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

In this episode of "Acquired," hosts Ben Gilbert and David Rosenthal are joined by Representative Anthony Gonzalez, a U.S. Congressman from Ohio, who shares his remarkable journey from being a Stanford graduate and NFL player to a venture-backed startup founder and eventually a leading voice in Congress on financial services and technology. The discussion delves into Gonzalez's efforts to understand and regulate the burgeoning crypto and web3 space, his work on the House Financial Services Committee, and his broader views on American democracy, industrial policy, and the need for innovation to address sustainability challenges. Gonzalez also reflects on the NCAA's name, image, and likeness (NIL) debate, advocating for athletes' rights while recognizing the potential impact on college sports. As Gonzalez prepares to leave Congress, he contemplates his future, emphasizing the importance of working with people he admires and contributing to sectors with significant growth potential.

• Ben Gilbert and David Rosenthal host the "Acquired" podcast.
• The episode features U.S. Congressman Anthony Gonzalez.
• Gonzalez has a multifaceted background including football, venture-backed startup experience, and a Stanford GSB education.
• He serves on the House Financial Services Committee and is knowledgeable about web three and crypto regulation.
• The episode promises to delve into Gonzalez's personal history, his work in Congress, and broader economic issues.

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

The quotes introduce the hosts, Ben Gilbert and David Rosenthal, setting the stage for the episode's focus on technology companies and their background. They also introduce the guest, Congressman Anthony Gonzalez, highlighting his significant roles in the tech and financial legislative landscape.

• Anthony Gonzalez's family has Cuban origins; his family immigrated to the U.S. post-revolution.
• His father was a steel entrepreneur in Cleveland, and Gonzalez grew up in Northeast Ohio.
• Gonzalez played football at Ohio State, later joining the NFL, where he played for the Colts and caught touchdowns from Peyton Manning.
• After his NFL career, Gonzalez attended Stanford GSB for grad school.

"His family immigrated from Cuba after the revolution. His dad was a steel entrepreneur in Cleveland, and Anthony ended up playing football at Ohio State." "He went to the NFL, he played for the Colts. He caught touchdowns from Peyton Manning, and he went to business school and now is A-U.S. Congressman. It's just incredible."

These quotes summarize Gonzalez's diverse background, from his family's immigration story and his father's entrepreneurship to his own athletic and academic achievements, culminating in his role as a congressman.

• Anthony Gonzalez initially aspired to become Mayor of Cleveland.
• He was motivated to run for Congress due to the 2016 election, feeling the need to contribute to the country positively.
• Gonzalez's campaign focused on economic issues and unity, resonating with Northeast Ohio's economic history and challenges.
• He approached his campaign like a startup, conducting "customer interviews" to understand voter priorities and crafting a message that aligned with his district's needs.
• Gonzalez built a strong campaign team, utilized Salesforce for fundraising, and worked tirelessly to meet fundraising goals and engage with the electorate.

"My aspirations in college, like, if you were to ask Troy Smith, who was our Heisman trophy-winning quarterback, who had the locker next to me, he was number ten, I was number eleven, one of my best friends. If you were to ask Troy what I'm going to do, he would say, oh, he's going to be mayor of Cleveland."

This quote reflects Gonzalez's long-standing interest in public service and leadership, initially considering a mayoral role before eventually deciding to run for Congress.

• Gonzalez serves on the House Financial Services Committee, the Science, Space, and Technology Committee, and the Climate Committee.
• These committees align with his interests and are relevant to his district's needs.
• His work on these committees covers critical areas like financial regulation, space exploration, and climate change.

"I've found myself on three great committees that certainly will be relevant in the near and long term."

This quote emphasizes Gonzalez's strategic positioning on committees that will impact both current and future aspects of American society, particularly in finance, technology, and environmental policy.

• Gonzalez believes the 2016 election highlighted a disconnect between politics and the economic realities faced by many Americans.
• He understands the economic transformations in Northeast Ohio, particularly the decline of manufacturing jobs, and used this insight to inform his political message.
• By focusing on economic revitalization and unity, Gonzalez aimed to address the underlying concerns of his constituents.

