Peter McCormack: We’ve got wine, we’ve got meats, we’ve got cheese, we’ve got some weed, we got the whole Mallers family.
Jack Mallers: You forgot the Bitcoins, we got Bitcoins!
Peter McCormack: We’ve got Ethereum?
Jack Mallers: No!
Bitcoin Mom: Actually a little.
Jack Mallers: Bitcoin mom! No, Shitcoin mom is the greatest trader of all time.
Bitcoin Mom: Someone paid with Ethereum at the store, so we have Ethereum.
Peter McCormack: So I want to start and go back, there’s two things I want to do early. I want to do early Bitcoin. Were you both in Bitcoin when you first met or was it one of you got the other into it?
Bitcoin Mom: Yeah, it was Bill! Bill’s tipping his hat. Do you want to tell them how you got into Bitcoin?
Bill Mallers: I would never have understood it. I don’t have a background in cryptography and my politics don’t overlap with it. So it is doubtful I would’ve found it in 2013, if it hadn’t been for our friend at Liberty Blitz newsletter.
Bitcoin Mom: And so that was in 2013.
Peter McCormack: And Jack was telling me that there’s a whole history to the Mallers family, right? A deep financial connection in Chicago?
Bill Mallers: Yeah it’s true. My father was chairman of Chicago Board of Trade. He was, at the time, the youngest chairman in 196 and his generation of exchange leadership really ushered in financial futures. It was all pork bellies, wheat, corn, beans. My Dad came up with the wheat pit and those guys I really admire and I see so many parallels between that generation of exchange ownership and what we’re seeing now in crypto, is just an ability to take on…
Put it this way, if I’d asked you where you thought stock index futures would take off, New York, maybe London, certainly not next to the pork belly pit! I remember when two bonds got big, we traded them right in the soybean pit. So I don’t know, I just grew up around a lot of financial innovation, kind of how we got here.
Bitcoin Mom: Then you started your firm.
Bill Mallers: Yeah, in 1984, discount was the rage. My dad and his friends used to say, “you want to stay ahead of what’s going to happen in futures? Watch the trends in securities” and that was in the 80s, was when discount and Charles Schwab and stuff was starting to take a lot of business away from the more traditional handholding full service firms. So my dad and his friends were like, “this is going to be the next trend”, but they frequently had conflicts.
It’s hard to maintain your current business and then open a deep discount, that’s a lot cheaper than what you’re charging current. So they wanted to be a part of it, but they didn’t want their name associated with it. So yeah, they set me up and I got my mentorship and education from a really innovative generation of Chicago traders.
Peter McCormack: Where did you meet Bill?
Bitcoin Mom: We were fixed up! We have a blended family. We were fixed up in 2005 and Bill has four kids, so Jack has three siblings on his side, I have two kids on my side and the joke was, when Susie said, “you got to meet Brooke, you’ll really like her, but you know what? Don’t tell her how many kids you have!” So on the first day, tell her about Jack.
Jack Mallers: Don’t tell her that your Jack’s Dad. Well I was in the same grade as your son! Just tell her that you’re really good trader and you live right off the lake!
Bitcoin Mom: Exactly! Maybe on subsequent dates, if it looks like it’s working, then you can say, “oh I didn’t tell you about Sean. I didn’t tell you about May.”
Bill Mallers: So actually, I’ve got 12 kids but I’ve only introduced her to 4, so I’m easing her in!
Bitcoin Mom: People nowadays or maybe a little while when they were younger, because all the kids, it’s blended family, they’re all one year apart. So there is a certain period of the year, during a certain birthday, if you said, “how old are you kids?” I’d say “19,20,21,22,23,24” and people would be like, “you have six kids?!” Bill would always say, “yeah, she’s crazy!”
Peter McCormack: Do you remember the first date? Where did you go?
Bitcoin Mom: Oh yeah! We were supposed to go see The Aviator, the movie with Leonardo DiCaprio.
Bill Mallers: Still got the stubs! Never went.
Bitcoin Mom: Yeah, we went out for dinner. There was a huge snow storm in Chicago and we ended up staying. We went at 6 and I didn’t know what he looked like, so I got out of my car and there was a guy who parked a few cars behind me, who was sort of like boxing into the air. I was like, “oh, I hope it’s not that guy. That’s weird, what’s he doing?” Well actually that wasn’t the first date, sorry. The first real date was that Aviator movie, but we had the lunch date.
Peter McCormack: Were you in Bitcoin back then?
Jack Mallers: Yeah, he was in 2005!
Peter McCormack: I used to put on my Twitter description, it used to say “15 years Bitcoin”, like as a joke. Yet people were like, “how can you be 15 years Bitcoin, it’s 10 years old you fucking idiot!” All right, it’s a joke dude! Okay, so 2005 you met and just stuff happens and then Bitcoin comes along. Bill you find it first, right?
Bill Mallers: I did. I kind of pride myself on finding unique gifts, like what am I going to get Cookie.
Bitcoin Mom: Cookie’s my nickname!
Bill Mallers: First of all, she’s a jewelry designer so you can’t get her a ring or anything. So you can’t get her jewelry and I had heard about it through Liberty Blitz and I go, “this is going to be a cool gift.” So I bought her five in like summer of 2013, but your birthday wasn’t for like four/five months and there’s no way I’m going to make it that long. This is too much fun! You know that feeling when you first discover it. So I think I jumped the gun on your birthday by a few months.
Bitcoin Mom: You did! He vomited it all to me in this like one hour session, where my head was spinning and I’m like, “okay?” He’s like “it’s proof of work it’s brilliant! If you think of tree rings…!” Anyway, because there weren’t that many books to learn about Bitcoin back into in the summer of 2013 but you did, I think you found like a Bitcoin for dummies book that was actually published and you read whatever you could.
Bill Mallers: Well basically just watched Andreas videos…
Bitcoin Mom: No, we didn’t know about Andreas. In fact, I always like to say that, Bitcoin is exciting because you are interested in it as a speculative thing, because the price kept going up at that time. Then Silk Road went down in early October of that year and then the price started to really climb later that month, early November and there were going to be these congressional hearings, the first ones that I know of, to discuss Bitcoin.
So Bill has already vomited about Bitcoin, we’re talking, I’m learning a little bit about it. I’m thinking of it more of like, “oh wow, this thing is going up in price. This is cool” and he’s like, “I got this great idea. I opened a Twitter account for you. You’re going to be Bitcoin Mom, too many kids, not enough Bitcoin!” I’m like, “what?” And he said, “okay, or you could be, I opened this account, the Bitcoin Mill, what would you like?”
Bill Mallers: For some context, back then Bitcoin was the least wholesome thing you could think of. So I would try and personalize it a little bit. You don’t have to be a Silk Road costumer or trying to evade capital controls. I don’t want to be in the Fed. I’m from the era where the Fed or Volcker’s Fed and Greenspan’s Fed, were really well-regarded.
I’ve never come from that side of Bitcoin, but I have come from a business where you got to give margin calls and you need the money in an hour and that’s a really hard thing to do through the banking system. I was just fascinated by the fact that I could wave a phone or QR code and get almost instant money transferred. That’s my background.
Bitcoin Mom: So the Bitcoin Mom account on Twitter was meant to sort of combat all the stereotypes that were really coming into a more national focus of, you know, is Bitcoin just for terrorists or drug dealers or money launderers or whatever. I was like, no, you’re Bitcoin Mom! Moms can use it, moms hold the purse strings, moms shop with it and this was the era where we really thought that merchant adoption was going to be the major catalyst for Bitcoin adoption. So there was Bitcoin Black Friday.
Bill Mallers: Oh, remember that you were supposed to go to a grocery store and nag them to accept Bitcoin because merchant option! I don’t know why that has faded because…
Bitcoin Mom: Store of value! Well we discovered, I think as a community, we all learned together as Bitcoin has evolved, nobody knows what it is. I mean doesn’t Jameson Lopp have that great piece?
Peter McCormack: The Coindesk article?
Bitcoin Mom: The one about Nobody Understands Bitcoin and we’re all evolving to learn what it is and unfortunately during the way, you’re going to get the civil wars, you’re going to have people split off ideologically. But back to that time, I remember asking Bill like, “what am I going to tweet about? Am I going to about shopping?” I’m a former academic and I try to pride myself on deeper thought. But I did, I tried to tweet about shopping. My first tweet was my first Bitcoin transaction, shout out Connie Gallippi!
Peter McCormack: That’s cool!
Bitcoin Mom: Yes, so Bill’s like, “I’m going to show you how to send Bitcoin” and I sent, I don’t know, it was a quarter of a Bitcoin, to BitGive Foundation. So that was all part of it, it was pretty exciting.
Peter McCormack: Who has more followers Jack, you or Mom?
Bitcoin Mom: He does now! It’s close.
Jack Mallers: Do I really?
Bitcoin Mom: Yeah, I think you do!
Peter McCormack: But who’s higher on Hive One? I think it’s Bitcoin Mom.
Bitcoin Mom: I think we’re really close.
Jack Mallers: Hive One?
Peter McCormack: Hive One is where they rank you in terms of influence, it’s funny! I think your Mom’s higher?
Bitcoin Mom: I worked really hard to promote Bitcoin for the few years, then Jack comes along and like sails past! No, I’m just kidding.
