I think the second thing is that-- people need to understand is that James and Travis are the managing partners, and I'm just in the general partner. They're the ones really doing all the work and making the investments, doing the due diligence, working with the companies.

And my role has largely been to do two things. One is to help them think about investments and particularly, portfolio construction. And the second is to help turn these companies that we're investing in-- these projects that we're investing in-- into companies.

The cryptocurrency world is at the time period in which you're going from building products to forming business models around products. That's the stage of its development. And unlike other investors in this space that are focused primarily on the coins and the tokens, like Bitcoin or Ethereum or other things like that, we're overwhelmingly focused on building companies. And so that's my second contribution.

ANDY SERWER: Hey, James, I'm curious about the back and forth between you guys when it comes to crypto. And you know, I know your dad knows a lot about crypto. I mean, he was explaining it to me years ago. So at first, maybe the learnings came from him. But at this point, are you telling him stuff about crypto that he doesn't know?

JAMES HUTCHINS: Well, I mean, I'd say, you know, we both collaborate. You know, he brings this 30 years of investing in finance and technology. And I would say, you know, I'm taking what he taught me about crypto and kind of expanding it. So we've taken his view of how this is the next great kind of payments technology, and we're thinking about, how can you build new types of businesses, new types of online communities around that. So at the end of the day, we're kind of standing on his shoulders at all times, really.

GLENN HUTCHINS: So I came at this, Andy, as a-- out of fintech. And when you and I probably first talked about this many years ago, my view was this was the place that we could transform the cost and convenience of payments, which is a still undisputed part of the financial services accounting-- particularly credit cards, but also remittances, foreign exchange transactions, those sorts of things.

What James has done, together with Travis, is really extend my understanding, first of all, that this technology can address anything of value, not just the conventional payments world. And second, that it actually points in the direction of a brand new computing paradigm, which is really transformative.

ANDY SERWER: Glenn, let me shift gears a little bit and pick your brain about the recovery-- the US recovery right now. Where do you think we are at this point?

GLENN HUTCHINS: Well, so third-- second quarter was down 1/3. Third quarter was up 1/3, which means you're still about 17% short of where you started, right? Because you need to go back up 50% to get back to the-- get the 1/3 back that you lost. So we're starting out down about 17%.

And so the way I put it is the depression is over, and now the recession is setting in. We're not in a period of recovery. You shouldn't confuse the bounceback as one of recovery, in my view. And the long-term consequences of the damage done to the economy by the fundamental mismanagement of the pandemic are what we're dealing with right now. So I would say we're in-- we've gone from-- the good news is we're no longer in depression-like circumstances. The bad news is we're in pretty severe recession-like circumstances.

ANDY SERWER: And what about a stimulus here, Glenn, and why has Congress struggled so mightily to get this done?

GLENN HUTCHINS: Well, stimulus is absolutely vital. I mean, there's a piece of analysis up on the Brookings website right now that demonstrates we need about $2 trillion of stimulus to get back to trend growth. And it almost certainly needs to be heavily tilted toward unemployment insurance because that's what's clearly has had the most amount of impact, given the nature of this problem, which was a sudden shock to employment.

The political experts can explain to you why we're not getting anything done. Look, from my perspective, it's some combination of the Senate Republicans decided to focus on a Supreme Court nomination rather than stimulus. They clearly prioritized that, so valuable time was wasted there.

And according to the new, most recent analyses, they actually are-- you need 13 Republicans to team with the 47 Democrats to get something done. And there is such an ideological opposition to spending more money that they're actually having trouble getting-- rounding up-- getting consensus around those 13 Republicans to get things done. So I-- but I-- but that's just what I read in the newspapers. It's really too bad because the economy vitally needs it.

If we had had the OECD the average, the 38 most wealthy countries in the world performance with respect to management of the pandemic, we would've had about-- there's another Brookings report on this. We would have about 100,000 less people die and nearly 9 million fewer people unemployed. So we're in a-- you know, you saw the China economy starting to grow again. We're in a very bad place with respect to how we managed the pandemic. And the economic consequences that are manifest, and they're going to be long term and they need to be addressed.

ANDY SERWER: James, over to you, I want to ask you about crypto in the time of COVID. How has the pricing and the markets gone during this time? I mean, and it speaks to this larger issue of what is crypto in the world of crypto writ large correlated to? But why don't you take the first part of that first.