"I ran on primarily an economic message and a unity message in 2018, which is when I ran around, hey, look, we've got to work together. We're from northeast Ohio. We should know that the way you solve problems is together."

This quote captures Gonzalez's campaign ethos, emphasizing economic issues and collaborative problem-solving as central to his political approach, reflecting his understanding of the challenges and values of his community.

• Gonzalez's campaign was likened to a startup, requiring a clear message, a strong team, and effective fundraising.
• He personally built a Salesforce dashboard to manage campaign contributions and meticulously tracked progress.
• His campaign's success was due to a combination of a resonant message, diligent team-building, and relentless work ethic.

"I like Salesforce and I'd used it in my previous company, so I built a little dashboard and had the contacts loaded in and tracked it the same way I tracked sales and ultimately hit the fundraising targets."

The quote highlights Gonzalez's hands-on, tech-savvy approach to campaign management, applying business principles to the political arena to achieve his fundraising and organizational goals.

• Importance of a balanced donor base: both high donors and grassroots support.
• The goal is to have a low average campaign contribution to show broad support.
• The need to raise money quickly to signal strength and momentum.
• The early campaign funds are often the easiest to raise.
• The real work begins after initial fundraising, selling the campaign continuously.
• Engaging with voters is rewarding and educational.

"But you also don't want your average number to be too high. Right. You want broad support."

This quote emphasizes the importance of not relying solely on large donations but also cultivating a broad base of smaller contributions to demonstrate widespread support.

"So the thought was, okay, well, let's raise as much as humanly possible quickly."

The strategy here is to raise a significant amount of money quickly to create a perception of strength and viability in the campaign.

• The reward of campaigning comes from connecting with potential constituents.
• Voters are knowledgeable about issues that matter to them.
• The responsibility of elected officials is to learn from and represent these concerns.
• The misconception that voters are not intelligent is challenged by direct interaction.

"And it's hard to explain this, but you learn so much from them, like an unbelievable amount."

This quote illustrates the educational aspect of campaigning, where candidates learn from their constituents about the issues that are most important to them.

• Alignment of values between elected officials and their voters is crucial.
• Occasionally, officials face decisions where constituent and national interests may conflict.
• The choice between personal judgment and political expediency is a challenge.
• Political capital must be spent judiciously.

"So the way I think of it is how closely do your values align with your voters values? And for me, the answer is most of the time."

This quote reflects the idea that when an elected official's values align with their constituents, making decisions is less complicated, but there are still moments of conflict that require careful consideration.

• Anthony Gonzalez voted in favor of the second impeachment of the president.
• Unease leading up to January 6 due to White House rhetoric and constituent feedback.
• The Capitol riot on January 6 solidified Gonzalez's decision to vote for impeachment.
• The impeachment vote was seen as necessary to set a precedent for future presidents.
• The decision to vote for impeachment was challenging and had personal political consequences.

"And ultimately my view, which I think is coming out in this January 6 commission, is that he kind of liked it, kind of liked what was going on."

This quote suggests that the former president's response to the Capitol riot influenced Gonzalez's decision to vote for impeachment, as it was seen as an endorsement of the events.

• Committees are where in-depth policy work and dialogue happen.
• The pandemic accelerated congressional interest in crypto regulation.
• Anthony Gonzalez went deep on crypto knowledge to legislate thoughtfully.
• The goal is to create bipartisan and bicameral legislation.
• The process from concept to law is complex and often slow.
• The infrastructure bill inadvertently included a crypto provision, highlighting the chaotic nature of legislation.

"What I say is committees are where the real work, you know, you follow on Twitter, you see the votes and all that. All that's fine and good, but real work actually happens in committee."

This quote underscores the importance of committees in the legislative process, where the substantive debate and policy development occur, particularly in specialized areas like cryptocurrency.

• Initial Republican support for crypto, with a demographic divide in understanding.
• Younger members of Congress are more engaged with crypto.
• The White House's attention to crypto has spurred bipartisan legislative efforts.
• The majority of Congress still lacks a deep understanding of crypto.
• The infrastructure bill's crypto provision demonstrates the complexities of legislation.