Peter McCormack: I noticed Bill today, you chirped into a conversation about…
Bill Mallers: I don’t know who’s got more followers, but when I used to go to Bitcoin conventions, “Oh Mallers, are you Brooke’s husband?” And now the last one I went to, “oh Mallers, any relation to Jack?” So I don’t know about followers, but I think Jack might have surpassed you?
Peter McCormack: But you’re the quiet one, because you’re out there with your 123 followers!
Jack Mallers: He’s like in the movies where there’s so much happening, chaos and fighting and loving and you’re like, “how’s this all happening?” And then it pans to the guy in the dark room who’s got all of the video screens of who’s pulling all the strings. That’s him, right? He started the Bitcoin Mom and got me involved. The amount of influence my dad has had on Bitcoin, that isn’t associated with him, a lot.
Peter McCormack: So who was it first? Was it Brooke or Jack that you got into Bitcoin first?
Bitcoin Mom: Well me.
Jack Mallers: I was like in high school though!
Bitcoin Mom: Well, yeah, exactly. We talk about it a bit in the kitchen with you as well.
Jack Mallers: Do you remember when I actually asked about it because I had a classmate… So okay, context is I went to college for like 90 days, less, way less, 45 days and I came home and entered a coding boot camp. One of my classmates, we all had to stand up and introduce ourselves and what are you going to work on? I was going to build a way for NBA officials to have to own up to horrible calls they would make or something. Then some guy gets up and he’s like, “I’m going to work on Bitcoin.
It’s this money that’s going to be better than the Dollar” and we were all like, “what the hell?” So I came home and I was like, “hey, yeah, so school was good”, I was 18 years old, I was like, “yeah, school was great. We learned this and this guy who, was like a crazy man, was talking about this Bitcoin thing” and Dad was like, “how do you know about that?” It wasn’t like, “oh that’s so fun. Go to bed and breakfast is in the morning.” It was like, “say that again, you know Bitcoin?” It was like that.
Bitcoin Mom: Well going back to that fall of 2013, remember we pulled that stunt with all the kids. This was when you could Bitcoin to buy a Gyft card, that you can then use at major retailers. So we put the Gyft app on all six kids and a couple of others and everybody went down to North Michigan Avenue to go shopping with their gift cards that we had funded with Bitcoins, because at that point Bill had bought Bitcoin really low and then it was shooting up.
It was like $1100/$900 around that. So we felt like it was free Christmas and that was so cool. We sat at a restaurant on Michigan Avenue and the kids did all the shopping, because they had paired up a secret Santa where they had to buy presents for each other. Jack would text us and say, “okay, I’m in the line at the Nike store and I really want to get these shorts for Betsy, but I need more money” and Bill would just shoot him some Bitcoin, refill the card… Yeah, there’s the picture of all of us with our Gyft cards on the phone. So how much was that?
Peter McCormack: How much Bitcoin did you spend?
Jack Mallers: Oh, we can go through an array of things.
Bitcoin Mom: On top of that, Bill asked me to buy, he said “Bitcoin is $400.” So when was this, Christmas 2016 or maybe 2015 “when Bitcoin hits $400, if it does, you can go buy me that bike for Christmas” because we have a local bike store that accepted Bitcoin and that was 7 Bitcoin!
Jack Mallers: I got a good one. Okay, so I’m living in my apartment. So this is a year ago and Bitcoin’s at what, like $20,000, so now it’s 18 months ago. So we have the painting that we paid 6 Bitcoin for?
Bitcoin Mom: Well, that was an auction at the Latin American Bitcoin conference, that we won and the money went to charity, to BitGive.
Jack Mallers: Okay, so 6BTC?
Bitcoin Mom: Yeah!
Jack Mallers: So I have it up in my apartment. Mind you, I’m like 23 and I’m living with a buddy and my buddy is like, “what is that?” I’m like, “dude, actually believe this. I know Bitcoin is $20,000 now, but my parents bought it for 6 Bitcoin. So that’s actually a six figure painting if you twist your words right.” No, no! It gets funnier. So he goes, “okay, that’s amazing” and now he would bring chicks over and he’d be like, “yeah, we’re actually art connoisseurs and yeah, that’s actually a very expensive painting done by the Satoshi Nakamoto artist on Twitter.”
Peter McCormack: What are you going to say about that Bill?
Bill Mallers: Nothing!
Bitcoin Mom: But also, we kind of felt it was our duty back then in 2014, when these retailers would come online and accept Bitcoin, we felt it was our duty to buy things with Bitcoins. So we did buy the proverbial patio furniture.
Bill Mallers: And we’ll let that painting go for 10 Bitcoin. Bitcoin Mom’s famous!
Jack Mallers: Bitcoin mom will sign it!
Peter McCormack: I don’t know if it’s correct, but somebody was telling me a story of somebody who was on the Rekd podcast, right back when Bitcoin first started, they did something crazy, like they bought a wizard’s cloak for 6,000 Bitcoins or something stupid like that. When Bitcoin was worth like nothing.
Jack Mallers: Oh No, that’s so sad!
Peter McCormack: I need to research that one. So this is the first time I’ve ever rolled a spliff while making a podcast. I haven’t done it in 15 years.
Bitcoin Mom: Oh, I don’t know how to do it.
Jack Mallers: I don’t think anyone knows how to do it!
Peter McCormack: So this was back 2013. So you followed the run up?
Bitcoin Mom: We did. What was interesting is that sometime in late 2013, I came across a video of Andreas Antonopoulos at a conference in Greece called Disrupt and if you guys just Google “Disrupt Andreas” and watch that video. You will suddenly have your A-ha moment, which I did. So here we’d been in Bitcoin for a few months and I thought, “oh my gosh, now I totally get it.” The revolutionary potential of this to change the world and lift billions out of poverty and oh my, my head was spinning and that was great.
So Andreas tweets out, “coming to Chicago, anybody holding a meetup?” So I look up all the meetups in Chicago, no one’s holding a Bitcoin meetup. So we had one, we just had one in our living room and invited, I think we had 35 people. I invited Andreas and we had no idea if he was going to come and I was kind of nervous about it actually. Then it was Sunday afternoon, at about four o’clock, he tweets out, “going to Bitcoin Mom’s house to meet my Chicago peeps!”
I looked at Bill and I’m like, “oh my God!” This was like a rockstar coming to the house! He came in on this freezing, it was Siberia, what they call it when it was like 20 below or something. He came in and I didn’t want him to feel the pressure to talk or anything, I just wanted to be a part of our community and part of the meetup.
But everybody gathered around and started asking him questions and he sat on our couch in our living room on a cold winter night for four hours and no one wanted to leave! I said this earlier and you guys made fun of me, but it was like a 19th century salon, where people were discussing abolition or something or women’s rights or something incredibly revolutionary. It just felt, I still get chills thinking about how wonderful that night was!
Bill Mallers: Nobody wanted to leave! I kept trying to get Andreas off the hook and be like, “well, getting late” and then he’d answer five more questions and we’d be there for another hour!
Bitcoin Mom: And this was also right when Mt Gox was imploding. So people had a lot of questions.
Bill Mallers: It was exactly right when Mt Gox imploded
Bitcoin Mom: It was next day when they announced and broke the story as I recall. You still got it! By the way, this is really low THC, so the psychoactive effects are going to be lower. The CBD effects, which are the health… I’m a big fan of,
Peter McCormack: So I’m going to get healthy from it? Did you have coins on Mt Gox?
Bitcoin Mom: No.
Jack Mallers: Tell him though, so you used to tell me that you wanted to be bullish. You wanted to bid way earlier than you actually did, but you you saw Mt. Gox from a mile away, just from being on exchange floors your whole life and it wasn’t until Coinbase came out, when you were like, “all right, if Andreessen is putting this thing on his back, then it’s time for me to get along.”
Bill Mallers: Oh no, I appreciate the comment, but really anybody from the financial industry, I mean everybody, regardless of your background, certainly saw a lot of handwriting on the wall with Mt Gox. Something was really fishy.
Bitcoin Mom: Bill would always have all the the charts up and he’s like something funny is going on.
Jack Mallers: Well they had a premium.
Bill Mallers: They had like a $100 premium because they always banking problems on withdrawing cash.
Jack Mallers: But yeah, clarify. A $100 premium is common today. $100 premium back in the day was over a 100% premium. So it was like 2x plus! So that was a huge, vomit worthy premium.
Peter McCormack: How is it today in 2019, back from say 2014 because I wasn’t around them. I don’t know what the community was like, I don’t know what it felt like. How does it feel different today?
Bitcoin Mom: We’ve all felt on the same team definitely. You’ll hear people say that over and over again. Especially if you are active on Twitter, the people that you got to know on Twitter, many of whom have become really good friends of ours. I could always tell with someone, that if I really like someone’s personality on Twitter, do you find this? If you really like someone’s personality on Twitter, you find that actually they are the same in real life.
Peter McCormack: Do you know what I find? People say to me that they find me very different from what I am on Twitter. They find me much nicer!
Bitcoin Mom: That’s often the case!
Peter McCormack: Yeah, what I tend to find in real life, most people I’ve had an argument with, if I meet them at a conference, we become friends straight away. There’s only one time that’s never happened. I met two people I’ve got blocked, at Bitcoin 2019, absolute trolls. We ended up hanging out and unblocking and just getting on! So I think most of the Twitter stuff’s just nonsense. There’s only one person when I was out in Berlin, this guy started trying to troll me in real life and I was just like, “what are you fucking doing?”
