along, you know. Yeah, exactly. Something else came along, right? And look, every, when we started, no one had their own kind of 35 year old working in the family office.

And so we had an edge. We had knowledge of and access to talent. We knew who the great hedge funds were because we had backed them as they spun out of the great firms and we had access to them.

We had capacity. And the internet changed all that, right? So suddenly anyone could say, well, who’s the best hedge fund manager in San Francisco? And you will get a list. The problem is, is that list valuable? Was it put there by someone who’s selling something? Was it put there with someone with knowledge? But everyone thought they could do it themselves.

So fees on that business started to change, but that’s part of the reason I shifted. But the real reason, you know, the other OMG. So you’re an OMG, I’m an OMG, Dan Moorhead’s an OMG, Dan Tapiero’s an OMG.

What’s an OMG? Old macro guy, Novigrad. We all came at this digital asset thing through macro. So my chapter three, I know this is a long journey.

Started back in 2013. So I’ve known Dan for 30 plus years when he was a Goldman, here’s Goldman again. And then he went to Tiger.

And when he spun out of Tiger, one of the things we did, we backed everybody that came out of Tiger. You know, Julian Robertson was a friend and a mentor. It was our largest position in Carolina.

He’s a Carolina grad. And so we backed Maverick and Blue Ridge and Lone Pine and Pantera macro when it came out. And 2013, 10 years later, he calls me and says, hey, come to San Francisco, I’ll buy you dinner.

Great, have dinner with my friend. And he sits me down and he says, I’m shutting down the fund. Like, Dan, why would you give back a billion dollars at two and 20? So I’m gonna spend the rest of my career in Bitcoin and blockchain.

And look, in 2013, I was not running drugs on Silk Road. I was not a cryptography student. I had heard of Bitcoin, but I didn’t know what it was.

But blockchain, I kind of got, because we had made some investments through August Capital and Sequoia and others in early blockchain companies. And so infrastructure for tech, I get that. Invest in Dan’s infrastructure fund.

It’s up like, I don’t know, 11 or 12 times. That’s good, but I should have put the money in the Bitcoin fund. It’s up 1,000 times, 1,000 times.

But I didn’t, you know, Pete Brigger did, ex-Goldman, of course. And, but I started to nibble and I did a little work. And in 14, and you probably don’t remember this, but I used to write these crazy long letters and everyone complained.

Like, you just go, no one wants to read 70 page letter. I said, it’s not for them, it’s for me. It’s like, that’s how I think, I write it down.

And every quarter I would sit for, you know, a week and I would write out what I thought about the world. And I, you know, I didn’t care if people read them, but some people did. So because I wrote a 40 pager in first quarter of 14, one paragraph saying, hey, I think Bitcoin’s interesting.

You should buy some. Price was 500 bucks. Anthony, people were like, you’re an idiot.

Don’t talk about this, we’ll fire you. Now, I will argue that the next paragraph was more objectionable than Bitcoin. The next paragraph was about Saudi stocks, which depending on how you look at it, are probably more objectionable as an investment as an American, but no one cared.

No one said a word about that, they just hated Bitcoin. Now the price, as you recall, went from 500 bucks to 186 bucks from March to September that year. Like, yeah, they were right.

Go back and do my job. Then eight weeks later, it was a thousand bucks. I’m like, no, no, there’s something here.

So I dug in more. And little sidelight of the story. So in 2015, my son graduated from Notre Dame and I said one word, not plastics like the graduate.

I said, blockchain. Said, go talk to Dan, get a job at Coinbase. So he goes to talk to Dan, interviews at Coinbase.

He says, I don’t know, dad, maybe it’s gonna be a big deal. I’m just gonna go KPMG. It’s safe, gets me to San Francisco.

I’m gonna go to San Francisco his whole life. Not like you’re gonna hate it, which he did. Quit nine months later without a job.

That’s a millennial thing, they quit without another job. I’m like, no, you get another job, then you quit. But no, he just quit.

