Mike: Hello, and thanks for tuning in to Around The Coin. My guest for today is Adam Hofmann, the founder and CEO of Nimble. Nimble is a decentralized and democratized insurance protocol built on Algorand. They've raised over $8 million with over 20 employees, and Adam is. 22 year veteran of the insurance market.

So we talked about what insurance is, the history of insurance, and all the considerations that make insurance better on Web3 than Web2 But I did push back and we talked about the detailed intricacies of. What a free market or a regulated market would look like for insurance on Web3 Hope you enjoy this conversation.

We went deep and really explored the nuances of macroeconomics and microeconomics. If you do, please share, subscribe to the channel and hope you enjoy. Here is Adam Hofmann.

Mike: Adam, I'm excited to talk with you. Thanks for hopping on the podcast today. I appreciate it. Yeah, man,  

Adam: I'm happy to be here, Mike. Thanks for having me.  

Mike: Yeah. You're one of my most anticipated guests.  

I think I think what you're working on just has obvious practical use in the world, whereas sometimes I talk to founders where it's difficult to understand there's layers of abstraction from what they're building to what someone can actually use.

And insurance to me seems people have talked a lot about it. Another one that comes to mind is credit, how credit's kind of centralized, but I'd love to hear what how do you describe what you hope to accomplish with Nimble and where you think it can go in the future?

Adam: Yeah, that's a great first of all, I want to pause on that whole concept of insurance is understandable. So nimble is decentralized insurance. That's what we're building. But the funny thing is, when I have conversations with people, they'll say, Hey, I don't really get insurance.

I don't understand insurance. It's, but then those same people will totally understand a centralized exchange or an N F T evolving project that has advanced technomics. I'm like, it, , it's, you use insurance all the time. Eeveryone does. I'm glad you said that because that's how I feel and sometimes I get stuck in that.

22 years in insurance. Of course I understand it, but I think everybody does. I think the traditional insurance industry has done a good job of making people feel like it's more complicated than it is, than it actually is. So they feel like it's oh, how is anyone gonna understand this? But that's a a long way around to say that Nimble is decentralized insurance.

So we're building a blockchain based insurance marketplace, licensed insurance marketplace that operates similarly to Lloyds of London. So that's a good kind of touchpoint. We can dig in more, but that's like the high level view.  

Mike: Yeah. Yeah. Yeah. Let's dig in. So Lloyd, how does Lloyds of London operate?

Adam: Yeah, so Lloyds is the place that ensures everything. So like when you hear Adele's vocal chords and Mick Jagger's lips and they ensure all that. The interesting part about Lloyd's is when they first started, Lloyd's was actually the coffee house where like wealthy people hung out.

And when people were shipping goods, the these wealthier people would say, Hey, we'll, we'll pay if you have, if your ship sinks, but you have to pay us a fee to take that risk. That fee now is premium. So the way Lloyd's works now is it's a marketplace, so it'll take any risk and their partners, their managing partners will underwrite that risk.

That just means look at the data. How risky is it? Should it even be insured? Is it something that's insurable? And how do we set up a premium for it? From there, they have a whole bunch of capital partners who say, now that we know the model, we're going to put. , $10 billion behind it, or, whatever it may be.

And then collect a portion of that premium. That's the profit. So that's how Lloyd's works. Nimble is doing the same thing, but busting down the walls to allow retail investors to participate as well. In the, trillion dollar insurance industry, you and I haven't had the opportunity to say, yeah I'll invest in Adele's vocal chords, or, you know what whatever it may be. But to participate in insurance and make some money back.  

Mike: And does participate mean underwrite? Are those the same, effectively the same verbs?  

Adam: No there's many ways. So if you think of insurance from like almost three categories, right? You have the insureds, the people looking for and buying protection basically.

And you could use anything, a car, a, a collection of baseball cards, whatever. But the people who are willing to pay the premium, So that if something happens they have insurance protection. That's one part. Another participant in the insurance process is on the other side, the capital providers.

So those are the ones who say we will put our own money up and put it at risk in case there's a claim. And for that we will make investment income, but we will also take a portion of the premiums and that's how they operate. In the middle of that is the category of insurance professionals. And that's underwriters like you're talking about.

So underwriters who understand the risk. It's important too to say, a lot of times we hear underwriters and we think listening to npr and it's underwritten by it's underwriting and insurance is really about terms, conditions, coverages. And then there's actuaries also. The actuaries are the ones who put the math tables together to determine what the rates are.

So those are the three categories. You got insureds. Insurance professionals and then capital providers got, and you can participate in any way within that system.  

Mike: And the way traditionally, now that the actuaries and the underwriters operate is they work closely together to create the contract and then the fee schedule.

So the underwriters would say, these are the set of circumstances for which this would qualify for reimbursement. And then the actual amount that it qualifies would be the actuary's domain.  

Adam: Yeah. So that's, yeah. So the underwriters have a better understanding of what fits the insurance company's risk appetite.

So like Lloyd's will do, a firework factory that's next to a, who knows like a pyrotechnics facility, like something weird and wacky, but they don't really want to do, you know your car, right? Whereas the person who insures your car, like Allstate or Progressive or whoever it may be, they don't want to touch something that's crazy risky.

like a fireworks factory. . So the underwriter's job is to make sure does this fit the the risk profile does? How risky is this? How much profit do we need to make in order to take this risk? And then the actuaries, yes, they work closely with them to say, all right, this is how we should rate it.

This is what the rate structure should look like, and this is how we can continually report what our rates are.

Mike:  And if you were to boil down the underwriting in actuary work to its simplest first principles, would it be predicting the magnitude of the cost and the frequency? Are those kind of the, how often for every a hundred pyrotechnic offices that are located next to this, how often is that gonna blow up?

Is this once every year? Once every a hundred years. A thousand years, right? And then how much does it cost? Is that the, or are there other things?  

Adam: No, that's basically it. So there's frequency and there's severity, right? . So some insurance companies and underwriters and actuaries may be interested in something that.

is very unlikely to happen like a satellite, right? Like I'll, I'll insure a satellite cuz the likelihood of it happening, falling from the sky or something is very low. But if it does happen, the severity is tremendous and that's how they'll build their models. Others are lower severity, but higher frequency.

So like something that cell phone insurance, right? Like people drop their cell phones all the time, so the claims are very small, so it's still profitable, but that's, so they look at it from severity, frequency. And one thing that they do a horrible job at is looking into the looking forward now no one can look into the future, which is what I was about to say.

But no one can do that. But they take past data to make decisions moving forward. But they don't do a great job at looking at the profile or helping. , someone who's buying insurance becomes safer. , to me it's almost, it's like health insurance, right? If we can help people be safer, whether it's with smart contracts or it's with real world assets or whatever it may be, it's good for everyone.

Cuz now you don't have a claim, which is the ultimate goal. You're not, you don't wanna have a claim if you're buying insurance, but if you do, you want to be made whole. But if that claim's avoided, so the rates go down everyone's in a better place. So that's the one. The one thing that the traditional industry doesn't do well is take those things into consideration and be proactive.

Mike: And is that, do you think that the traditional industry doesn't take a proactive stance because it doesn't, they're not financially incentivized to do so because technically their margins wouldn't change. Like maybe the premiums go down, but how does that help them? Is it,  

Adam: yeah, and I hate to be. negative about it because I want to give them the benefit of the doubt first. First things first, the underwriters and the actuaries who are doing the work are employees. So they're given, guidelines and what to do and how to do it. And usually it goes through six levels of approval and all this stuff.