"So the more senior a member, the more skeptical they're likely to be. And this makes sense, right, if you look at how crypto is used and the more junior the member, and mostly by age as opposed to tenure, the more likely they're going to engage in it and try to understand it."

This quote highlights the generational gap in Congress regarding familiarity and comfort with crypto, affecting the approach to regulation.

• DeFi (Decentralized Finance) presents unique difficulties in determining tax obligations.
• Traditional exchanges or brokerages are not the only entities producing taxable events in DeFi.
• Application developers would also need to provide tax-related information, which is currently impractical.

"lt in many ways, well, especially in Defi, to figure out what your taxes are." "And so you would need every application developer to be spitting these things out, too, which is, as you mentioned, pretty untenable."

The quote highlights the complexity of tax reporting in DeFi due to the decentralized nature of transactions and the impracticality of expecting all application developers to issue tax documents.

• A senator clarified that the intent of a proposal was not to target all developers but legitimate brokers.
• Congressional intent is crucial for court considerations.
• The preference is to understand the crypto industry better before creating regulations.

"And so the senator who proposed that had to go down to the well of the Senate and basically say, I did not intend for it to sweep in all these developers and wrote letters and those sorts of things." "It wasn't to sweep up all the developers, but was to actually go after legitimate brokers."

The quote explains how a senator had to clarify the true intent of a legislative proposal, emphasizing the importance of distinguishing between legitimate targets of regulation and those who should not be affected.

• Drawing parallels to the Clinton administration's approach to the early Internet, the "do no harm" principle is suggested for crypto regulation.
• The idea is to allow the industry to develop before imposing regulations.
• Crypto has potential problems, like tax evasion, but the industry should not be destroyed prematurely.

"So what do I think it should be? I actually think we should look to the Clinton administration for how they handled the early Internet, and they orchestrated around the phrase do no harm."

This quote suggests that the crypto industry should be regulated with a cautious approach that avoids stifling innovation, similar to how the early Internet was treated.

• Stablecoins are seen as the most straightforward crypto asset to regulate.
• The difference between fiat-backed and algorithmic stablecoins is recognized.
• A possible law might define "payment stablecoin" as a fiat-backed stablecoin.
• Regulatory silence on algorithmic stablecoins is preferred until they are better understood.

"My view is stablecoins are probably the most straightforward to figure out." "A payment stablecoin as essentially a fiat backed stablecoin."

The quotes express the speaker's opinion that fiat-backed stablecoins are easier to regulate than algorithmic ones, suggesting that regulation should start with the former.

• Regulation should protect American consumers and investors.
• It should also provide comfort to developers to innovate without fear of illegality.
• Most innovators in the crypto space aim to build responsibly.

"One is protection for the american consumer, or the american investor, when something goes dramatically wrong." "Two, is giving comfort to developers that they can innovate without doing something illegal."

These quotes outline the dual purposes of regulation: to protect consumers and to provide a safe environment for innovation. The emphasis is on the need for clarity in regulation to support responsible development in the crypto industry.

• Congress showing bipartisan support for crypto principles can influence regulatory agencies.
• Proposed laws, even if not passed, send a message to regulators.
• The hope is for Congress to follow the "do no harm" approach rather than a heavy-handed one.

"But that's also why it's so important that Congress actually puts laws forward, even if they don't pass." "By showing there's bipartisan support for a set of principles that in and of itself will send a message to the regulators."

The quotes emphasize the importance of Congress taking action on crypto regulation to guide and influence the approach of regulatory agencies, even if the laws are not immediately passed.

• NIL laws allow college athletes to profit from their name, image, and likeness.
• The NCAA's prohibition on NIL was overturned, leading to a chaotic market.
• There is a push for a national standard to provide even opportunities across states.

"It never made sense to me why college athletes were the only people in America who couldn't do anything with their name, image and likeness." "What we proposed was, hey, let's do a national standard. Let's have one standard and legalize it."

The quotes discuss the rationale behind advocating for NIL rights for college athletes and the need for a national standard to ensure fairness and order in the market.

• Efforts have been made to reform international financial institutions like the World Bank and IMF due to China's influence.
• The focus on China, capital markets, and crypto are key areas of legislative work.