Bitcoin Mom: How do you troll someone in real life?
Peter McCormack: Just saying the same shit that he says to me on Twitter, “you’re given a platform to frauds!” So anyway, I walked away from that one!
Bitcoin Mom: I think it’s so interesting that you are trying to piece together the whole history of everything. We all have like battle scars and I can tell you after… Yeah, starting around Mt. Gox, starting with those congressional hearings about the Silk Road thing, Bitcoin always felt like it was facing existential threat. There was always something. Things as mild as like the Blockchain, not Bitcoin stuff.
Jack Mallers: Well, I remember, I learned to code right after I dropped out and I would be working on the couch, just whatever. It started to get really Bitcoin focused at one point and I remember looking at the chart and I’m working on like a change tip plugin for free and Bitcoin starts to fall under $200. Mind you, it was like $1100 when my dad’s like, “this thing’s interesting.” I remember looking at it like, “oh, is this thing going to go away? Then I’m going to have to go to college and introduce myself as a freshman that’s going to be like 40.” I was like, “oh my God!”
Peter McCormack: What’s wrong with 40 Jack?
Jack Mallers: Nothing! But you know what? I remember running up to my dad’s room like, “hey, is this thing on? Is it working?” And he was a bitter, best trader ever! Falling all the way down there, I was like, “Dad, should I apply to college?” He was like, “hold on one second. I’m on Coinbase!”
Peter McCormack: I think that first full bear market is scary for anyone. I mean I’ve just really experienced mine. I did some CFD trading of Bitcoins back in 2013 and I made on the web and also on the way back down. I was like, “oh whatever” and forgot about it.
Bitcoin Mom: What’s CFD?
Peter McCormack: Contract for difference. You’re not really buying Bitcoin, you’re making a bet on the movement of Bitcoin. They’re not legal here in the US, but we have them in the UK. So you can do leveraged plays and kind of leverage bet on what’s going to happen. So I made money on the way up and lost it on the way down and forgot about it. Then every now and again will see Bitcoin in the news and the price has dropped more and more.
Then say it got down to around $200, I was like, “that thing’s dead” and then it started to go back up. Then I got back in! Now I’ve just had my first kind of bear market and the first one is quite scary, when you really live for it is quite scary. I think if you can come out the other end of it, which I have and I know some people haven’t, but if you can come out the end of it, then you’re in!
Bitcoin Mom: Well, you have to put the PSA in here right now. Never invest more than you’re willing to lose!
Peter McCormack: No, I didn’t invest more than I could afford to lose. I only put 32 grand in. I lost more winnings, than my emotions could take! But it doesn’t matter. I’ve got this podcast now, we’re here, it’s fine. It’s not a problem! You talk about the battle scars. So what did… I guess everyone is different…
Bill Mallers: Well I’ll tell you. People from traditional finance, like “oh that stuff, that’s casino.” We were around like say in 1987, that took 90 minutes, to take close to 20% off of the stock market. How about the currency markets during the 90s and how about the grain markets during the drought or the flood? Whoever thought the Midwest would flood? I was a risk manager during some really dangerous markets and crypto I don’t think, is in character, any different than some of those financial markets.
Peter McCormack: What about you? What are the main battle scars?
Bitcoin Mom: I personally don’t have battle scars, but the 2017 civil war really got to me. I got really involved. I renamed myself really early on the UASF Mom! I spent a lot of time trying to understand big blocks versus small blocks and we tried to… We didn’t line up ideologically in the beginning.
We were trying to wade through these waters to see what, and I don’t think I understood everybody’s motivations on both sides either, but yeah, that was a battle I felt like I am going to… I normally am very, very non-contentious on Twitter, I’m like pretty nice and diplomatic and I don’t promote companies and I don’t take sides and I don’t get into fights, but that one I felt was bad.
Peter McCormack: I think if you are new into Bitcoin, I think you can see both sides, the big block argument and the small block argument at first touch and go, “oh they both make sense.” I can fully empathize why people think big blocks make sense. Just maybe over time, you learn a bit more and you get a bit more educated.
But I can see how people then go off into a certain camp and then get indoctrinated into the cult of that camp and I think both can be cultist at times, but I think it’s very easy to get drawn in. I certainly during it didn’t fully understand, I kind of kept my Bitcoin and sold my Bitcoin Cash, because gut feel, based on who was supporting each project
It kind of was like, “well, you’ve got Jameson Lopp over here, you’ve got various developers over here, you’ve got Andreas over here and then over there you’ve got Roger and a bunch of people I don’t understand.” So my gut feel was based on who I trust, but I see how people got lost in it.
Bitcoin Mom: Oh yeah, absolutely and then you see what happened to that. Can I tell you a little irony?
Peter McCormack: Yeah go on then.
Bitcoin Mom: You might have to edit this out.
Peter McCormack: No, definitely not! Loose lips, cookie!
Bitcoin Mom: I’m not going to tell any of Jack’s secrets, but because of that fork, we used the BCH airdrop to fund Jack’s Zap company or whatever, your efforts. So we helped Jack basically not have to…
Jack Mallers: Bitcoin cash has funded difficulty swaps and derivatives, it’s funded Lightning stuff, it’s funding a Bitcoin core engineer at one point. So Roger, no matter his intent, created money out of thin air and gave us the best money in the world for it and allowed us to fund and help Bitcoin a lot! Thank you Roger for supporting Bitcoin! Do you have any more of those monies? Can you create and pay me for it? Create a new one please, the purple one!
Peter McCormack: That’s actually hilarious! What price do you sell Bitcoin cash at?
Bitcoin Mom: At first I didn’t feel confident enough to split the coin, so I was just ignoring it. Then I was like, “oh, I can’t not do this.” My best was 0.12 of a Bitcoin I think? It was a pretty good trade. What, you think I did better? Jack’s pointing upwards.
Peter McCormack: Mine wasn’t great. I sold, I think about $400. I sold it pretty quick.
Bitcoin Mom: Oh, I started pretty low, but never the super high, like when he pumped it up to $4,000 for his Bloomberg interview. No, that was too late. But I just love at that same time, “Lightning people keep saying it’s going to take 18 months, it’s vaporware. It’s never going to happen.” Meanwhile, we’re funding a very active application and Jack was able to quit his normal job and work on Zap full time. It was great.
Peter McCormack: What was the normal job?
Jack Mallers: I’ve had one normal job in my life. I was working at a startup in Chicago. I was hired to be an engineer, but then ended up evolving into like leading the product, so design, product and engineering.
Bitcoin Mom: You have a patent don’t you?
Jack Mallers: Yeah, there’s a patent for it. So the company was, I wouldn’t say struggling, but a little bit confused, like we all get and I built a solution on the weekend. I’m like the most competitive person, right? So if I do something, I do it all the way. So I built something on the weekend and I proposed it to them and it turns out it was really, really successful and they put a patent in my name for it. Sorry, I’m like distracted, that was a fat wine pour! That was a lot of wine.
Peter McCormack: This is my Joe Rogan episode, because I never normally drink…
Bitcoin Mom: Oh no, don’t do… Oh my goodness.
Peter McCormack: No, we’re going to do everything! Can you imagine having a whitey during the interview and just passing out? I just love that story that Roger Ver helped…
Bitcoin Mom: And Jihan!
Peter McCormack: And Jihan, have helped finance Zap, I think that’s incredible!
Jack Mallers: Yeah, it’s the best thing ever!
Peter McCormack: That’s going to be the title of this show, “Roger Ver financed Zap!”
Jack Mallers: He financed a lot, like miners are going to be hedging difficulty. We even funded at one point a Bitcoin core engineer, so there are lines of code, thanks to Roger. It was really the craziest thing though. I used to describe to my friends, they’re like, “what do you mean? You got money for free? I thought that’s not how it worked?” I’m like, “no, check this out.” So let’s say I created money out of thin air, like my toenails. I clip my toenails and I was like, “here, here’s some new money” and you said, “well, no. I can’t do anything with your toenails.
I can’t exchange it for any goods. I can’t pass it on. I can’t exchange it for a Dollar. So no thanks.” It’s like, “no, no, no. I’ll give you my toenails and then I’ll buy them from you!” That’s what happened. So it was like, “oh, thanks for this fresh batch of toenails Roger and you’ll pay me in Bitcoin for it? How lovely! Thank you so much! I can’t wait for next Christmas!”
Bill Mallers: I’m not going to follow that. That was really good!
Peter McCormack: That’s the second time you’ve used toenails though? It always comes back to toenails.
Jack Mallers: When did I use it?
Peter McCormack: You said it earlier.
Jack Mallers: It’s my go to financial instrument. You’re trading high, by the dip on my toenails!
Bitcoin Mom: We just got back from San Francisco and we’ve just been talking about gross things for days!
Jack Mallers: The new Call of Duty zombie map is San Francisco, defeat all the shitting, naked apocalypse of zombies with the new Call of Duty.
Peter McCormack: I had it today when the Uber was taking me to the airport in LA. So we’re driving on the, we’d call it in England, a dual carriageway. It’s not a freeway, but it’s two lanes. So we’re coming under this bridge and he starts beeping. I look up, there’s a woman just walking down the center of the road and she looks at him like he’s an idiot for being in a car on the road and she’s obviously messed up in some way.