But you're hitting on something, Mike, that's huge. And we call it the disincentive loop, right? So if I'm an insurance company and you're paying premium and I help you be safer, that's gonna cost me money. , your premium's gonna go down, and like you said, maybe it eats into my margins, right? But even worse is when you consider how they do it.

So if they, if an insurance company, traditional insurance company has a loss ratio of 80% they're basically saying for every a hundred dollars we take in, we pay out $80 in claims. that sounds oh, okay. Wow. They, their profit's only 20%. And even that can get taken away in operating expenses and things like that.

But what they don't dig deeper to say is of that $80, 40 of it may be the cost it takes to investigate and settle the claim. Oh, so right , so you're looking at 80% and you're thinking, oh my god, insurance is wacky. Like they, that's how many claims there are. No, that's how much it costs in including in that is the cost to adjust the claim.

So to settle it to the person who picks up the phone, the person, what incentive do they have to make that process more?  

Mike: They I would think that they do because similar to like a grocery store, if I go into a grocery store and there's a box of cereal that's, I dunno, $5. The, that cost of the cereal is, maybe half of it goes at the actual manufacturing of the cereal.

But then there's the box, there's the employees electricity for the buildings and everything else. So the actual price you pay for the goods that you want are probably around 50%. So insurance in that loss ratio seems like the similar example. They have an incentive to be more efficient. They want, they, they wanna offer me the cheapest price for the cereal cuz that's where I'll go.

The insurance companies financially incentivized, at least on paper to offer me the best deal in compe in competing with other insurance companies. So they would want to offer the highest what would you call those payouts?  

Adam: Yeah. , you would think, right? . But unfortunately, the way that model works is when they file their rates with whatever jurisdiction they're in, right?

Let's, if it's one of the states, right? All 50 states have different insurance commission and insurance regulations. But when they file those, the Department of Insurance, or Department of Revenue, or Safety or Finance, whatever it may be, they look at those numbers. So if my 80% loss ratio is there and I'm looking for a 2% rate increase, that's justified.

They can look at that and say yeah, but if I have a 30%, 40%, 50% loss ratio, and I still want a 2% increase, it's not gonna get approved. I'm gonna have to lower my rates. And everybody knows, like rates have not gone down. Like rates they very rarely go down. We see the opposite actually. So we see a lot of.

Price premium optimization, which goes against everything I think that insurance is set out to do, right? So Mike's a loyal customer of ABC Insurance Company. Mike pays his premium all the time. Your rate, when it gets down to it in people who fit that fall into that same bucket as you, your insurance premium goes up.

Let's just say it goes up, 10%. And me, I shop all the time, every three years. I'm shopping. I'm looking for a different, my rate is actually better than yours regardless. There are risk metrics in there, but if you take that pure base premium, I'm getting a more favorable rate because I'm not loyal.

That doesn't make any sense. So the math in there is just, that's why we call it the disincentive loop. You keep dropping those things in there and you're like, they're actually incentivized to not be helpful .  

Mike: And that's, is that strictly because of the government the artificial capping of premiums and the government intervention?

Adam: Regulation has a big part, has a big part in it. And this is one of the things that I'm constantly talking about, is that like in that regulation, that I do believe that most regulators have consumers in mind when they think about regulation historically, at least, and when. But what happens is you create all this and you're creating a system that's really hard to get into.

It's really until decentralized technology, blockchain, crypto came to be. Competing in the insurance space was if you increase your rates 5% and I increase my rates 4.8%, I'm attractive, I'm more attractive than what you're doing. But new entrant couldn't come into the space to foster and drive that kind of competition cuz the regulatory landscape was so challenging.

So what's set out to protect consumers has never done that. So in Massachusetts, they went to a system called Managed Competition, which I don't know when that was, but God, it was either, 15 years, 10 years ago, something like that. But the intent was, oh, we'll get managed competition. So when people buy auto insurance, we're gonna be forcing, letting people, letting carriers not have just one rate across all of Massachusetts, which is the way it used to be.

Every carrier had the same rate everyone said. , the rates are gonna go down because if you're forcing competition, someone's gotta be lower. The rates didn't go down. They continued on the same path because ultimately, who's gonna be the first person to say, this year our rates are down 10%. , no one's taking that.

So yeah, that system, no matter how hard the regulators try, just doesn't seem to ever go the way of the consumer.  

Mike: Wait let me just reverse engineer this a little bit. If there is 10 different insurance companies in some population, the one that offers, and they all offer, say hypothetically, the exact same coverage and everything else, the one that offers the lowest price, even by a slight margin, should take the vast majority of the business.

Why? Why, in your example, why would that not be happening .  

Adam: So there's a few things. One is there are people who understand insurance is more than just a premium, right? Like that, you can buy insurance from someone who just regularly denies claims and Right. The argument is take 'em to court.

Who the heck wants to take anyone to court? Yeah. It's not right. But the other side of that is the pain in the ass. That is the insurance industry. So if you look at statistics, it says, the statistics are 70%. The way they frame it is 30% of insurance consumers are fairly happy with their service, which to me is insurance speak for.

70% of people are unhappy, right? , 70% of people are unhappy with insurance. 80% of insureds stay with the same carrier. So even though 70% are unhappy, still the vast majority just stay where they are because. , are you really gonna fill out paperwork, go to the registry? What are all the things you might have to do?

Notify your mortgage company, send in appraisals, whatever it may be to save 1%. , most people aren't, cause it's just a pain in, it's a pain in the butt. And the system is, call an agent. And I love agents. I think agents are great and necessary part caveat to that. Good agents are really good and really necessary, that creates a lot of barriers for you.

So you're looking at it, you're like, I could, my rates went up 5%. I can move over here for 4%. I just, I don't have the time. So's  

Mike: what I'm trying to understand, what, I guess what I'm trying to get to is there a architectural difference, say between the way that the free market operates in insurance and the way, say like airline miles work?

I would choose Virgin Airlines over. American Airlines, if they were the same price, because I place maybe a 5% premium on the experience that I know I'm gonna get with Virgin. If I'm, flying just with my backpack, I'll go on Spirit Airlines. But if I'm going with a family, so there's externalities that are embedded into the, it's not just price, but those tend to be factored in.

You could, there's review sites. There's a way that, that, that transmission of value differential is distributed into the market and effectively priced into the price. And then you have, so you have that, which is the intangible price distribution, and then you have Kayak and Google, which are just listing the hard prices.

I would imagine an insurance is similar, right? I know maybe Geico is, tends to be a little bit better. This one is a little bit worse, but I'm gonna go with this one cuz it's, there's so that would, yeah. Is that how it's, is that, bro, is that now broken in some way?  

Adam: It is broken in some way. In the ways that it is not broken, is that, , and that's the role of a good agent too, to be able to say, yeah, you can save, 15% or more, but you're not gonna have the right coverage when it comes to a claim.

, it's gonna be a pain in the butt. All that kind of stuff. That is absolutely true. Some people don't care, just like some people will fly spare airlines, spirit airlines. No matter what. The difference is imagine if on, whatever JetBlue, the seats are all, if the same, like economy seats are all a hundred dollars, but yours are, yours is 120 because the last time you were on a plane you were loud and people didn't like you, so you're riskier on the plane.