"Over the whole course of my term, I would say probably a third. I've done a ton of China work."

This quote indicates the speaker's significant time investment in addressing China's growing influence on global financial institutions and markets.

• There is a perceived divide between those who believe in American democracy and those who do not.
• The battle is not strictly between political parties but about faith in the democratic system.

"To me, I think we're at a crossroads in our country, but also globally." "And I think the breakdown is, do you believe in american democracy or not?"

These quotes reflect the speaker's view that the critical struggle of the current era is centered around belief in the effectiveness and value of American democracy, transcending conventional political divides.

• The American idea of democracy has been influential worldwide.
• Prior to America's founding, governments typically served themselves, not the people.
• American democracy was groundbreaking, placing individual sovereignty at the society's center.
• The U.S. government's role was to protect individual rights, a concept that was novel at the time.
• This democratic belief extended beyond the U.S. to a global context, promoting self-government and democracy.
• The U.S. has generated wealth, prosperity, lifted people out of poverty, and contributed to peace.
• Despite imperfections, such as the Three-Fifths Compromise, the U.S. model is preferred over authoritarianism.
• Criticism of democracy, whether from the left or right, undermines global leadership and empowers adversaries.
• Democracy requires active participation, including voting in elections and primaries.

"Prior to our founding, governments were not of buy and for the people. Governments were of buy and for the government." "For the first time ever, we placed the sovereignty of the individual at the center of society." "We've created more wealth, more prosperity, lifted more people out of poverty, freed more people, and oversaw the longest sustainable peace in world history." "I think that's a dead giveaway to China. It emboldens the Russias and the Chinas of the world."

These quotes emphasize the innovative nature of American democracy, its historical impact, and how criticism can weaken its global position.

• Voting is a critical aspect of democracy, and informed decision-making is necessary.
• Participation in primaries is low, around 20%, yet they are decisive in many races.
• Gerrymandering has resulted in congressional districts where primaries are often the real battle.
• Increasing primary voter turnout could lead to more moderate politics and improvements.
• Voter engagement, including following primaries and making informed choices, is crucial for a healthy democracy.

"And not only do I have the right to vote, but I kind of should know what I'm voting on." "The primary is where the battle is for most races." "If we could move our primary electorate participation from like 20 to 50, I actually think our politics would moderate and they would improve dramatically."

These quotes highlight the importance of voter education and participation, especially in primary elections, as a means to influence political outcomes.

• There has been a shift from globalism as an unfettered good to concerns about supply chain vulnerabilities.
• The goal is to create a sustainable, dynamic, and resilient economy.
• Leading in critical technologies is key for economic value and job creation.
• COVID-19 exposed the drawbacks of optimizing solely for efficiency, revealing the need for resilience.
• The U.S. should aim to control critical technologies and supply chains, either domestically or with allies.
• The government's role in funding R&D is crucial for long-term solutions to sustainability and security challenges.
• Reshoring production, especially for critical items, is important, but not everything needs to be reshored.
• The U.S. often has higher manufacturing standards, which can contribute to global sustainability goals.

"I think there's sort of three buckets that I think are most important one is to build a sustainable economy. One a dynamic economy, and then also a resilient economy." "If you just optimize for efficiency, you're going to hit a trade off at some point." "I want as many critical technologies and supply chains, domestic or with our friends as possible."

These quotes discuss the strategic importance of sustainability, resilience, and innovation in the U.S. economy and the need for government investment in R&D to achieve these goals.

• Entrepreneurs and investors should focus on industries with strong growth potential.
• The decentralization movement and climate change mitigation are significant areas for potential growth.
• Founders should leverage their skills in industries where they can excel and contribute effectively.
• Collaboration with people who share mutual respect and admiration is vital for success.
• The government and private sector must work together to innovate and address global challenges.
• The key is to innovate in ways that make sustainable alternatives economically viable worldwide.

"I look for industries that have enormous tailwinds, and where is the growth going to be?" "Focus on the things that you can be the best in the world at that have a bunch of tailwinds behind them and surround yourself with people you love and admire."

These quotes suggest that entrepreneurs and investors should target areas with significant growth opportunities and work with like-minded individuals to achieve success.