He eventually got a job with a company, got taken over by Adobe. Then his boss recruited him away to this company called Snowflake and Rocketship. So I’m really proud of him, really happy for him.

But when Coinbase went public, he called me and said, all right, fine, dad, you were right. But you’re not as smart as you think you are. I go, oh, do tell.

I told you to go to work at Coinbase. He’s like, yeah, but you didn’t lever up the house and put all in Bitcoin. I’m like, you little shit.

That is fact. And I didn’t, and why didn’t I? And why didn’t I go all in in 2015? Well, I had these clients who were paying me a lot of money to manage hedge funds and private equity and venture capital and all these other traditional things. And they kept telling me how stupid I was.

And I was like, but there’s a there there. It took me another year, but I finally convinced clients to do some, bought a little Bitcoin, bought a little Ethereum. And in 2017, I decided, all right, we’re gonna do this.

We’re gonna start a fund in digital assets. And we were fund to funds guys. So I’m like, all right, we’ll do a fund to funds.

And I had met this young guy, you know, Pomp, and we’re going to his event here this week. And I had met this young guy and he’d convinced me, he says, no, no, no, we’re gonna start a venture fund. I’m like, Pomp, how are we gonna start a venture fund? You can’t just become a venture capitalist.

He said, no, that’s what we’re gonna do. So the funny part of the story is, the reason he said that is because to do a fund to funds in 2017, there were two funds. There was Pantera and there was Blockchain Capital.

There was no A16Z Crypto, there was no Paradigm, there was no nothing. I mean, we were the third firm to form Morgan Creek Digital. And we sent Pomp first meeting up to DC to interview, or to pitch this pension fund.

And we just got lucky. We got so, so lucky. The CIO there, I just actually, she was down here for the Carolina game.

She’s a Carolina grad. And we and her family went out to dinner afterwards and we kind of relived the story. And 10 minutes into the presentation, she says, I’m in, and I will find a way to get my board to do it.

Pomp calls me and says, Mark, we’re gonna raise a billion dollars. It’s gonna be amazing. We didn’t raise a billion dollars.

The next 35 meetings, zero. I’ve been there too, Mark. University of Texas.

I don’t know if you’ve had this experience. University of Texas literally told them to leave. Like I said, just get out.

This is so stupid, leave. So we didn’t raise a billion dollars. We raised $41 million.

We put that to work and it’s done quite nicely. It’s good vintage, 2018. Raised another fund in 2020.

It was a tough year to raise a fund, right? Cause lockdowns, but we raised a nice fund. And we did another one in 22 and we’re raising our fourth fund now. So my chapter three, you asked about the odyssey.

It really is an odyssey. So chapter one, I work for a not-for-profits allocator. Chapter two, built a nice little fund to funds business.

Chapter three, I’m a late in life venture capitalist. Now you asked, do I still have the hedge fund? So in the old days, I had four business units. I had the hedge fund to funds.

I had a China growth capital fund, kind of a hybrid fund where we allocated capital to managers and co-invested. I had a early stage venture fund where we’d allocate to the brand names of tomorrow and then co-invest with them. And then I had a, what am I missing? Venture fund.

Yeah, that was it. And then I had the OCIO fund. So four businesses, I was the CIO and I had young guys, 25, they were kind of working with me.

Fast forward 15 years, they’re 40. They run those businesses. I’m around if they need me on Mondays, we do our investment communities, but now I’m mostly full-time digital assets.

Well, I mean, it’s such an awesome story. I didn’t interrupt you at all because I thought the story was awesome. And I want people to hear the story because it’s a story of adaptation.

It’s a story of intellectual honesty. It’s a story of getting a lot of things right. It’s a story of making decisions about changing some things when they’re not going your way.

And it leads me to the centerpiece of what I wanted to talk to you about, which is Bitcoin. You are one of the early lanterns into the asset class. I’ve heard you, I have you, I’m proud to admit this, I have you on my Google notification.