So then you have all this thing where it isn't standardized. So that you know that value that you pay in having a claim settled it is If it would be similar to saying that's how they charge your airline fairs based on your past experience on airplanes. or if you were late to the Gator, if you held up the plane, but also, the plane might crash 10 to 20% of the time, like that's gonna change everything. So in insurance denying claims all the time, as much as it's frustrating, it actually doesn't happen. So you have this what is the benefit from going from company A to company B if it's just 1%, except maybe like they've tried everything in insurance. They've tried, like you can have it people come to your house and help you set up your computers and it's nobody wants to use that, like you know what I mean? They buy insurance for very few reasons. They have to, or they want to, and most people fall into the, they have to category, you have to . . There's not a deep understanding of I'm gonna go from, Boston to Florida on this plane and I need to get there.

It's I bought a new car and I need insurance for it. .  

Mike: Yeah. There, there seem to be some things in life that you, that are more compulsory. I have to get what would be another example? I have to buy food. But that that doesn't necess necessarily mean there can't be an efficient market for food distribution and pricing.

Adam: The difference is the difference is, I could go to the grocery store and look at all the different milk, right? Whatever and I could say, I don't want to drink milk, I want almond milk, but wow, it's a lot more, and I can make that decision for myself for health reasons. I have the budget to, to buy that.

Other people can't. But there is no, there's regulation there too, right? You're not gonna buy a gallon of milk that might kill you, right? But in insurance, because, , as you described with the cereal, you know your costs. , your costs are there. How much was the cereal? How much was the overhead?

How much was the packaging? How much in insurance? Everyone's potentially, you could have no claims for 20 years and then have a million dollar claim. , the it just becomes, it's not as choice driven. Even though people do make choices and they do, people leave for 15% regardless of what the coverage is.

People stick with the same company because they've been with them for 20 years and they really like the people they deal with. Those choices are still part of that market, but the rates don't necessarily, it's almost like they're separated from the price because they're making those decisions cuz they're not.

10% more than someone else. That's very rare.  

Mike: And so your claim is that the, or your view is that the pricing is very, is almost collective across the market is inefficient. And I would imagine that's, that could be true if there's one player in the space because they have no competitive force pushing prices down.

But why would that be true in a market, even in the traditional insurance market where there are many different players there? Is it because government, it comes in  

Adam: and I think it's because, this is why I don't want to be too negative. Now. First of all, insurance companies have a ton of things that they have to do, right?

They have a lot to do. And leaving it to insurance companies to make a process more efficient is just not gonna be on the top of their list. This Shaun, a priority. They have regulation to deal with. They have claims to settle, they have customer service, they have overhead, they have all these things, new and emerging risks, but, I, so you can't say it's just insurance companies and you also can't say it's just government and regulation.

But what I tend to think is it's just this slow evolution to this kind of, oh, that's the way it is. , that's what it feels like to me. I spent 22 years in insurance and very many of those was explaining how insurance works to either, people buying insurance for their house or their cars, or later in my career to corporations buying it.

And it's a really tricky thing to explain when you're in the position of a risk manager, risk advisor, insurance agent, because there's an understanding that insurance companies have to make money. Just like you. But I got to a point in my career, and that's when I left and started Nimble, was like, yeah, that's not a sufficient answer.

You can still make money. and be develop better rate structures and develop better ways to reward your employees and develop better ways to make a system that creates ac like really keeps people safe. And that to me is where it's, it is, it gets fuzzy. Yeah. Because you would think logically it just, why wouldn't someone just take a 5% rate increase?

But I, it's almost sorry, 5% rate decrease or cuz they don't have to Geico's entire marketing budget is save 15% or more. They don't tell you over what, they don't tell you how. They just say save 15% or more. That's probably by cutting coverage that you're not gonna know until the event of a claim.

And then what the insurance industry does a good job of saying is this is a contract. You signed a contract, it's all, and it's like, who's reading a 50 page document? They're relying on that. And when you find out something isn't the way you want it, it's a little bit too late. So that's why it doesn't really have a incentive to change.

They have a lot going on and that's what they're focused on. Interesting. Usually one of them.  

Mike: So I think of I generally think of markets, I'll use this like metaphorical analogy as like an ecosystem or like a forest, like a rainforest, where you have the old trees, you have the old animals that've been around for a while.

And then eventually through the diversity of death and rebirth things maintain vibrant. Like the ecosystem itself is vibrant. And for an ecosystem to be vibrant, there has to be. Competition. There has to be varying levels of offerings, right? You can eat this bug or that one. This one might kill you.

That one might kill you. But, and there's diff there's risk based into that. And so I think in our world of a, we have an ecosystem of products and services out there, wh I try to analyze why would there be decay? What would cause that to happen? ? And one of the things I think analogy yeah, it's interesting is one of the things I think would lead to decay is if there's, it's like a group that has just, it's like a, an animal that has exploited, like completely drained all of the juice.

So like an insurance industry together has a, it's like a collective diabetes. They're like , they're so fat from their own profits that they're not seeing the opportunity and they can't get after it. And this is where the new young, vibrant founder, entrepreneur, or whatever would come in typically as the old thing starts to decay.

And they would take all the cheese, right? They would attract people to buy their products. Or if they're an animal, they're like, but that's not happening. And I tend to think maybe the reason is that it's just too difficult to allow young sprouts, new companies to emerge because of the regulation.

Adam: And that's, that is that mic is 100%. Yeah. Yeah. It's take that vibrant ecosystem where, you know, one tree dies and that another tree grows, but it grows in a different way to face the light or whatever. take that same thing and put a biodome around. Totally. And every time you're like, Hey, I wanted to introduce this new creature, we're just gonna drop it in there and see if people like it and see if it works.

If it's, if it doesn't work, we'll take it out. Yeah. Nope. In order to do that, you have to pay a hundred million and get a hundred different licenses and start, and then people are like then forget it. I'll just try to retrofit, fit that animal that's already in there. To be better.

And that is a very hard thing to do, . I'm gonna try to take that, sloth and make it a cheetah. It's you can spray paint it or whatever, but it's not gonna, it's not gonna work. That's what the InsureTech industry has been doing. It's been, and not because the insurtech industry's bad, but because they've been forced to, they've been forced to play by a set of rules that, they can't innovate in.

It's. The barrier entry financially and otherwise is really high.  

Mike: That's fascinating. It's almost like the macroeconomic pervasive fallacy is that competition yields good products at good prices for customers and what's not factored in the fall. Why that's a fallacy is that it's not just about the number of players in the space, it's the ease of which a new players can pop up and create.

So it's like we might have eight insurance companies in a market, but if you don't, if it's not easy or at least possible to start a new insurance company, tho all the eight of those are gonna be overpriced and stagnant and Yeah. So yeah, that's a,  

Adam: that's that disincentive loop, right? That's that kind of there's no reason for them to, cuz they still have to meet the regulations.

They still have capital requirements, so it's not. God I don't think it is, it's not like they're like, twiddling their thumbs and doing maniacal like laughter and saying, haha. But, I also think it's not fully trans, it's not transparent at all. . But, yeah. That's what it feels like.