That was kind of rare in LA, something that bad, but I was blown away by how bad San Francisco’s got. I’ve been going to San Francisco now for 10 years. First time I went was like 11 years ago and I had the most amazing time. No problems, didn’t see anything and every time I’ve come back it’s got worse and worse. I was staying up at Union Square, you saw my tweet, I went for a jog and I thought I was in an episode of The Walking Dead.
Isn’t just seeing the rows of tents or seeing rows of people and it’s really sad and depressing, but you could be outside Walgreens and there’s a dude shouting at somebody who wasn’t even there. Then you get to the bottom of the street and there’s somebody begging. Somebody said it to me recently, “San Francisco is now 10% dystopian future.”
Bitcoin Mom: Absolutely it is. We have a terrible homeless problem here in Boulder, but I feel like, you saw those guys, they’re like, “love you Mom!” I mean, they love us, they’re sweet and I think they’re relatively well taken care of. But it’s a huge problem.
Peter McCormack: Would you say there’s a difference though? For me it felt like in San Francisco, there was a lot more people with mental health problems and probably a lot more people on drugs.
Bitcoin Mom: Yeah, drugs.
Peter McCormack: Well, it’s definitely mental health as well. Why is there such a huge problem? What’s happened? I can’t understand it!
Bitcoin Mom: Well, just in general guys, it’s just… Well in San Francisco people have said that it’s gotten so expensive to live there, so you have some people who are homeless because they can’t afford to live there anymore. But there’s a lot of mental health issues, insurance, the whole healthcare, don’t get me started on how they treat mental health.
We have six kids and I swear four of you guys have anxiety disorders, right? I mean, really. Jack gets panic attacks, we have a daughter right now who is being treated for pretty severe chronic anxiety and so it might be something about this generation, but I don’t know, don’t ask me to talk macro on this, it’s too hard.
Peter McCormack: I had chronic anxiety and panic attacks back from… The first one came from drugs. So I told you I had a drug problem and then I went through two years of really bad anxiety and then panic attacks probably once a week, you think you’re going to die, you know what I’m talking about?
I’ve had ambulances out, I had it even once on the Tube in London where I collapsed on the Tube, I thought I was dying and then, it’s so shit, so they end up taking me off the Tube. By the track, they take my shirt off and I haven’t got a great body. Then they bring the paramedics down and I’m getting an ECG in rush hour, London with everyone walking by!
Bitcoin Mom: What spurred the panic attack? Claustrophobia?
Peter McCormack: Nothing like that, just bang and it hit me. After my separation, my divorce, just everything changed. I tell you how I got rid of it, I don’t know if you… Do you run?
Bitcoin Mom: You got rid of it?
Peter McCormack: I did, by running.
Bitcoin Mom: Really?
Peter McCormack: Yeah, running. I went to the doctor and they wanted to prescribe me anti-depressants and my brother has them and he’s never got off them. Every time he’s tried to wean himself off them, he’s got the depressed again. So I got in the car afterwards and I just Google “alternatives to anti-depressants” and the three things that it came up with were; running, yoga and meditation.
So I did all three. There’s an app called Calm, which I used when I had really bad panic attacks, but I just got my trainers on and I ran. I pretty much ran nearly everyday for a year and it all went. That’s what worked for me. I don’t know. Do you run?
Jack Mallers: Yeah, I run, I play basketball.
Peter McCormack: Does it help?
Jack Mallers: Are we talking about my panic attacks on a podcast?
Peter McCormack: We don’t have to! We talked about mine. It might help people.
Bitcoin Mom: Oh it does help people actually!
Jack Mallers: Yeah, I’ve had panic attacks forever.
Bitcoin Mom: What do you do?
Peter McCormack: During the panic attacks or just in general, because anxiety is not binary, it always exists. I mean people that struggle with mental health, myself included, you have to just constantly maintain whatever it is, running or your diet, but you’re always just taking care of yourself.
Bitcoin Mom: And there are times of high stress. We’ve been giving Jack CBD. I know it’s helped Bill and me, that’s a discovery we’ve made when we moved here to Colorado. We take it every day and buying this company here in Boulder was extremely stressful, it took a really long time and the CBD, I wish I’d had it raising all those kids, because it is so amazing how steady I am.
I cope with stress a lot better and here’s just a little tip everybody, CBD works best if it has a little bit of THC to activate it. It has to do with the entourage effect of the whole plant and so we take everyday 20 CBD to 1 THC ratio and I think it has helped us so much. So anyway for you, I think the CBD is really helpful, but you have to take it every day.
Peter McCormack: Well I live in Chicago. I don’t have it.
Peter McCormack: No, they just legalized marijuana and you can take the half based one that’s legal?
Jack Mallers: Yeah, well I’ve gotten much better over the years for sure. It used to be much worse. I used to not be able to go to my first classes in school. So obviously the listeners know that my parents are divorced, so Brooke is my stepmother, we went over that story.
So days where I would have to go from my dad’s house to my mom’s house, who I don’t get along with too well, I physically couldn’t leave his car and go into a class. So I would go to a specific teacher and I would just have panic attacks for about an hour and a half straight. I didn’t take history and what was it, English or something in seventh grade.
Bitcoin Mom: You didn’t go to class till noon.
Jack Mallers: Yeah, so it used to be really bad in middle school, Now it’s fine. Now if I’m someone, well Stacey Herbert or someone calls me, “an autistic, 14 year old virgin”, I’m okay, I’m much better!
Bitcoin Mom: So someone said that in the comments when you were on the Kaiser Report?
Jack Mallers: Oh, it’s the best. So mind you, no one ever really cared about what I had to say until recently. Maybe that somehow gets forgotten, but this is all new to me. The Magical Crypto conference was the first time I ever spoke at one of the big conferences and it was a derivatives talk. I was so proud of myself and I thought, “man, I don’t know if I did well, but I know I didn’t blow it.”
Peter McCormack: You crushed it!
Jack Mallers: The audience was laughing and I was cursing up there. So I know I didn’t blow it and so I went back and I watched it on YouTube, as egotistic as that may be. I was like, “man, this is so cool” and I’m looking at the comments and I’m talking about… So corn farmers traditionally hedge themselves through derivatives and that was a very Chicago thing; agriculture, hedging and derivatives.
So I’m walking through how a corn farmer hedges and how Bitcoin miners need to hedge a lot. There’s a lot of things and an array of products that need to exist and in the comments, someone goes, “hey, I just sat down, I’m halfway through the presentation. What’s this guy talking about?” Someone comments, “oh, it’s just some 14 year old autistic virgin who’s trying to put corn on the Blockchain!” I thought it was so funny! This is the first time I’d ever had any trolls or anything.
Peter McCormack: That’s quite funny trolling though.
Jack Mallers: Yeah, I was like, “fuck yeah, I’m an autistic virgin who puts corn on the Blockchain? You’re damn right!”
Peter McCormack: You know what, like when you get trolled, I don’t mind the really, really insane ones. Like I’ve had people laughing at my mum for being dead or telling me they want me to get cancer and die like my mum, with those ones I’m like, “ugh, whatever.”
Bitcoin Mom: I’m so glad that doesn’t get to you, that’s awful.
Peter McCormack: But it doesn’t because when’s it’s that shit, you just know they’re just insane, there’s something wrong with them. It’s when somebody says something like, “oh, I listened to your show, it’s rubbish.” I’m like, “oh fuck!” That really gets to me! The soft ones, because you think, “oh, they really mean it.”
Bill Mallers: Isn’t that a fun irony though, is that most 25 year olds will tell you some story about how their mom tried to make sure that they didn’t take drugs. Jack can tell stories about how his mom told him, “you need a little THC to properly activate the CBD!” That’s a pretty cool mom.
Peter McCormack: She’s a pretty cool mom!
Bitcoin Mom: Yeah, the trolling. I’ve only had to block a couple of people and one of them was this account during the Bitcoin civil wars in 2017, who was on the big block side. I’d say something about UASF or against the SegWit2X and he’d get on there and call me a retard and I’m like “do you kiss your mum with that mouth?” I couldn’t believe it, so I had to block him. But I’ve never blocked anybody else except the Bitcoin.com account.
Peter McCormack: Well Bitcoin Mom is everyone’s Mom, so they can’t talk to you like that! Some of these people are just crazy. I have about 2,500 people blocked.
Jack Mallers: Yeah, but you take it hard though.
Bitcoin Mom: It makes me cringe the things people say to you!
Peter McCormack: Yeah but I give it out, I deserve some of it. But yeah, some of these people just get a bit crazy.
Bitcoin Mom: Everybody who’s really nice in person, please don’t!
Peter McCormack: Well, you’ve invited me into your home now, you’re going to have to let me stay now, as I’ve drunk too much and we’re going to blaze this up! So let’s do the weed story, because that’s half of the story. I already know the show is going to be called “Bitcoin and weed.”
Jack Mallers: Well the weed story, you have to tell, starting back when I was growing up, about the transformation. We have to smoke first though!
Bitcoin Mom: You guys, I don’t get high!
Peter McCormack: How can you tell Jack to get high?
Bitcoin Mom: I don’t tell him to get high, I tell him to use CBD. There’s no psychoactive effects at that level.
Peter McCormack: You’re like a modern day Howard Marks aren’t you? You know, the weed guy? He used to bring it in on the plane! You haven’t seen the film? So this is legal? What we’re about to do is legal?