So when I see you come up, I click on to you to hear what you’re saying. You’re talking about 100,000 being a fair valuation right now. You think we have upside from here.

Bitcoin has dipped a little bit. Having said that, it rocketed after the Trump election, peaked at 108, it’s trading probably 86, 88 right now. Is it oversold, Mark? Is it fairly valued? Is it, tell me what you think is going on in the world of Bitcoin and where do you see us shaping up for 2025? So again, it’s such a fascinating topic because to your point about adaptation and change, the market is changing, right? If you go back to the earliest days, 2009, I call it kind of 2009 to 15 was the first they ignore you phase, right? A bunch of nerds and geeks playing through magic internet money.

I mean, there are a lot of OGs, just unbelievable people, Max and Roger. And I mean, there’s just a lot of people back then, Charlie and they got it and no one else did, but everyone just ignored it, right? Just, it wasn’t real. It was magic internet money.

You guys knock yourself out, it’ll disappear. And then in 16 to 21, we went into the, then they laugh at you phase. And that was what we were trying to build our business.

And literally we would call a hundred people to market our funds. 90 wouldn’t call us back. Some would literally laugh in our face.

I said, Texas said, get out of the office. And of the 10 that would actually talk to us in fund one in 2018, nine out of 10 said no. Now we ended up with 30 investors.

So we talked to a lot of people. And in 2020, it got a little better. Still, 70 out of a hundred wouldn’t call us back, but that was a threefold increase.

So something, but then still nine out of 10 said no. So we ended up with 90 clients. And it was that kind of, they weren’t laughing in our face, but they were still laughing.

Like, no, this is not real. It’s not interesting. Well, starting in 2022, we entered the, then they fight you phase.

And that’s what we’re in right now. And what do I mean by that? So what I mean by that is the internet, which was this amazing thing that goes to this, there’s been a technological cycle. Started in 1954 with the advent of the mainframe computer.

14 years later, it shifted to microcomputers with the advent of microchips. 14 years later, it’s always 14 years. Now, why is it always 14 years? My theory is it’s half a generation.

And it’s because young people invent everything new because they don’t know what they don’t know. And they’re willing to try stuff, unlike us old guys who have a hard time changing our mind. But, you know, Mark Andreessen, 19 years old, Larry and Sergey, and they’re 20.

So, you know, 1982, there’s this innovation around the personal computer up where I grew up in Seattle. And, you know, actually many of my friends don’t work anymore because they were smart enough to go to work there. I wasn’t.

I always defend myself saying, look at the picture of the original Microsoft 11, and you wouldn’t have worked for them either. It’s kind of a funny picture. But they’re all multi-billionaires and I’m not.

So I shouldn’t make fun of them because they’re mad geniuses. It turned out Balmer was the smartest one of all of them, right? Well, you know what’s crazy about that, Anthony, is Balmer’s mom said, honey, why would you work for that company? No one would want a computer in their house. And she was quoting Ken Olson from Digital Equipment Corp who had said, no one would ever want a computer in their house, right? So she was just parroting that.

And he has 18 billion reasons why he was right, mom was wrong because, and I found it comical that 20 years later, they got bought by a personal computer company, Compaq, which is kind of funny. So, but people did want a computer. And so then 14 years later, in 1996, that was the big thing.

And that was really my aha moment in my life and career. So 1996, I’m at Notre Dame and we’re allocating capital to Kleiner Perkins Caulfield Buyers. Well, it’s still called Kleiner Perkins Caulfield Buyers.

I always feel sorry for Perkins Caulfield and Buyers because no one mentions them anymore. Gene Kleiner was important, but arguably those other three guys were pretty important. Sequoia was not a brand name.

Sequoia was splitting into two firms. Don had hired this young guy, Michael Moritz, no one knew him. And the other three guys were like, we’re Audi because we’re the future.

No one’s ever really heard from them again. And everybody knows Michael because Michael’s first deal, Yahoo, second deal is a company called Google. And I remember going to our board at Notre Dame and explaining that we just made this investment in Google.