Mike: Yeah. And it's like I, automotive is a good corollary too because the automotive industries seem to hit this plateau as well, where. You got four or five, six different auto companies out there. They don't seem to really be doing anything. There's occasional like features, power, windows, or we got dual exhaust, but Exactly.

Yeah. And then it's okay, there, it's possible to start a Tesla and because Tesla was possible to be, it wasn't prevented by, it may be hard, but it's not prevented by regulation. Now the whole ecosystem is enriched. Again. You have four or five other electric car companies. All the car companies are like, I bet now if you look at Ford today or gm, they're way more dynamic and innovative today than they would be 10 years ago because Tesla pushed them.

Adam: I love that. I love that Mike, because it's, I had never thought of that, and I love that because you're right. Sure Elon Musk had enough money to, do whatever he had to do to take Tesla to the next level and all that. But I think your point is, yeah, I, there's no way you would've seen a.

Electric Ford truck, it . And it's so good, Mike, because the similarities are spot on because I always say insurance is, and I'm gonna correct this now, I say insurance is the only industry I can think of that tells its consumers what they want and doesn't listen to the consumers.

It's no, you need this coverage. We're gonna give it to you at this high price, blah, blah, blah. Here's some benefits that if you do use them, we're gonna cancel your insurance. Cuz we didn't really want you to use them. But the auto industry is that way where it's yeah, we want electric cars. No you don't.

You want SUVs? No, we, and then here comes Tesla and here comes the model three especially. And it's no, we definitely want that. And now they're like, oh, yep, you guys want an electric truck? It's . Yeah. We've been saving that for 20 years. Yeah. And it's this fear about they might lose money, in the space we're in now with decentralized technology and blockchain and it's , you don't actually have to lose money.

Yeah. Like these insurance companies don't actually have to use lose money. It's like that ecosystem that you're talking about is you wanna show them that. If you remove that Biodome you're actually gonna make, you're gonna be, you're gonna enjoy a even more vibrant community. Yeah. Like they have so much money.

Yeah. That it's not gonna just disappear. It's like the music industry. Yeah. Everyone's that's the end of the music industry. Napster and streaming and, there's still a lot of problems in the music industry, but they didn't disappear. Yeah. They, they still have power, but, but now indie labels can exist alongside, so I don't know why people don't understand that.

I don't get why industry doesn't understand it. Fear, I'm sure. And a lack of. education around what, especially in this space, what blockchain is. They say, hear blockchain, they hear crypto and they're like, we just saw what happened with ftx. We're never gonna get into crypto.  

Mike: Which is actually, I don't like good or bad kind of labeling, but I think it's very understandable.

It's there's a good story where they took the distance in a, they would measure the time it took for a mouse to run through this pipe and the pipe had a piece of cheese on one end, and when they starved the mouse, they found that the mouse ran faster. So if you're hungrier, you run faster towards the cheese.

then they took the same mouse, starved it a little bit, and then put cat urine behind it. And that's the fastest possible. Yeah. Time it takes to go down. So imagine companies only having the cheese, this is like the you're stagnant, you know of real, no motivation from behind. You're just like we can go after that.

We can make more money here, but you're already pretty fat and happy. That's where automotive industry, healthcare, like many places in, it's just in the western world, we're there. We're not like pushed from behind. Then you have Hey, we have to do this. Otherwise we're like, we're in big trouble and we might get eaten and die.

And so that's that. I. . That's the part of the evolutionary process in business that doesn't get enunciated well or articulated well is like four gm. These old companies, even the healthcare and insurance markets, they can be better than they are if, oh, they definitely from behind. But it's like you need that spark that what you guys are doing is like you're utilizing a new technological framework to enter the market in a way that then showcases the potential and then puts them on their heels.

And ideally, like yes, an externality of your existence is that the traditional insurance market becomes more competitive and efficient.  

Adam: Yes. And that's it. Like they insurance, if we go back to those Lloyds of London, coffee house days insurance was simply, we'll give you money because we have it if your boat sinks right.

Like that was. insurance has never been bad at having a lot of money, right? , what they've been bad at is trying to evolve to do things that they maybe don't need to do. And this technology now allows us to do that. If it was like, oh wait a minute, we can make five or 6% return on our capital instead of three to four.

Yep. And you don't have to deal with any of the BS that goes around. We, they'll see that. And I, and it's funny, I love your analogy, like the mouse running through the pipe and then I think like insurance in any of the industries we're talking about, if instead of a mouse, you make it a cat.

And at the end of it, it's this big whatever. Cats love to eat cheese too, I think, but like big bowl of yummy cat food, right? Yeah. They're gonna go eat it cuz they're cats. . But if you put that, dog urine scent behind them, they're gonna run. But if you put mouse urine behind them, they're not gonna run.

. And that's what I think in the insurance industry, they assume that anybody who's creative and anybody who's innovative and maybe disruptive, they just think they're bigger and better then. So they're like, we're not afraid of you anyways. We're gonna take our time and go to that big bowl of food.

But it's the people who were like, oh, I just put mouse here in there, but I'm really a dog. It's that kind of, and it's it's so dumb cuz I don't actually don't like that kind of like war attack approach. But it's like guys like, it's fine. You can do your thing, you can have your bowl of food.

We're gonna have it too though. .  

Mike: Yeah. Yeah. No, I think it's like a, that, that's like the, I think Gandhi said that where he said, first they ignore you, then they mock you and laugh at you. Then they compete with you and then you win. Yeah. It's like it's the, that's  

Adam: how it goes.  

Yeah. Someone said the other day, there's a, there was two, two amazing things that I've carried with me listening to other people speak.

One was about, blockchain's risky and it's scary and money laundering and criminals and all these things that get said about it. And this person said, yeah, there were absolutely zero plane crashes before planes are invented. And he just left it. And I was like, . Yeah. That's so good.

Because it's at first people want, they wanna respond with Exactly. Whoops. No, that, but it's that. And then I heard someone talking about the Nasdaq and that it was set up because people were brokers, traders. or taking advantage of rates. So they would charge you whatever they wanted.

There was no, no transparency in it. And when NASDAQ was being set up to be more transparent about that they were up in arms, right? They were like we don't want to, you are gonna take money away from us. But what they failed to see from a vision standpoint is did they lose money by their rates being cut And more reasonable?

They did, but they made more than they'd ever made because way more people could enter the ring and participate. . So it's that's the mindset that I think insurance companies need to have. It's no one's going to steal from you, . No one, that's not what's happening. It, there is a way for you to make more money while I pay a lower premium.

And insurance professionals have more long-term rewards for the work they're doing. Like it that can all exist, . It seems to me like we have plenty of models that show that unfortunately we have a lot of models that don't and they take advantage of people. Yeah. So it's a matter of just cutting through that noise.

Mike: Yeah. Yeah. It's either they're either gonna be blockbuster, ibm, you're either the old company that innovates, you're the old company that dies and whatever. That just comes down to the personnel and the drive and the clarity and leadership of those specific companies. And there'll be a diversity.

Some will, some won't. But either way, it's I think about things holistically and you want a holistically healthy ecosystem of development in different areas, insurance, healthcare, et cetera. And it's it's fascinating to like, deconstruct what it is that makes ecosystem healthy from a from a large standpoint. Oh, I love that too.  