JAMES HUTCHINS: Sure. So like everything at the beginning of the pandemic in March, there was this risk-off period where there were some large drawdowns and selldowns both in the Bitcoin and Ethereum markets. However, you know, as people started to realize that, you know, cryptocurrencies are this global permission in this financial system where anyone can kind of access these markets, anyone can send money around the world, there has actually been a huge rebound. And actually, for the last three or four months, we've seen an enormous explosion in decentralized financial applications built on Ethereum. And so we've actually seen a huge boom time during the COVID crisis because people have started to understand the power of digitally-native finance in a time of kind of lockdowns and everyone stuck inside.

ANDY SERWER: And what do you think crypto-- you know, when will it sort of become-- hit-- become a mass thing, in terms of financial services? So right now, you keep saying it's sort of on the edges of things, and JPMorgan kind of says this-- yup, we're all-- we love crypto too, but you know, we're not really-- that's not mainstream for us. Talk to us about the future evolution of this world, if you will.

JAMES HUTCHINS: Sure, happy to. So we're starting to reach kind of mainstream adoption in the stablecoin space. So stablecoins are dollar-denominated crypto assets that live on these networks like Ethereum. And they allow anybody to kind of access the US dollar market. And this year, we're going to see about $800 billion of transactional value in stablecoins, which is about half of the percentage of kind of the annual global transaction volumes. So I would say we're getting pretty close to kind of real usage at a large scale in stablecoins.

And then the other place that we see kind of the beginnings of mass adoption is in crypto collectibles or video games. And so taking a step back, crypto networks are the first place where you can have provable digital ownership of items. For the first time, I can prove that I own a trading card, I own a piece of a video game. And companies like Flow are starting to build video games with large brands, like the NBA, in this game calle NBA Top Shot where you can buy, sell, and trade NBA trading cards. And I think that might be the first place where we see kind of real mass adoption of kind of crypto.

GLENN HUTCHINS: And the trading card isn't a conventional trading card like you'd think of it.

JAMES HUTCHINS: No.

GLENN HUTCHINS: Right? It's a unique video clip of your player doing something important as a trading card.

ANDY SERWER: It's all new stuff. Hey Glenn, how much of a existential threat is crypto to legacy financial services companies, ultimately?

GLENN HUTCHINS: Well, I-- look, I think that the important thing about crypto is that it worked inside the regulatory framework for various countries. So there will always be a role for deposit-- regulated deposit-taking institutions that operate inside the AML, KYC, deposit insurance, all that kind of heavy capital-invested type of framework.

The-- I think the primary place where crypto is addressable is all the other products and services that don't relate directly to deposit-taking and lending, for the technology associated with the infrastructure and the payment system, the custody system, the clearing, all the kind of stuff which turns out to be the high profit-margin business for a lot of these banks but aren't at the center of their regulated kind of mission. I think that's the kind of most important piece of it.

But the-- I think later on, what we will see is this new form of computing, which is decentralized, will eliminate the need for large hierarchical institutions, like big banks, to be the owners of the truth about who owns what. And as a consequence of which, that takes a massive amount of cost out of the system and revolutionizes the cost basis of finance. And that'll challenge the business model of some of the largest institutions. That could take time. But don't forget, in technology, we always overestimate what can happen in a year and underestimate what can happen in a decade.

ANDY SERWER: Right, sure enough. Hey, let me switch over to politics, Glenn. I remember you telling me early on in this campaign season that the candidate should be Joe Biden for the Democrats until proven otherwise. And I think that the way you actually framed that, it actually came to pass. In other words, there was no proving otherwise, and we have Joe Biden. How do you feel about him as a candidate right now, and what do you think his chances are to win very soon?

GLENN HUTCHINS: So Andy, one of my rules in investing is only fools predict interest rates, stock prices, and elections. So I'm not going to do that. But I will tell you, from a business person's perspective, I think the main point here is that the centrist-- centrists consistently have won in the Democratic party in '18 and '20.

And the kind of policies that Joe Biden is putting forward is those that he will adopt that he used-- that he ran on in the primaries and that he says he will adopt as president have been reviewed by, you know, places like Goldman Sachs and Moody's and Penn Wharton and all those and all are ones that will promote economic growth. So I think, from the business perspective-- business community's perspective, there should be nothing to be concerned about with respect to a Biden presidency, if it comes to pass.

ANDY SERWER: If it comes to pass, one of his proposals is an increase in taxes for corporations and Americans making more than 400k. That doesn't concern you?