And they’re like, why would you invest in the number 21 search engine? That’s stupid, right? There’s AltaVista, there’s WebCrawler, there’s Ask Jeeves. And I go, but it’s not search. They don’t search, right? If you think about search, it’s totally ridiculous to think that you take time to go search the internet for information.

What you do is you find the information, you index it, you put it into a little webpage, factoid that I love. 1991, there were zero webpages. First one created by Tim Berners-Lee.

Today they’re 1.7 billion. Google owns half of them. Amazing.

Think about that. And what does that mean? It means every time you type a question in the search bar, it takes you to the place. Like, I’m pretty excited.

I hate to admit this, but I’m pretty excited. Friday is the release of this new game called Monster Hunter Wilds. And during lockdown, my son got me involved in video gaming with him.

He’s younger. And so I’ve become addicted to this Monster Hunter thing and the game’s coming out. So I’ve been all week typing, okay, what weapons do I need? And it doesn’t search the internet.

That question has been asked a million times. This is a very hot game. It’s gonna make a lot of money for this company, Capcom.

And long story short, if you do ask a unique question, they have to build another website. So anyway, so back to why was this such a turning point? Well, we invested in Google. Turned out it was a good thing.

500K turns into 200 million. There should be a quad at Notre Dame called the Google Quad. And the aha moment went off.

The infrastructure around, and I’m gonna answer your question about Bitcoin, was the internet disrupted media and commerce. All the value that was in ABC, NBC, CBS went to Netflix. All the value of mom and pop stores went to Amazon.

This entire 30 year period has seen a massive shift, but it’s tiny compared to financial services. Financial services is the biggest industry in the world. It’s a 7 trillion with a T, and the T word is such a big number that people are numb to it, right? You and I would have to stay here on the podcast for 31,710 years, which is great, good looking as you are, as much as I like to talk, that would be painful, 31,710 years.

A dollar a second, that’s one trillion. So seven of those babies get spent, extracted, stolen, I will argue, from us every year because of trust. We have to trust the banks, the brokers, the insurance companies, the title companies, that our money, which is no longer our money, or you put the money in the bank, it’s the bank’s money, and you have an IOU, but we trust that they’re gonna take care of it.

Well, what blockchain does, and what Bitcoin has the perfect use case for blockchain is as perfect money, what it does is it disrupts that fundamental industry, and we go from trust to truth. And this is such a monster deal, and it’s so big, right? And so resisted by the banks, I’m gonna circle back to the answer, right? Which is in the olden days, right? I lent you money, I lent you a hundred bucks, and I’m old, I wrote my papyrus tablet that you owe me a hundred bucks. And you come back a year later with 110 to pay me back, and I’m an unscrupulous guy, I’ve changed the number to 200.

I’m like, you know, Anthony, you owe me 220. You’re like, but I only borrowed a hundred. You blew it, you trusted me, I was not trustworthy.

So the Medicis, right? Some of your forefathers, maybe not your forefathers, but somebody’s forefathers way back then, 838 years ago said, you know what? That’s a bad system. Anthony, you write down a number, Mark, you write down a number, and we, the benevolent Medicis, for a small fee, we’ll make sure the numbers match. But here’s the problem.

In that year where you’re out earning the 10 bucks to pay me interest, I go to the Medicis and I say, you know what? I’m gonna change my number to 200, I’ll give you half. They’re like, done, easy. So you come back to pay 110, I say it’s 220.

You’re like, Medicis, what? Anthony, he must’ve written the number down wrong. You trusted us, bad. So now with the advent of a blockchain, we don’t need an unscrupulous third party, bank, insurance company, whatever, we have truth.

We have a blockchain, a ledger, a permanent immutable trust record. I mean, I’m sorry, truth, a record of truth, and truth replaces trust. I wanna stop you there for a second because what you just explained and how you just explained it makes me think that it’s worth a million dollars a coin.

Oh my God, more, more, way more.