Adam: So what I'm a big fan of, whether it's ecosystem or industry or I love taking things apart to put them back together. Like I, it's forever, even when I was a kid, it's I just wanna know how it works because it might not work efficiently. , and maybe it works perfectly, and if it does, then great.

Yeah. What's the, either way you're gonna find out that you could do it better, or you're gonna find out that it's perfectly done. So oh, great. Yeah. That's it.  

Mike: Yeah. Yeah. That's a deeply human desire to do that too. So what is it about the nature of the structure of the technology of blockchain that, like how does that weave into this story?

Like where is the opportunity here to create human incentive structures that are better than what currently exists?  

Adam: Yeah, there's a few. And the main one is just the efficiency and speed of the technology, right? The ability for it to move super fast. And on top of that, the ability to split the penny, right?

You can't, that's, that stuff's hard to do in traditional finance, that, how do we have to do accounting and this and that, and all these things that happen and. Siloed and underwriting department, actuary department, the technology here, blockchain technology allows for efficiency and transparency.

What I think a lot of people are missing in the insurance world is you have to be inside the world a little bit or to hear these stories or whatever, but there's nothing stopping you from getting insurance in multiple places and filing multiple claims. It's illegal, so that would be one reason why you wouldn't want to do it.

But does it happen? Are people paid multiple times for the same claim? They are. Are people paid multiple times for different fraudulent claims? They are. The systems right now are so siloed that's a big expense. That expense is passed off, right? That's another reason. It is. It is fraud heavy in the industry.

This technology allows that to be. It's never gonna be gone. It's never gonna be something that's gone. But it actually mitigates that because if you have three insurance policies and you file a claim on chain, all it has to do is just, do the math to say, does Mike have other policies? And it says, yes.

Okay, then we're gonna have to pause right now and figure out why Mike has three policies. So it allows for efficiency, it's cost effective, it allows for transparency, which is always beneficial to rates, right? Because the NASDAQ example, and it's happening now with benefits insurance producers who don't want to reveal their, what they're charging in fees.

W why ? If you don't wanna reveal it it's not good. So this technology allows for that. And then, ultimately what it allows for is allowing other kinds of investors. To participate and provide their own capital. In the insurance industry, there's always conversations about lack of capacity and what they mean by lack of capacity is if we need a hundred billion dollars to pay all these different random claims, we only have 50 billion, we only have access to 50 billion, but they're cutting off every retail investor in the world.

It's an easy solution to a capacity problem is use the technology to be able to all those things, efficiency, cost effective, and retail investors to create a, just a more robust system and ultimately you get a system where everybody wins.  

Mike: , you initially, you touched on the idea of the multiple insurances being illegal is that I, in the blockchain world is.

only a problem when people are acting fraudulently. Cuz I, I can't see how it would be bad, why anyone would want to do it would be beyond me. That, that you're acting fr legitimate, fraudulent, fr it's only fraudulently.

Adam: Yeah. They'll be the only reason because it would be like, I'm gonna ensure this car, with three different companies, I'm gonna have it stolen and I'm gonna report it three, three times and now I got three cars.  

Mike: That makes sense. Yeah. Yeah. So that's a way to, it's almost like leverage on your fraud . It's  

Adam: yeah. And that's that, like you said, incentivizing people that like, the other example we use is if you imagine a collectibles like marketplace where you could buy insurance for your, music equipment, right?

Like your instrument collection. Now an underwriter at an insurance company who's gonna look at that and just make sure, alright, Mike said this guitar is worth $10,000. Here's an appraisal that says it's worth $10,000. It's worth $10,000 claim. Time comes around and you get $10,000, right?

There's no expert in that process. But now imagine a decentralized insurance pool with all different insurance for all different guitars and a community of people who really love these guitars. You file that $10,000 claim and everyone can see it, and everyone can say, that's a $200 guitar. Wh why is he claiming 10,000?

The experts are now a part of the community and they're incentivized to do that because if that's what happens, one bad apple kind of situation in insurance, all that fraud is costing everybody, all those, taking more money than you need is costing everybody. So in this scenario, you're basically making sure that everyone's just acting in the best way for that risk pool community, which would be the people insured, the people providing money to that risk pool, which is just.

The insurance pool of money and the professionals working to make sure it's profitable. So it's like now that disincentive loop that we talked about earlier, now we've spun it the other way and now everybody's incentivized. And that wasn't possible before this technology.  

Mike: In that third category, the people who are making the decisions about the value of the P, they're effectively doing the underwriting on chain, right?

That, that would be the person who's familiar with guitars, they can price guitars efficiently. They're saying this is 200, not 10,000. They're the ones who are going to, through the, through a free market of multiple players, they're going to converge on some price. Say you want this guitar insured there's seven people who just cast their vote and you we're gonna take the average of those and this is what insurance is gonna be.

Is that like mechanically? How does that work?  

Adam: Part of it is similar to the, multiple claims and fraud, right? Is, if you have a pool of, in guitars, right? And you know that you have a 68 Strat and so do a hundred other people, if yours is overinflated, that information is known right away.

So it's already enough to give you pause, right? There's not even human intervention involved, it's just this doesn't match the other ones. . The other side of that is the underwriters can determine the rates. It would be more of an appraiser role that determines the value and by opening up. , let's compare like traditional insurance and then you know, built on blockchain insurance.

If it's traditional insurance and a appraisal comes across a desk for someone that says it's a $10,000 guitar, they have to trust the appraisal. Cause it's a certified appraisal. Maybe it's a specialty program that they can bounce it off some people. But now this is all bouncing it off. Some people who may be at lunch, who may be on vacation, who may, it's inefficient, right?

This decentralized insurance is, Mike Insure is a $10,000 guitar. Oh, weird. When we bounce this off comps, it looks inflated. Hey, risk pool community. Can everyone just have eyes on this If you want, you don't have to. And a hundred people look at it and say, no, that's legit because he has upgraded this, that the other thing.

We're good to go. that can happen. That consensus can be reached in minutes, and then everyone can be paid again. We're talking about like a fraction of a penny. Like everyone can be paid for that. Everyone can be given a nimble token or, X amount, u s d, whatever it may be for their participation.

The money spent is far lower than the fraud that could be, could have been claimed. And it helps weed out and identify like, why does this wallet address keep putting in fraudulent or inflated claims all over the place? The intent is not to deny the real value. The to intent is to make sure that pool is, has as few bad apples in it as possible, right?

So that everyone, the system can only work if everything is running on that kind of, I hate to say honor system, but built that way with the incentivized method is the right  

Mike: sort of dynamic to think about this as like the, you wanna optimize the. , the, oh, how would you say this is like the accuracy versus the dollar.

So it's I want a correct assessment of what this piece of property is worth for money spent. So you can ha, you can assume everyone's working remote, no one's like in the bathroom, but you have a traditional insurance company, one underwriter, maybe a couple where they bounce it off each other.

That's all, say it's super efficient, sent in Discord, slack, no difference there. , they're giving their input. Maybe they're trained experts and there's three of them versus, and you have to pay them a salary versus a decentralized might be 50 people, but presumably they're not as good.

They're casually doing this. Is that the comparison? Like on a scale,

Adam: like minus the, they're not as good. This is another thing that I use too, is I get that a lot and not as pointed as that, but I, people ask like, how are we gonna trust these people? Like, how are we gonna trust that they know what they're doing and they're doing a good job?