Bitcoin Mom: Oh yeah, in this state it is legal.
Peter McCormack: That’s fucking great.
Bitcoin Mom: I mean, cannabis is illegal in the US at the federal level, it is a schedule one drug. That whole history is so fraught with injustice and racism that just… Anyway, but it’s legal here in Colorado and I don’t know… How many states have at least medical marijuana? It’s like 47 states and the voters have recognized that they believe that it has some medicinal benefit.
A schedule one drug at the federal level, means that has no medicinal benefits and it’s up there with, what else is up there? It’s worse than cocaine, it’s worse than meth, which is ridiculous. So anyway, Jack’s talking about the transformation. So we raised these six kids, who are all teenagers at the same time and our house was the house that everyone came too, because we had an open door policy. Jack always had tons of friends around.
Jack Mallers: Listen to this, so when I was in middle school, our house was just the best and the coolest dad in the world. So on Fridays, everyone… It was a competition to get to the House first, because my dad would go on these notorious, historic Costco visits! Because my parents were divorced, so some weekends I’m at Moms and then some weekends I’d go to Dad’s.
So at Dad’s house, we’d load up at Costco, we had rope swings and my whole middle school class or high school class would come over. So in middle school it was a competition to get there because he would make so much food off his Costco runs and if you showed up too late, if you were the 50th kid, you weren’t going to get any of the bourbon chicken. So it became a competition…
Bitcoin Mom: Not real bourbon, that’s just what it was called!
Jack Mallers: Yeah, it was microwaveable, but it became a competition, that kids would start ditching their classes late or faking injuries! So my mom lived about a block away from our Middle School and my dad lived about a mile and a half, so kids would start ditching their 9th period on Fridays when Jack was at his dad’s house, just to get the bourbon chicken, be first on the trampoline or be the first to play basketball in the backyard or whatever.
Bitcoin Mom: Our house was insane. I walked into a frat house!
Peter McCormack: So then kids would start ditching and by the time I got home to my own house, the Bourbon chicken was gone. I’m like, “fuck!” I can’t ditch ninth period, it’s just not how I was raised. So we would get on 9th period and someone would fake an injury. So we’d walk to Mom’s house and be like, “hey Mom, Kieron really fucked his ankle up. We can’t walk all the way to dad’s house, we got to get a ride!” So then we started getting a ride and we would be driving past the kids that ditched 9th period, like “motherfuckers!” It was before Uber and it was so tactical back in the day.
Bitcoin Mom: Oh my gosh, the craziness of that house! We just sold the house and so it’s kind of sad that it’s closed. We were going to sell it for Bitcoin, but no one would do that. So do you remember when you chased those kids out of the alley because your sisters were having like a 7th/8th grade school party and those guys were trying to sell weed to those kids.
Jack Mallers: Yeah, you set me on the job! “Hey, are you doing anything tonight? Would you mind just standing in the backyard and watching for someone trying to sell drugs to my daughter” Yeah, sure Mom!
Peter McCormack: “Yeah, that’s my turf!”
Bill Mallers: If anyone’s going to be selling weed around here, it’s Bitcoin Mom!
Peter McCormack: Oh yeah exactly! So sure enough, here come the 9th graders trying to sell it. Wasn’t it the freshman from the high school coming over and tried to sell weed to the middle school? I thought it was you guys who chased them out of the alley!
So I remember that one time you had that friend that came over and I’m like, “Jack, the kid reeks of weed. I don’t want him in the house” and it was very uncomfortable. We had like kind of a contentious, Jack and I would say had a contentious relationship on some of that stuff. But at the time it was so stressful cause we just didn’t want to be “that house”.
There was another really popular house in our town that was kind of known for the big parties and known for the parents that turned a blind eye to the underage drinking and drug use and we didn’t want to be that. The cops were called there all the time, we didn’t want to be that family. We wanted to be the family… What?
Jack Mallers: Not only that, but I didn’t drink or smoke or anything all throughout school. So it wasn’t not only that, but kids would come over and be like, “all right, we want to try weed” and they would leave out of respect for me, I was like the only kid…
Peter McCormack: The irony!
Jack Mallers: Now trading Bitcoin and slinging dope! Yeah, but it wasn’t only just like parental, but it was the culture of the house we had.
Bitcoin Mom: Yeah, absolutely and we had to protect that culture. So we really had to make sure it was a drug free, alcohol free home and I think we did a pretty good job. I think sort of like at the end, we kind of gave up on the last ones. So that has been quite a transformation for how we raised our kids and chasing that out and making sure we tried to stay the house that parents felt safe sending their kids to, we really guarded that. We still had the police call, but that’s because someone beyond the tramp screaming obscenities or something.
Bill Mallers: It’s usually noise, other than any other problem.
Peter McCormack: So let’s get into the weed business. So you told me that it was originally to do with Bill? With sleeping problems? So what happened? What’s the story? How do you discover weed and how does that then mean you suddenly own four dispensaries and four grows?
Bitcoin Mom: Yeah and a genetics lab and a seed company!
Peter McCormack: A genetics lab? Oh shit, we’ve got so much to get into yet!
Bill Mallers: I’ve always had problems with sleeplessness…
Jack Mallers: Sorry, just asking for a lighter.
Peter McCormack: Can we have this? Can we really do this in your house? Part of me doesn’t want it. What do I use, just this as the ashtray?
Bitcoin Mom: So I’m curious because this is one of our strains and like I said, it’s mostly CBD. You’re not going to get super high on this and I like that.
Peter McCormack: Hey, what do you think of my rolling skills?
Bitcoin Mom: Oh, I’m impressed. I have nothing to compare it to! I was such a good two shoes growing up.
Peter McCormack: I’m such a lightweight, I’ll probably be completely smashed.
Bitcoin Mom: Oh now you’re not going to be able to run this podcast, that’s the thing. Then we’ll just take it over!
Peter McCormack: So Bill, you were having sleeping problems?
Bill Mallers: Yeah and one of my Bitcoin friends said…
Bitcoin Mom: Jack’s taking a picture of Peter right now smoking CBD.
Jack Mallers: Go on, my bad.
Peter McCormack: Are you posting it?
Jack Mallers: No, I just wanted to have it!
Peter McCormack: Let me go back, I don’t want to talk too much, but part of the problem was moving to this elevation, which we didn’t even expect to live here full time, so we’d live here halftime. Anyway, so when you go your whole life, living at almost sea level in Chicago, as Bill did, moving to a mile high, the effects of moving to this elevation are pretty severe. So you had nausea, insomnia, what else?
Bill Mallers: It’s a weird kind of nausea. Normally you associate nausea with stomach flu or something. I’d feel fine and I just couldn’t keep food down and I’d have to step out. So one of my Bitcoin friends, Crypto Rick just said, “in order to deal with your sleeplessness, your nausea, have you tried cannabis?” I go, “no, I don’t.” My generation… I grew up in the 70s where everybody’s parents smoked and your house smells like an ashtray and I just don’t want to smoke.
He goes, “oh no, come on. They got edibles or tinctures or cartridges.” So yeah, we just walked into the dispensary and I just said exactly that. I go, “I can’t sleep, but I don’t want to smoke” and they were so enthused about finding a solution, like “okay, try this one. If this doesn’t work, come back and we can tweak it and try something different!”
I was so impressed with the quality of the staff, the knowledge they had and I don’t know if you’ve ever built a business, that’s not an easy thing to do, particularly a retail business, which has all sorts of salary constraints. Not everybody can get executive level salaries and here, people just on the front line talking to a tourist, were so engaged and I just love that business. We kind of got to know the staff.
Bitcoin Mom: We keep coming in and they’re like, “hey, Bill, are you sleeping? How’s it going?” They started calling us mom and dad even before…
Peter McCormack: Weed Mom!
Bitcoin Mom: So one day we were at the coffee shop next door and one of their managers came down, Carrie, who we love so much and I’m like, “why don’t you guys accept Bitcoin?” Bitcoin seems like such a great solution for cannabis industry, as you can’t take credit cards, you can only could accept cash and she said, “well, the owners have been trying to sell the place and they don’t want to make any changes to anything.”
I looked at Bill and I said, “oh my gosh, it’s for sale?!” We thought we were retiring here and retirement’s boring guys, you got to have something to do. We’re only in our fifties, so retirement seems a little premature.
Bill Mallers: That is not a hint for grandkids, by the way!
Bitcoin Mom: No. God, no!
Jack Mallers: Noted!
Bitcoin Mom: Done with kids right now. Bitcoin Mom says “done with kids!” Anyway, so we started the process of buying this company and it was the most onerous process you can possibly imagine. It took eight months.
Peter McCormack: Is that because you have to get some licenses?
Bitcoin Mom: Regulatory stuff. It’d be easier to open a bank.
Bill Mallers: No I think the motivation is good. They want to make sure, and I think I agree correctly, there are elements in the cannabis business that they want to keep out of here and they want to make sure that any type of criminal or corporate or something, isn’t just recruiting a local couple to front for them. So they really interview you very thoroughly.
Bitcoin Mom: Our first application, which is called the “pre-suitability application” to the state of Colorado’s marijuana enforcement division, was at least 600 pages and took me several weeks to compile all the documentation. They wanted actual copies of our college diplomas from back in the early 80s from Duke and North Western, which of course I don’t have anymore. But then it’s financials records.