GLENN HUTCHINS: Well, not-- it's a return to tax policy very similar to what happened during the Obama and Clinton administrations in which there was booming economic growth, terrific stock market performance. The reason why the analyses of those plans turn to be positive is that money turns around and gets reinvested in a variety of initiatives that are growth promoting.

And you know, you have to remember that the Trump tax cut was largely used for stock buybacks. It did not have-- generate significant increase either in investment or in employment. And so as a result of which, it didn't generate any economic growth. The economic growth of the four quarters preceding the Trump tax cut is identical to the economic growth in the four quarters following it.

ANDY SERWER: Right.

GLENN HUTCHINS: And so we need to have an economic policy that promotes growth and also that protects the balance sheet of the American government.

ANDY SERWER: Yeah. Back in May, you told me that many retail stores were likely to go away permanently after the pandemic. Still feel that way?

GLENN HUTCHINS: Well, look, I think there's a whole host of economic arrangements, largely around the bricks-and-mortar economy, that are going to have a very tough time. Well, you've seen the number of retail bankruptcies there've been, right? You know, and the weakest of those-- Penney, Sears, et cetera-- are kind of laboring mightily.

But also, I think commercial real estate will be significantly resorted, right? Plus other fundamental changes in commuting and all the infrastructure around that. So I think that the-- as we said earlier, the pandemic will cause-- accelerate a bunch of changes that are already in place plus promote some new ones, like the Zoom economy. But I think the weak wildebeest at the back of that herd it's probably the physical retail companies are were already laboring entering the crisis.

ANDY SERWER: James, does it matter for crypto if there is a Biden presidency or Trump second term?

JAMES HUTCHINS: No. I mean, we're very early in the life of crypto, and it's about just enabling developers to keep building. And I don't think politics really factor into how crypto will do in the next couple of years.

ANDY SERWER: Let me ask you both about LL Cool J, who is on our program. And I understand that you guys have maybe both a personal and business relationship with him-- or I guess I should say business and personal relationship with him. James, why don't I start with you?

JAMES HUTCHINS: Sure, so I call him Todd. So I met LL Cool J as Todd, in his business capacity. And he was beginning to start Rock The Bells, and I had done a lot of research in the digital media space. And you know, we really hit it off. He's a really exceptional person. And I helped him think through his business model on Rock The Bells, and it was just-- it was a really special experience. Todd was an incredibly gracious host to me in LA, and I'm really excited to-- about what he's building.

ANDY SERWER: Glenn, what's your take on this?

GLENN HUTCHINS: Well, look, I think it's great. Todd is a-- as James said-- is a really great human being. You know, he-- in addition to being kind of one of the people who created-- really invented rap, he had been very successful as an actor, in addition to being a performer, and a business person in the business space. He owns the franchise for "NCIS-- I guess-- Los Angeles," as well as "Lip Sync Battle," as well as having his own Sirius XM channel. So this is a-- he's a real entrepreneur and a polymath.

I had the good fortune of meeting him when we gave the award at Hutchins Center for African and American Research at Harvard. We got to know each other. I introduced him to the venture capitalists, Jeff Yang, who kind of put-- with whom he created Rock The Bells. And then they hired James to write the business plan with him. So it's been-- and we're all investors in it. So it's great. So we wish Todd nothing but the best.

ANDY SERWER: I still can't get used to calling him Todd, but I'll let you guys keep doing that. Hey, last question here for both of you-- Glenn, I'll start with you. What advice do you have for a father and son looking to work together?

GLENN HUTCHINS: All I say is James, what is your advice?

JAMES HUTCHINS: Oh man. You know, it's just all about, you know, leveraging the foundation that you have as a father and son. Don't try to be anything that you're not, and just go from there. I think that's the power of the relationship-- the business relationship that my dad and I have is that we don't try to be anything other than father and son, and I think that really makes us special and unique.

GLENN HUTCHINS: And I think the other thing I would say, Andy, is I think I would recommend this to a lot of parents who were thinking about this-- fathers and mothers-- is it's very important for the kids to go out into the real world and prove themselves first for two reasons. One is because they gain enormous experience and credibility. And the second is because then they have-- it's an addition to their self-confidence, that they know they were tested in the real world first before we did this thing together.

ANDY SERWER: We're going to leave it at that. Glenn Hutchins and James Hutchins, thank you both so much for your time, and best of luck to you.

GLENN HUTCHINS: Thank you, Andy.

JAMES HUTCHINS: Thank you, Andy.