. And what I always ask in return is, yeah. How did you determine when you had coffee with your underwriter for your car? Like how did you determine during that coffee date like that everything was good with them and of course they laugh and they're like, yeah, I don't know who my underwriter is.

I'm like, they have credentials, they've been hired and they have training. , the same thing can happen in a decentralized world. Verify a license or a designation, and now they're credentialed.  

Mike: But in that example, say you have 50 people on the decentralized side, and then you have three people on the other side.

If they're equal, assuming equal level of qualification and training, then wouldn't the cost just be linearly proportioned higher?  

Adam: It's not. It's, they're not employees of Nimble. They're decentralized. So they're not getting a salary. They're being paid for the work they do and the quality of the work they do.

They're getting that, the return and the yield from that risk pool and proportion to the work they did and the good work they did. So this isn't something that they would come in and just sit there and only work for Nimble at some point. I'm sure it would. But it's you're basically allowing someone.

A side hustle. Like someone to be able to come in and do the work that they do in a more efficient way. And something that I think is super cool that it's very rare that anyone else thinks is cool. I always think about the underwriter or the actuary that builds this.

Let's take actuary. So they put in the work for a premium model, right? And it's super good. It's wildly profitable, it makes so much sense. What if another risk pool wants to use that? And they use that and the underwriter continues to now have royalties basically for all these risk pools using their amazing model that doesn't exist anywhere else.

If that was the traditional space that underwriter made, that model for that company and that company. And that's their secret sauce or their pre in this way, the underwriter controls that. The actuary controls that it can be used by other risk pools, and it's gonna just continue to give them, income, continue to generate income for them.

So that's another way that this technology is advanced.  

Mike: And what technically speaking, would it be possible to start this without any decent, any blockchain technology where you said, okay, we're gonna have, sign up on our website, you can be a contractor 10 99, press the button on the website.

Once you get over $10, we'll send you ACH transfer. But we have a list on the website of different assessments that you can give. Like where's the point at which you say, okay, this is impossible to do through a regular website and 10 99 and payouts.  

Adam: Yeah, I just think it's the First of all, I do firmly believe that it's, the Web 2.5 narrative is the most accurate for right now.

Like I do believe that I don't think that, I don't think it could be done fully Web2 because I don't think, I think all those inefficiencies end up creating a system that doesn't work in the way you want it to. I also think it's not scalable. I think it's not, it doesn't become a system where you could build an insurance risk pool for any risk at any time, very efficiently and very fast.

But it's also a system that we want to be successful in, want it to be secure. And we put a lot of thought into that. So we have an insurance team at Nimble that's working with these initial project partners to build these models and to understand these risks. as a building block to move forward. So we're not gonna keep those and be super precious with them.

It's more let's just make sure that we can show insurance professionals, LPs, insureds, that this model actually is borrowing from a 300 year old industry that has been very successful. So we're not trying to just, I don't know, it's 5%, pay us 5%. We'll see what happens. It's very much risk based, so we're doing that so that the building blocks are there to continually build, a bigger community.

Mike: Interesting. Gotcha.  

Do you think one of the areas that maybe blockchain enables you to do would be like, just enter the market in the first place? We were talking about how the barriers to entry , is it, let me ask you this. Is it le illegal to. , which side is illegal? Is it illegal to purchase insurance if you're in like Massachusetts?

Or is it illegal to start an insurance company in Massachusetts? And if that's the case, what if I started an insurance company? Like, why does it matter where I'm located? I started in The Bahamas, and then somebody in Massachusetts buys from that person in The Bahamas.  

Adam: It's wildly complicated because if it's not insurance, it doesn't need to be regulated, right? So you'll see a lot of decentralized insurance, protocols or projects, but they're, they make it, they make certain to say, this is not insurance. Insurance means a very specific thing from regulation. Now to complicate it, you have different jurisdictions in the US you have 50 different states with 50 different opinions on it.

There are states like Wyoming and Vermont that are very open to this conversation from an insurance standpoint. And this gets back to your, the vibrant economy. They're not as big as California or New York, so they're interested in becoming a leader in this. But it's not illegal to buy it.

It's not that some, if someone bought insurance, what would, what the term insurance implies is that there are certain capital requirements that are met to ensure that you're not gonna go under. So when you hear that term, you're basically, when you say to someone, would you like to buy insurance?

The assumption is you have enough money to pay claims. , there are some other platforms that avoid the term insurance because really all they are is a liquidity pool. That can pay claims and once they run out, they're not paying anymore.  

Mike: They don't necessarily have at all.

Yeah. This and the reason why this is, I would imagine why the government initially got involved is that individually, if I crash my car, even if I don't have a hundred percent collateralization on the total pool, not a big deal. But if a whole, if a whole neighborhood burned down and I'm a local insurance provider, then you have to have a hundred percent of what you're insuring in cash.

Or something there, thereabouts.  

Adam: Yeah. And it's no different than banking. . And, this is the other thing too, that I, after ftx, a lot of people were like, They should do what banks do and hold a hun they hold one to one. They don't hate to break it to you.

Banks don't do that. No. Yeah.  

Mike: Lemme I ask you a question on this. So we've had a couple times, the great Depression where banks were caught lending out more than money they had and people came, everyone came back all at once and wanted their money. It wasn't there. 2008. Very similar structure to that arrangement.

You're lending out more than you have. Everyone comes back and you're all dried up. Ftx, same thing. Has it not happened in insurance? Does let me ask you, does insurance companies, do insurance companies always have one-to-one or is it more that PE people just aren't ever going to all make a claim at the same time?

If there's it's  

Adam: a little bit of both. Yeah. So in insurance in insurance, there's capacity towers, right? , . That's why they, reins insurance companies have reinsurance, and reinsurance is basically insurance for an insurance company. Okay? So I'm an insurance company say that has, 20 million in the bank.

But on paper I have a hundred million dollars worth of risk. The reason I carry 20 million is because based on the diversification of my risk, right? Like maybe it's cars all over the country. So the odds of everyone having an accident or everyone's car getting stolen at the same time, it's nonexistent.

But because I want to maintain that kind of solvency compliance and regulatory compliance, I then buy insurance from, another reinsurer at for $5 million and I pay them 2% of the premiums for that and they keep buying. So I ultimately have in Black Swan event, I have enough insurance coverage there, but it's not just sitting in the bank.

And it. and it shouldn't be like, that wouldn't be worth, like if banks just kept money in a vault, right? That wouldn't work because then how are they making money? They're gonna have to increase their fees, they're gonna have to do something else. But there is a responsibility and there is certain risk management that should be in place.

And then, when you bring up the Great Depression, I think that's important. When you think about prior to, so the bank, the Great Depression really is what forced F D I C, which is, insurance for banks. But what a lot of people sometimes forget or overlook is that insurance is paid for by banks, but it protects you and me.

So prior to F D I C, there were 4,000 bank failures and, millions of dollars in lost deposits after the F D I C. In the years following the Great Depression, there were nine bank failures. . This is another example of collaboration, right? The F D I C is insurance for my deposits and your deposits paid for by the bank, which means I feel safe that I'm gonna get my money when I need it.

And it also stopped banks from going out of business because you and I now feel comfortable leaving our money in the bank. Yeah. To me, in the FTX situation in blockchain, I'm like it's that, but it's that decentralized. Why couldn't FTX and Binance and all anybody take like an F D I C is two, two basis points.