Bill Mallers: How are you going to pay for it? Are you financed by somebody that we don’t want in the business? So I actually have this in my Bitcoin scrapbook, I had a state regulator ask me the following, he goes, “how are you going to pay for this?” I go, “well, I’ll probably liquidate some of my Bitcoins” and she goes, “where are you going to sell it?”
Bitcoin Mom: No, she said, “when are you going to sell it?” I was like, “I’m going to see when the price was the highest!”
Jack Mallers: Mr Mallers. When top sir?
Bill Mallers: Why, you got a resistance level you’re looking at?
Peter McCormack: Do you have an account on Bitmex?
Bill Mallers: Where am I going to sell it? I’ve been trading since 1977, I’ll take care of the money.
Bitcoin Mom: But yeah, they did ask a lot of questions, some of which were really, really invasive. So that’s just pre suitability. So you get approved and we were fast tracked, because we have squeaky clean records. I think I had a speeding ticket back in 1991. So then you do the purchase agreement, all this stuff and then you do a new application for changing ownership to the state of Colorado and the city of Boulder. That process was another 800 pages and another tens of thousands of Dollars and that process takes anywhere, as they told us, six weeks to six months. So yeah, it took a long time! So we finally were approved for ownership in late January and so we’re really new to this business. We’re not pros. We obviously aren’t pros because we bought a viable business with fabulous staff. There’s 65 employees, our executive management is unbelievable and it’s been a lot of fun! I mean I’m focused more on the medicinal side of things.
Peter McCormack: Do you have to accept cash because you can’t get banking?
Bitcoin Mom: Correct, many cannabis companies can’t get banking because the banks don’t want the feds to come down on them, because it’s a schedule one drug.
Peter McCormack: So how does the conflict between federal and state level laws work? How can you be legal state level, but illegal at federal level and not know whether or not someone’s going to arrest you. So what’s going on here?
Bitcoin Mom: That’s the problem. It’s definitely a problem.
Bill Mallers: Well it’s a problem but also, if it weren’t sketchy and have questionable legal status, I doubt that a guy like me would be able to get a big part of it. I think you’ve got to look at it both ways. But I think a lot of corporations are not going to be able to access this opportunity for that reason, because they are constrained by legal issues or they’re advised against it by PR problems.
So I try to look at it like a speculator and the only reason I can get in, we got a great shop, the only reason that a guy like me can probably get into this is because there are a lot of people that do have their hands tied with investment opportunities that just can’t touch it.
Jack Mallers: So it is good for the body and Bitcoin Mom has got into all of the science of it and it is probably an amazing retirement, but I mean this guy’s a trader. It’s almost like a call option that will never be out of the money. It’s got the most upside. So looking at a portfolio, you got cannabis in there somehow, Bitcoin, I mean those are the type of like, never expiry, never out of the money call options. Those are the trades that can be generational.
Bill Mallers: If your investors want exposure to cannabis, I think there’s maybe two Canadian companies that you can take a look at. I dabbled a little bit there, but you really want exposure in this business. It’s not easy, because of the legal status.
Bitcoin Mom: We’re in a fortunate position because we’re licensed in a legal state, that we get people coming to us saying, “we’re want to do research on the cannabis plant, but we don’t have the licenses to touch the plant, but we have all the equipment to test it and we can do all the genetic stuff.” So they sometimes come to Colorado and talk to us about that.
We have a company called Colorado Seed Inc, and that used to be just selling seeds and now we’re pivoting, because we’ve got fabulous scientists working there, who are doing some great work. We’ll probably know in a year, how well that’s gone.
Bill Mallers: No, you guys are going to get tired of hearing me analogize between Bitcoin several years ago and cannabis now, but it is. Didn’t every Bitcoiner five years ago, have to hear, “oh yeah, that’s kind of sketchy, arguably illegal” or “somebody’s going to shut it down” That’s the same thing you hear about cannabis nowadays, which as Jack says, I’m a speculator, that to me is an opportunity.
Peter McCormack: But it’s a completely cash business though? You don’t have to tell me the inner workings of the company and if that exposes too much, don’t answer, but do you have to pay the staff cash?
Bitcoin Mom: No. Used to have to!
Peter McCormack: But then if you can’t…
Bitcoin Mom: We have a bank account.
Peter McCormack: So you run it out of a personal account?
Bitcoin Mom: No, we can’t have a personal account. The business account has to stay away from my personal account.
Jack Mallers: But there’s Brink’s trucks.
Bitcoin Mom: I don’t want to talk about op sec.
Jack Mallers: No, just in general, like in Boulder, on a given day you’ll see Brink’s trucks lined up, like the TV show 24 or something like there’s a robbery like Batman. But they’re just responsibly transferring six figures in cash to the banks, at all times.
Bitcoin Mom: So the prior owners waited 10 months for a bank account at this one particular bank, I’m not sure I should be naming it. There’s one particular bank that specializes in cannabis as a state charter, it’s a good bank. They were very kind to transfer the account to us when we took ownership, because otherwise we would have been screwed and we would have gone back to the whole stacks of cash on the table, pay all your vendors in cash, pay all your employees in cash, which is how they used to do it, which is very dangerous.
In fact, our CFO said one day, “I used to be really nervous about working here, because I knew how much money was in the safe.” But now really that money gets taken up to the bank pretty quickly and we also accept debit cards. But crypto is a great solution, we do accept Bitcoin, Ether and Litecoin or other coins that we’d be willing to ShapeShift back to Bitcoin.
We are the rarity. We sometimes get people coming and saying, “I’ve got a solution for you guys to help you accept crypto” and we’re like, “yeah, we got this!” Because a lot of those are kind of like, they’re payment processing, wonky workarounds that make it possible for the store to just basically quickly turn it back into Dollars.
Peter McCormack: What kind of weird things have you learned about, since moving into the industry? Because obviously you come in cold, you basically know it’s about getting high and maybe medicinal, but you’ve obviously gone into it… An example for me being is that, when I was a kid, you basically bought weed and you smoked it. But now you have all different types of ways of consuming it; drinks, gummies, whatever. Name me a few of the things that you’ve really learned about the business that have surprised you.
Bill Mallers: The quality of the customers. I usually do. You think you run a pot shop, you’re going to get dropouts or counter culture types, no, not at all. You get tourists, you get high end customers. I love our costumers! I like hanging out in the shop and yeah,
Bitcoin Mom: We also have a store up in Lyons, which is called “The Bud Depot” and that’s the last dispensary on the way up to Rocky Mountain National Park, which is a huge tourist destination and we get everybody there! That store does so well in the summertime. It’s funny you ask because this weekend coming up, there’s a big Grateful Dead concert here in Boulder that attracts a ton of people.
Peter McCormack: Wow, when is it?
Bitcoin Mom: It’s on a Friday and Saturday and that is the biggest sales weekend, because we get so many people that come and our stores is right in the most touristy part of Boulder’s main drag, which is called Pearl Street. So you see everybody there, old guys, people our age, older who, “gosh, I haven’t done this since the 1970s” or “we’re only doing it for this weekend.” Also outside of that, because University of Colorado is here, it’s a huge school. So then you get all the parents coming and no, I won’t tell that story, should I?
Jack Mallers: Loose lips cookie!
Bitcoin Mom: Shall I tell the story about how I ate a gummy and I ended up in the hospital?
Peter McCormack: If you want to. You already told it so you have to!
Bitcoin Mom: I did not take a drag off that I swear, this is me. I took a bite off a gummy but forgot that I did it and I thought it anyway, I woke up in the middle of the night, I thought I was having a stroke. I was numb in my body, I honestly couldn’t speak, I scared the hell to Bill and our daughter and they called the paramedics.
Jack Mallers: Yeah, Dad called me and was like, “Hey, Cookie is going to be okay.” From what? What happened? “No, she just ate a gummy!”
Bitcoin Mom: But I didn’t know it! So the paramedics come, they ask about taking anything, I can hardly speak and I can’t move my body. So they have to walk me down the stairs and they put me on the Gurney and then they put me in the ambulance. I know they gave me an IV. Poor Bill and our daughter get in the cop car and get taken to the hospital. They give me a CAT scan, because at my age, they think you’re having a stroke. So “no, no, no, everything’s fine. I’m fine” and they finally put us in an Uber at 5.30 in the morning to come back home.
I’m coming out of it and I look over at Bill and our daughter and I go, “oh my God, I did take something. I took a bite of that gummy that helps people sleep.” And Betsy said, “oh no, no, no, no, not that one that was over there?” I’m like, “yeah” and she’s like, “oh, that’s the one I had from another source and that was 100 milligrams.” I’m like, “oh my God. I thought it was a 10 milligram one!”
So it was and I took 50 milligrams of that stuff and of course I was completely gone. But this is all to back to what we were saying before, I was embarrassed that this had happened and the next week I happened to run into the, don’t tell me how, but I ran into the nurse who had treated me in the hospital and she goes, “how are you doing? You look familiar, I saw you last week?
I said, “I’m so glad I ran into you. You asked me if I took anything and yes, I had eaten one of those marijuana gummies and it was way more than I thought it was” and she’s like, I” knew that.” She said this happens every single night. All the parents that come in to bring their kids to University of Colorado, like, “oh my gosh, I’ll try an edible.”
So they take it, they eat it, nothing happens, they wait 20 minutes, I’ll take some more. Nothing, because it takes like an hour to hit your system and then boom! So cautionary tale!