Why not take 2, 3, 4 basis points into a risk pool that can protect someone? If a system goes down, you want mass? And do that. It isn't, it's like we always try to get close to it. Proof of reserves. I'm like, yeah, great.  

Mike: Yeah. , yeah. You're effect, what's that gonna do? I would imagine that there's a we're in like a strong like decentralization fanboy stage where ideology stage where it's like every, the more decentralized, the better, but I think that lacks a certain nuanced understanding of how the economy works and how people work.

And that centralization provides value in the market where complete decentralization is vulnerable. And that the centralization complimented with decentralization is optimal. Where you're right. Like government is effectively just pooling resources together, albeit, yeah. Mandatory, if you were to five exchanges come together, pool resources take a few basis points.

Put a collateral together and then call it, decentral, F C D I C, it's  

Adam: And not controlled by the government. I don't want the government to control that, and I don't want it to be mandatory. But if I'm a user and I'm about to put my money in a what? In anything, let's call it a centralized exchange.

Custodial, yes or no arguments aside, and I'm like, oh, I'm about to transfer over. And I'm like, wait, why don't they have the C D I C logo? . And I'm like, oh, they made a conscious decision not to contribute. Then I'm gonna move over to Mike's, cuz Mike's has the C D I C logo and I'll put it there.

And it, I want it to be transparent that it's up to 50,000, up to 10,000, whatever the number is. But it doesn't seem, and no one, and in a decentralized way, you can do that without, with it still being the money of those. Companies and those foundations, whatever blockchain layer Yeah. Whatever the, those foundations, it can still be theirs.

It can still be theirs, but it can still be handled and transparent in a smart contract in the event someone makes horrible decisions and folds and bank run, like you said, comes from people literally running to the bank and saying, give me my money in the bank saying we don't have it.  

Mike: Yeah. Let me make, maybe at this point I almost think that this doesn't get articulated well either, and I, I honestly hadn't thought about until now, is that inside of the centralized, traditional structure, There is an embedded price embedded reality that if things get really bad, where the point of a point of attack is.

I can go to the capital building or the bank or the insurance company headquarters and there's a guy that's gonna be there, an office. And you can get together, you can protest, you can riot, you can revolt what, whatever the thing is. And there's, and because of that, there has to be a certain kind of that behavior is factored in, whereas decentralized, if you just took the money and it's all decentralized network, it's like, where are people going now to get their money back from ftx?

Ftx money is gone. Where'd it go? It was in the banking world. You could trace it, it's gotta be within the bank. Oh, this bank took it. We're gonna go to their headquarters and we're gonna talk to this guy. But there's actually no getting it back in decentralization. So I think the either the price goes up as a reaction because there's no you can't.

enforce anything in a Black Swan event, or you have what you proposed that C D I C in kind of a decentralized decentralization.  

Adam: Yeah, that's and everyone's, everyone's gonna benefit from that. And, in the event of a good year, say say, are you gonna build where  

Mike: Adam, are you working on this? You should build this.  

Adam: Oh God damn. That's one of my first things is like, it just, you, I keep hearing things like, CZ is going to raise money to put aside for a recovery fund. I'm like, why are we raising money for a recovery fund when we are collectively? Everyone could have just contribute to it.

What is 2% going to hurt a whatever, 240 billion or trillion, or whatever they project it to be. It's okay. And then that money can, yeah. The, I can't, we can't build that alone, but I really think it would go a long way to have a bunch of projects come together, cross chains. all kinds of projects and be willing to explore that option.

Yeah, because what I mean, again, we'll use that same data from the Great Depression where if I'm a bank and I hear a number, like 4,000 banks have shut down because they couldn't handle it. And then after the F D I C nine banks, I'm like that's actually good for me as a corporation, . That's actually good for me. So maybe I'm paying basis points and I believe strongly in that kind of collaboration of insurance moving forward, where you're an insured and you're paying a premium into a risk pool, and so is an LP providing capital. You're both contributing. You're not just giving the LP money, you're contributing to that risk pool.

Your premiums are gonna be used to pay claims. Actually, before an LPs money is gonna be used. So in a good year. , you get to take some money back and the LP made some money and now makes extra money. It's just like it has to be done in that way. Where there's a collaboration and I think C D I C as much as I've never I had never thought of that before. Is that, or D I C or whatever, yeah. Whatever it may be. Like, yeah. I'm a big proponent of that. I actually, wrote a piece on that was on Coin desk, and I just it feels obvious to me, and once you get, for me at least once I get over something, at first when something's obvious, it feels oh, it's not gonna work.

But then if you get past the, it's not gonna work part and it will work and it's obvious.  

Mike: It just seems to me like here, look, the caveats I would make if I'm gonna poke holes, and it would be that the government doesn't need to maintain any cash balance in order to guarantee the funds in the banks, because the government, unlike.

Crypto has the ability to take money from people against their will because they have guns and they have organization to do . And so I think like that abil, that'd be like as if there was a central party that had multisig access to everyone's wallets. And they could just, anytime they wanted, they could just take it out.

The gov, if the government came to me and sent me a letter and said, Hey, Mike, you owe us 10,000 for this special tax thing. I have to pay it. Like I, they have access to, effectively they have access to take that, and maybe that means there's just a cap. So it's the exchanges aren't capped, but F D I C isn't.

It's a hundred K or there's some cap on there. Yeah, two 50. Two 50. So maybe it's lower. Maybe it's two 50. But either way there's a  

Adam: That's exactly how I would build it. Yeah. Yeah, 100%. Because you don't even need to take people's money if you are saying charging two basis points, one basis point, whatever.

, how awesome would it be to know that you had $10,000 worth of coverage, like any amount at this point? , right? And to me it's like you could build that model at, from an actuarial standpoint to make sure it, it works for everybody. And if you're gonna pay, depending on the riskiness of your platform, one to three basis points, that can be automatic in this space.

Every time a deposit goes in.  

Mike: Yeah, you're right. 1%. It could  

Adam: just move  

Mike: 1%, move 2%, and then there would just be a pool. So you're basically trading the centralization that the government has to take people's money in exchange for the. . The fact that you have the, you have to keep the collateral in an account.

Like the government doesn't have $20 billion just sitting somewhere ready to go in case the banks fail. . But it can get it, whereas you can't get it. You can't, you have to have it on in a  

Adam: Yeah. There would have to be some kind of protection there, like you said, from Multisig as well. So it's not just like we're gonna all start doing it.

It, if there's, if it's a if it's a Dow of all the organizations contributing and you know you need consensus in signature from the majority, then. . , all those things that I would let someone much smarter than me. Yeah. Handle in the process. But it's doable.

Mike: It's interesting. know, I promise you now I just realized we're running over. We could keep going too, I think. I, the one thing I'll add to that is it seems like the fact that the United States in particular has this decentralization of voting mechanism seems like you'd wanna replicate that in a sense where the people who have control, at least in theory, to take money outta my account by force, are the same, is the same, albeit that's an inefficient, you could have a similar system where we're all gonna vote for the people who are ultimately hold decentralization power.

So there's nine people, and then we need five of those keys to actually take money out of people's accounts and we're gonna vote on those people. Like you need, there needs to be a recentralization reports and voting.  

Adam: Yeah. And I was talking to someone about that they were building decentralized identity platform and they were talking about, The ability for you to still own your, let's just use data in their example, but it could be the same.

You still own your data. I am a platform that wants to protect that data and then there's, I don't know, there's a banking authority, like whatever, or there's a consortium that want to also do it well, in order for that money or that for me to access your data, you need to approve it and I need to approve it, or you need to approve it.

And the other authority does. I think the example they used was like, Mike controls his data, nimble has access to the data, and now the government is I need to know about Mike because Mike is a bad person. Like they can't just unilaterally go get that. You need to be involved in it. or Nimble needs to be evolved in it.

But if Nimble says, I want to access Mike's data, and you're like, no, and whoever this other authority is no, you can't randomly access it. It just adds another layer of protection. Where, to your point, today it's ,, but we have guns. , and it's like, all right, then I guess you can have my data

Yeah. It's that kind of, which is, it's  

Mike: still re which is kind just to add on that, it's it's interesting now because the guns are very relevant as a mechanism for defense against a government that is overreaching. we, and I think that gets a lot left outta the conversation, but the reason why it's the second amendment, the second most important thing that the founders had in mind was like, they came from a world a couple hundred years ago where governments were overreaching, and they did make a drastic and unreasonable claims by threat of violence and for everyone to have a mechanism of defense was that, was the thinking of course there's like home ownership and protection and hunting and things, but  

Adam: Yeah, but you're right.

It, yeah. It was. And  

Mike: I ask what's sophisticated? Are we different? Ha, have our minds changed? Ha has some structural thing happened to where that's no longer a threat? Or are we sleeping on that? And is that, I didn't think it, yeah, of course it is. We're not different people conceptually than World War II and Holocaust and the revolutions, like same biology, just different tools in front of us,

Adam: I, and I would hope that we've evolved a little over the time. I, and I do think that you're right, if you look at it from someone else's point of view, like who, yeah. What is your line of defense? If you're truly afraid of that overreaching, and that's your feeling is the only way you can defend yourself.

It's not how I feel. But someone might feel that way. But if they have another way to defend themselves or. Oh, yeah. It's interesting to think what that looks like, and that's what they talk about. Blockchain could create a, utopian or dystopian future depending on which way you look at it.

But there's so many of these things. It's robots are gonna take jobs. And I'm like, ultimately, in a perfect world, if there is automated jobs, that means, to your point, the cost of that bowl or that box of cereal should be less, which means the cost of living is less, which means I don't need to work 60 hours a week and everyone wins.

But I don't necessarily trust the markets to go in that direction instead of just being like, Ooh, yay. Now our profit is 40% instead of 20. Yeah. And that's where you. or how do we protect ourselves from that? Yeah. And hopefully it's with different tools besides guns,  

Mike: That, for me, the analogy that comes to mind in this example is like a forest fire where you don't, you actually want consistent low velocity, low magnitude forest fires that just propagate, through, we get 5, 10, 20, 30, every few years.

You don't want no forest fires and then a massive inferno that kills everything. So I think like we're in California, west coast is slowly realizing that, but I think that slow realization is the same kind of realization in the economy, albeit more abstract. Yeah. Cause you can't see the fire physically, but it's you want, you want banks to fail.

You want like couple banks a year to fail, but you don't want 4,000 in one year to fail.  

Adam: . Exactly. Exactly. It like, and that's exactly the point, right? Because it's okay, so I'm a bank and I failed. I'm one of the nine banks that failed. . Yeah. This is probably a reason. Yeah, like you're saying like, yeah, something had to happen there.

To me it's, and I even think like this concept of the economy and forest fires and all of it, and I'm pulling it up now cause I want to get it right, but there's a quote when like for, oh here it is from the presidential advisor during the Great Depression. And the quote is, we knew how much of banking depended on make believe or stated more conservatively the vital part that public confidence has insur assuring solvency.

And I read that and I'm like, they're literally describing the US dollar as make believe. And here we are now talking about crypto as fake money, magic money, make believe money. And it's like it already is make believe . So we don't need to try to add that level of complexity. and confuse and scare people.

, it already is. Yeah. And back at the Great Depression, the, a presidential advisor is saying that yeah. It's make believe if the economy works when it, there's confidence in the  

Mike: economy.  

Yeah. It does. It's seems like that's a feature, not a bug. That it's make believe, because then it can move quickly.

It's abstract. So you have different Yes. Mechanisms for allocation or deployment of that money.  

Adam: You can let math in, on blockchain and decentralize, like you can let math Yeah. Be the decision maker in that yes. No, that's it. Yeah. Not subjective yes, but I don't like where Michael lives.

Yeah. Or no, but maybe my neighbor can get the, if yes or no. Yeah. .  

Mike: Yeah. Yeah, it's interesting to think about. Cool man. I really enjoyed our conversation so far.  

Where are you learning stuff? Are you following any people in particular books or blogs online that you turn to,

Adam: In this space it's the typical ones.

It's just, Twitter really, and just reading articles that other people share. But I'm a firm believer that to learn in this space, it's about drawing connections between things that aren't in this space. So it's reading, anything from, innovative work practices to innovative family practices, to, things about jazz.

And I just watched the Amy Winehouse documentary again the other night. Like for me, learning is not in one lane. It's the ability. learn enough about a bunch of things to be able to draw those lines. So that's the way I've always been. I get focused on something and I'm excited and curious.

, and I'll just dig into it. And then there's always that moment where you're like, wait a minute, this is just like this thing. , and drawing that. So that's how I handle it.  

Mike: Last question for you. If someone feels the intuitive draw to learn a new instrument, I know you play piano and went to school at Berkeley Music, what's the best way, given all the tools that are available in today's world to learn, and then why should someone learn?

What is being proficient in a musical instrument? What does that bring to somebody's life?  

Adam: That's an awesome question. So I would say, first I think of the idea of being proficient in an instrument, like the idea of success. It isn't a one size fits all, right? Some of my favorite pianists like Felonious Monk, and then Chico Chick is a clearly, technically more proficient player than Thelonious Monk, no doubt.

But Thelonious Monk is absolutely brilliant. So I would say, the tools I think it's the same for learning anywhere. For me, I learned piano by sitting at a piano and just trying to figure it out the best I could, and then getting really engrossed in, oh wait, this thing that I just did is already a chord and means this.

And that just kept me going, whatever works. If you wanna my son Brendan has been teaching himself piano and he's 20. So he's been using YouTube and it's amazing to see the progress he makes, but it also instills that love in him where he's Ooh, I want to go to the next level.

Like I wanna do the next thing, right? I want my left hand to get better, or I want this. So I would say whatever you're comfortable with, but just remember that, there's like the Prince guitar solo from my Guitar Gently Weeps tribute with You haven't seen that. It's amazing. But then there's the Neil Young guitar solo from Cinnamon Girl, which is one note for a minute.

You don't get distracted. The benefit of music is determination, dedication, and it fires every part of your Your brain will just be lit up even at the smallest thing, and you can never perfect it. There's no such thing. . So it's awesome.  

Mike: Adam, congrats on the progress so far. I hope you guys continue to build some really meaningful technology and improve the world for the better.

Adam: I hope that's the case. Yeah, I appreciate that. All right, take care man. Thanks so much, Mike. Bye.