Peter McCormack: Talking about the things you’ve learned about it and the quality of the customers, do you think that’s because people are just still excited they can do this? They’re like, “wow, I can go in the shop and buy some weed!”
Bitcoin Mom: Yeah I think so.
Jack Mallers: It’s more though… The people that enjoy cannabis and that it helps, is not what is portrayed to you, is probably the more, “oh, why don’t you get a bunch of college dropouts and drug addicts on the street”, is because those aren’t the only people that smoke weed. That’s why!
Bitcoin Mom: We see every demographic in there, absolutely. You can’t stereotype it anymore and I believe that our generation and my parents’ generation, Jack’s grandparents generation are using cannabis more and more because they’re realizing that it really is very helpful for so many things.
Peter McCormack: So what kind of balance between medicinal and recreational customer do you think you have?
Bitcoin Mom: It’s a good question. Here’s a little secret, there’s no difference between the medical and the recreational stuff we sell any place. Everybody’s like, “oh, if you go into the medical store, you’re getting much better quality.” No you’re not, you’re able to get it a little bit cheaper, taxes are lower and you get more…
Jack Mallers: Well the dosage is higher.
Bitcoin Mom: It’s the same weight. We grow the same plants! What else has surprised us, is that the taxes on the cannabis industry are so crazy high, that nobody in this industry that’s mom and pop like us, is making money. Not yet.
Jack Mallers: Well of course though. What’s the incentive for the state to legalize it, but for tax?
Peter McCormack: Taxing it to a level where you can’t make a profit…
Bitcoin Mom: 70%.
Jack Mallers: Well it’s an interesting way to put it though. They’re not taxing it so that no one can make a profit. Interesting that you won on that trade, you must’ve done that, because the other guy on the other side lost. It’s like, no, I didn’t do that for him to lose, I did it for me to win. The government, they’re speculators too, that’s an opportunity for them.
Peter McCormack: Of course and they know what to tax high is cigarettes, is alcohol, is gambling, it’s the vices right? This is another vice, but is it taxed disproportionately higher than other vices?
Bitcoin Mom: Yes and here’s the problem. There is something called 280E regulation at the federal level, so that you cannot deduct, in the course of running a business of trafficking drugs, and this goes back to… You have a different history than I do, you think prohibition. I heard that it was from the 80s where a cocaine trafficker was trying to deduct his business expenses and congress said “No.” So 280E will not allow you to deduct any business expenses that are involved in the sale of your product.
So no advertising, everything that everybody else deducts, like salaries… We pay so much taxes, it’s crazy. So this is kind of a bet that it’s going to get legalized and that eventually 2, 3 years hopefully that the 280E regulation will go away and we’ll be able to be treated like a real company.
Peter McCormack: Is there a significant alignment between Bitcoin and the weed industry or was it just because you’re in both that you see the two together?
Bill Mallers: Oh, probably the latter, but I definitely see the two together; sketchy, illegality, not exactly acceptable, but that’s where there was an opportunity. In my mind, they seem very similar to me, but I’m not the only one that’s drawn analogies between crypto and cannabis. That’s something that your kids someday will see as completely natural, but you were viewed as kind of a leper, if you were into crypto five years ago and it feels that way with cannabis now, “sn’t that a drug” or “just say no” or whatnot.
Bitcoin Mom: That’s a good way to put it. It really does have that.
Bill Mallers: Well that’s where you find opportunities. If everybody agrees that that’s a good thing to buy, there’s not that much upside in it
Peter McCormack: But is there for you guys, is there a preference to accept Bitcoin over cash or do you not care either way?
Bitcoin Mom: We’d rather accept Bitcoin.
Peter McCormack: Because you’re not carrying the cash?
Bill Mallers: Well cash is expensive, you’ve got to have a big safe for it. When you swipe a QR code and it lands in the the cloud or Bitcoin wallet, it’s secure. It’s safer!
Bitcoin Mom: But the problems are that one, nobody has Bitcoin to spend and two, if they do, they don’t want to part with it, because they think it’s going to go up price. So we have 10% discount if you pay with Bitcoin or any crypto and so that’s sort of an incentivizing strategy.
I can tell you though, I don’t want to be a Debbie Downer on this one because crypto was a great solution for the cannabis industry while it’s still primarily cash, but as soon as the US Congress passes this safe banking act, which they probably will by the Fall, they’re going to make it possible for banks to feel safer to bank the cannabis industry and therefore we will probably be able to accept credit cards.
Once that happens, that’s a lot easier, as if you pull out your credit card, you’re going to probably spend more than you normally do if you’re paying with cash and certainly more than if you were paying with Bitcoin. So I’m not quite sure how long this use case is going to last, but talk me out of it. I’m not sure
Jack Mallers: Who, me?
Bitcoin Mom: Anybody.
Jack Mallers: No, I think it’s a very bullish thing that Bitcoin falls in last of what people prefer to spend on a consumer good. Of course it does. Well, I look in my wallet, what’s the best money and what’s the worst, I’ll spend the worst one. That means Bitcoin’s working. It’s won the hard money, good money game of, “oh that thing’s only $100” or “that things 0.01 Bitcoin”, I mean that’s a totally different conversation.
Peter McCormack: People want to keep their Bitcoin!
Jack Mallers: Yeah, of course you do, that’s the best money.
Peter McCormack: So what is this banking act? Is it new, is it something in the Senate?
Bitcoin Mom: Yeah, there are a lot of pro marijuana legalization or at least pro marijuana bills that are before the US congress right now.
Peter McCormack: Do we know how much money they’ve made on tax so far? Like per year?
Bitcoin Mom: Oh, at the US level? I’m not sure. I did have some guy tell me that the US is not going to let go of that 280E regulation. Even if they do de-schedule it, that’s going to take… That reminds me of people who are exonerated in prison for a crime they didn’t commit and they’ve been on there for 20 years, but they’re suddenly exonerated, but they don’t get to walk out that day, as it takes a long time to be able to really get them out.
It feels the same way, like as soon as the 280E, sorry Bitcoin, see I do this! Bitcoin and cannabis are sometimes the same word to me, as soon as cannabis is legalized at the federal level, then it won’t be immediate, like suddenly, “oh my gosh, we get to really take actual deductions on our business.” It will take a while, because the government doesn’t want to part with those taxes.
Peter McCormack: Is there anything going on at the federal level at the moment? What is the status of regulation?
Jack Mallers: Yeah, the next election. Everyone knows that, the President of the United States, that’s just the highest form of marketing job that you have. So they’re marketers and whoever wants to be the President of this country is likely going to have to side with the substance that everyone is using to improve their lives. So all of the details of what’s going on at the federal level, depends on what journalists and media outlet you watch at night. But what’s actually happening is, whatever marketer is going to pitch themselves to run our country, is going to have to co-sign to the rest of the world’s innovation.
Peter McCormack: That’s really interesting. So it’s quite interesting that we in the UK tend to follow US elections pretty closely. We are really interested in them, we are really interested in the Presidential race. Personally, I’m less interested in the nominee or the candidate debates, probably because the coverage is lower. So they’re campaigning at the moment, preparing for 2020 right? And they’re looking to pick a candidate out of the 16 or something I read? I can’t remember. Do you know who the candidates are?
Bill Mallers: I am blessed with an inability to give a crap about…
Peter McCormack: Well you give a crap now.
Bill Mallers: Well it’s a benefit from growing up during Nixon’s presidency, I just don’t care.
Bitcoin Mom: You’re asking how many of candidates there are in the democratic side? I think they’re like 25 now.
Peter McCormack: And you think that’s a real point score against the Republicans?
Bitcoin Mom: Actually I think you’d be an idiot if you were Republican, even in terms of cannabis reform, I think that you’d be an idiot if you’re a Republican and decided to take the other side of what Jack would say. No, everybody’s got to be pro-cannabis, I think both sides.
Peter McCormack: And that changes the business significantly you think?
Bitcoin Mom: Well tax wise it does. It also allows us to ship out of state and we are preparing for that.
Jack Mallers: Well like if you got long Bitcoin years ago and you think it’s going to go up, well why? What’s the actual trade? When do I cash my Bitcoin in for more than I bought it for? Everyone’s got their narrative; the ETF, Black Swan event, hyperinflation, whatever. I mean for the marijuana industry, the trade that you are looking to maximize, definitely one of the lower hanging fruits is the taxes. If I go from paying, 70+ cents on the Dollar to 20 or 10, then what are the returns on that trade?
Peter McCormack: Plus the ability to expand your business probably online.
Bitcoin Mom: Yeah, we can ship! We have a company called Colorado Seed Inc. So if you are suddenly, “I need seeds.” I’m a new grower in Illinois or whatever. I wonder where I can get some good seeds? You might Google that. That is a little simplified fantasy, but I’ll bet they have some good ones in Colorado. I’ll Google Colorado seed and we’re going to come up first. So we have a lot of potential that way. Also shipping out of the country, because Africa is going to probably be the next great agricultural Mecca for cannabis growth.
Peter McCormack: It kind of feels like it’s coming everywhere. The conversations have changed slightly in the UK. We’ve had two incidents recently of parents who’ve had highly epileptic children. They’ve been away, they’ve bought weed, I think usually in Amsterdam, and they’ve had it confiscated on the way home.
One boy who had seizures and another girl, I’m not sure what happened with the girl, but with the boy, the Home Office, the Home Secretary actually turned around and changed the mindset and said okay, we’re going to allow it this time because this kid was risk of seizures. But there’s a real pressure, certainly on the medicinal side I’m feeling in the UK, I’m hearing about things in Germany or various countries, it’s almost like a generational shift.
I think there’s a bunch of people who don’t want it irrationally. They don’t fully understand the arguments for it and it’s just generational. My dad still doesn’t get it.
Jack Mallers: Well what you just said, if you were to edit and snip that sound bite, that could apply to Bitcoin or cannabis, that’s the whole point. How many Peter Shiffs are there on Twitter that just simply were born too early, to ever learn how Bitcoin works and why it’s helpful. Or cannabis, right? It’s interchanging
Bill Mallers: Doesn’t sound like a justification for a major investment. Doesn’t it feel like this is going to change? But that doesn’t feel like something you would base a major investment on, but it does, it is part of our attraction. It feels like time’s up for the “just say no” crowd. There are medicinal benefits and it is a healthy intoxicant.
Bitcoin Mom: It’s way better than alcohol guys! I love my wine, but alcohol is a poison.
Peter McCormack: It’s not going to ruin your liver. It’s not going to poison you.
Bitcoin Mom: I don’t think anybody’s ever overdosed on cannabis.
Jack Mallers: Well you did!
Peter McCormack: The two worst things you can put in your body or two ones that are legal, cigarettes and alcohol. People are always going to intoxicate and there’s nothing wrong with that. It’s a way to enjoy, but the only two that are legal, are two poisons and that’s why we think cannabis is a good answer.
Bitcoin Mom: I have friends with cancer. So I have one dear friend with stage four cancer and she’s on her fourth round of chemo and this stuff helps. It really helps with pain. It helps with nausea. It’s a plant! Bill always says, “it’s like cutting your grass, taking your grass clippings and turning them into some magical substance.”
Peter McCormack: Well, this was the dumb thing. When my mum was dying, we wanted to just give her the cannabis oil to try it. So we had to buy it online with Bitcoin from a kind of website and that was the only way to do it. So amazing proof that Bitcoin is brilliant. But the problem is, we were still buying it from someone we didn’t know. We had to just go with our trust with no consultation, no advice. Whereas if it was legal, we would walk into the shop and say, “this is the situation we’re dealing with. What would you recommend? You would explain this, so we would know what to go away with. So you professionalize it and you’re professionalizing what is really just a plant!
Bill Mallers: Yeah, that is what we do!
Peter McCormack: And that’s actually what the Silk Road did. I felt that the Silk Road professionalized the drug market and it made it better for everyone.
Bitcoin Mom: Absolutely and it was safer.
Peter McCormack: Yeah, it made it safer when you were buying, you knew what you were buying. The sellers were reviewed. Everyone values an online review. It was safer for the dealers because they’re really… I heard about an operation from a guy I know who worked for VICE. He went out to an operation, it’s just a professional warehouse, packaging and shipping it off. I kind of feel like it’s better for the government, because that’s a whole bunch of people they’re not criminalizing and having to fight against, which shouldn’t be. That sounded like a manifesto there!
Jack Mallers: And they were accepting Bitcoin so they didn’t get taxed 1,000,000% on the Dollar. So it was good for everybody.
Bitcoin Mom: That’s true. I mean the irony that… So in our store, you we bought a print from Cryptograffiti, that is a homage to the Silk Road that Ross Ulbricht started and it’s just a wonderful print. The fact that we’re able now to hang that in our dispensary, where we can sell cannabis legally and Ross Ulbricht is serving two life sentences in the Supermax down the road, it makes me… If you don’t want to cry, you have no heart. That’s utterly unbelievable.
Peter McCormack: Yeah I was with Tatiana yesterday, you must know Tatiana? We were talking about this there. The worst thing about that whole story for me as well is, it was used to set an example and the guy set up the Silk Road 2, which was actually a worse site, served like 7 days or 14 days.
Bitcoin Mom: I’m not sure about days, but he just got a much tinier sentence.
Peter McCormack: I think it was days.
Bitcoin Mom: There was someone else who got like a 5 year sentence or something for his dark market. That was a complete travesty.
Peter McCormack: So really this business is a hedge, you’re making a bet? You’re speculating on law changes and it doesn’t seem like it would make any sense to reverse all this now?
Bitcoin Mom: I can’t imagine, but you never know.
Peter McCormack: They’ve tasted the tax dollars!
Bitcoin Mom: There’s that at the state level now. I think at the federal level, who knows what Trump will ever do. He’s just so impulsive.
Bill Mallers: Follow the money. We pay so much in taxes. That’s the thing that saved my last business, as a futures industry paid a lot of taxes. So we were able to fend off any regulatory problems, probably because it employs a lot of people, cannabis industry employs a lot of people, pays a lot of taxes. It’s good business for Boulder. So I think that’s our shield. I really don’t worry that much about abolitionists because like I said, cannabis is a really big moneymaking business.
Peter McCormack: I’m just going to look it up. I want to see how much it is.
Bitcoin Mom: I’ll save you the time, it’s about a billion dollars for the state alone.
Peter McCormack: Wow! So what’s the budget for the state?
Bitcoin Mom: I don’t know, but I know that it’s been a huge boon to the state. It’s supposed to go to education and road building and all kinds of therapeutic benefits for…
Peter McCormack: They’re not going to get rid of $1 billion.
Bitcoin Mom: Nope and that’s the state. It’s the federal level that is the challenge.
Peter McCormack: How many states is it legal in now?
Bitcoin Mom: 47 for medical and I think 13 or something for recreational. They call it “adult use”.
Peter McCormack: I mean, that’s moved quickly!
Bitcoin Mom: Well every state, Illinois just legalized it with their new governor Pritzker and you have to look at the tax revenues in a state like Colorado. Illinois is broke and now I hope they do it right!
Peter McCormack: I guess there’s a number of people that aren’t even then drinking and getting into fights and ending up in hospital. Most people just go home and have a smoke and chill out!
Bitcoin Mom: Exactly, think about it!
Bill Mallers: When your state’s broke, you want to raise property taxes, they’re going to leave. You want to introduce riverboat gambling? That’s kind of predatory or you want to let them smoke weed? I think it’s really more a money thing, than the “just say no” generation. Visit these states. Illinois is broke. I don’t know, I think cannabis is a great solution.
Jack Mallers: Well, it’s also one of the things, along with Bitcoin, where the younger generations grew up with no bias. So people my age are so comfortable with drugs, everything about it, things between cannabis to Xanax to all of it, is so accessible. So it is also one of the things where the people that are such strong veto against, are going to end up dying, literally!
The people that grow up and are native to it and “oh man, you have a final and you’re stressed out, you should really take a puff before you go to bed” or I mean Bitcoin in the same way. One of my good buddies ran for Mayor of Chicago. A guy in my generation and those are the type of people that are going to run the world. So eventually a lot of the stigmas and the vetoes are going to quite literally die.
Peter McCormack: So it’s all Bitcoin and weed and you guys are right in the middle of it!
Bitcoin Mom: Crazy, isn’t it?
Bill Mallers: I can’t believe I married her right? Bitcoin, weed, what is going to be, psilocybin next?
Bitcoin Mom: No, no, no. I actually believe that psilocybin microdose… Magic mushrooms.
Peter McCormack: I’ve never done them.
Bitcoin Mom: I’m not proposing…
Jack Mallers: Submitting a BIP on life? Life improvement proposal, microdose mushrooms!
Peter McCormack: Is there anywhere where that is legal, either for medicinal or…?
Bitcoin Mom: Denver. Well, not decriminalized. We have one medical patient at our store who is really good, he’s staying alive on that stuff, I swear. He’s so sick.
Peter McCormack: So that would be the next step, you’ll have a mushroom farm?
Bitcoin Mom: I don’t know, maybe?
Peter McCormack: I also heard that MDMA is now being tested or prescribed for soldiers for PTSD?
Bitcoin Mom: Look at that book that we have over there. It’s Michael Pollan’s “How to change your mind” and Michael Pollan’s just a brilliant writer and it’s all about the potential of psychedelics to deal with mental health, to help with mental health. LSD, psilocybin, all under the care of knowledgeable and attentive… I haven’t read the book yet, but I’ve heard it’s really good.
Peter McCormack: It’s quite a change over the last few years though, right? When I grew up, all drugs were bad and evil and now we’re moving into a world where lots of things are being reconsidered.
Bitcoin Mom: Yeah, it’s really changing.
Peter McCormack: Alright, well we’ve just crushed an hour and 36 minutes without even thinking about it. I think we should get some food. Anything you want to leave anyone, to tell them where to come and find your shop, where it is, how to follow you?
Bitcoin Mom: So we have the bud depot in Lyons, Colorado and we have Helping Hands Herbals on Pearl street in Boulder. I’m the Bitcoin Mom on Twitter.
Bill Mallers: Thanks for giving us a chance because this is not a get rich quick or doing something midlife crisis. I really believe that cannabis is going to be… It’s a business I want to hand down to my kids. So thanks for giving us a chance.
Peter McCormack: Anytime! You’re always welcome and Jack knows he’s always welcome. Do you want to say goodbye?
Jack Mallers: See you guys, I’ll see you on Twitter.
Peter McCormack: Check out Zap! Thanks very much guys.