Billionaire Mike Novogratz on Crypto, AI, and What “Rich” Really Means

The only way people get rich is either to create something so spectacular that you're going to get a multiple on it, so build a company, or to bet on something with leverage.

The AI bubble is a bigger story than railroads. It's a bigger story than the internet. It's a bigger story than crypto was. It's the biggest story of our lifetime and therefore it will be the biggest bubble of our lifetime.

I just don't think this AI bubble is finished yet. And I don't know if that means Nvidia 10 trillion before it crashes. And so you have this powerful story that's going to keep being fed at least for a few years.

10% of their net worth is about the right amount. Maybe 15.

I think the really, really bad crash would be if...

Thank you.

I was moving some of the equipment here and I saw all of your military stuff. I mean, this is pretty badass.

You basically don't want to land a helicopter in bad weather. You don't want to fly in bad weather. Like, it's interesting when Kobe Bryant — I have Kobe Bryant on my phone. And I met him once and a picture of me and him I carried on my phone because he was such a charming and charismatic and so, so kind to me when I met him. He died of pilot error. Most helicopter crashes are pilot error. And it's usually when the passenger pushes the pilot to fly in shitty weather. And so rule of thumb: if the weather sucks, go the next day.

It's a funny story. I have a plane and I have a pilot who I've known a long time. I met him in flight school and he was at this Gulfstream flight school and they said, 'What do you do if your client is trying to push real hard and you know it's not the right thing to do?' Like, 'Oh, that's easy, I just call his mom.'

He hasn't had to. I have learned to let go, let go, let God, and let him make the decisions.

Listen, the hardest part of navigating markets, navigating crisis in your own life is to take a breath and try to disconnect that fight or flight, that fear response from the rational response. And I think I kind of naturally do that. It's not always healthy because for me, a lot of that stress shows up in my body. And so every time I've gotten a massage for the last 40 years, no matter what continent or what type of massage, the practitioner says, 'Are you okay? Your body tells me you're not okay, but are you okay?' And so I actually can get very calm in my head, but the stress goes into my body. Like that's — I'm not advocating that. You need to figure out through exercise, meditation, how you just don't let that stress get to you. I think I have a hack that makes me a good risk taker and good in emergencies. I literally disconnect like...

Dissociate.

That's not my advice. That's what I — that's why I have been successful. I wish, you know, my wife meditates for three hours a day. Like I wish I could literally just — sometimes I process it out and don't let it get to me.

The body keeps score and my body says ouch.

Pattern recognition. So, I've learned buy low, sell high. I learn when everyone else is panicked, have courage. Part of having courage intellectually is to then understand I'm going to be okay anyway, right? It's like, what are you scared of? You're scared of losing. People won't like you anymore. You're going to feel less worth about yourself. And so I have had a tremendous amount of luck in that I have a really wonderful family. I grew up in a middle-class suburban neighborhood where my friends were great. I went to school. I had great roommates. And you know, I was born a cheeky cute kid. And so my whole life I've been patted on the head and told I'm liked. And so that security of feeling loved allows you to say, 'I can take more risk.' If you're nervous, if, 'Oh, my success equals my love,' you get more nervous. And so a lot of it is framing your own story as one of privilege. And people say, 'Wow, you're a self-made man.' That's the stupidest thing I've ever heard. You're not a self-made man. Your parents have to have sex for you to be there. So no one is self-made, right? There's two people that make a human. But you are nurtured by your family. You're nurtured by your teachers. You're driven to your practices by dad's friends. And so by the time you have some success, it's shared success. And if you allow people to share in that success, it takes some of the stress away. Doesn't take all of it away, but how do you behave? Because it's really that fight or flight response is, 'Oh, I'm going to die.' And death is a lot of things. It's not physically dying. It's like I'll go bankrupt or I'll get fired.

Ideally, meditation, exercise, breathing, all of those things help. They help a lot. I actually — when I kick into dissociating as well, which is not great, but it's just — I think that's one of the reasons I realized that I was once in a fire and I was just very helpful getting everybody out and went back, put my daughter here, 'So you stay right here,' and cool as a cucumber. And then that night I was like, I had all this and often I drink too much that night and then the next day my back hurts and I'm like, 'Oh, where?' But in that moment I deal with the stress and then it just gets stored up.

Seven.

I think big families can be complicated, but there's a lot of benefit in having people that like you just because they have to like you. And when you do really well, they tease you and kind of take you down a notch. And when you do really poorly, they support you. And then you support each other. The trick of successful big families is that there's often a sibling or two that are mentoring the other siblings. Often their parents aren't the mentors. Their parents are like the guiding light and the cheerleader, but they often don't have the skill set to really connect and mentor. It's the early successful kids. And that reads true with most families of multiple successful kids.

You know, I don't think so because I've seen a lot of introverts that are successful. I don't know what it is to feel like an introvert. I have literally been an extrovert from the time I was three. And I watch my mother. If my mother is sitting on a park bench and the woman next to her, she'll know everything about the woman's life. And then she'll come back to the dinner table and she'll be like, 'Oh my god, my friend Jean.' And she's telling all these stories about Jean's kid. We don't know Jean or her kid. You know, she is such an extrovert and I think I inherited that. And so it does give you an advantage of being able to connect to people, to not be scared of people. I think one of the big things that young people need to learn is that their voice matters. I remember at Goldman Sachs I had these great mentors and people were like, 'How do you have those mentors?' I was like, I just walked into those offices, asked them a question. You're allowed to do that. I was like, why not? You know, they all use the same toilet. They're not that different. And if you approach people with admiration and awe and ask, 'Geez, how did you become so successful?' Oh, they'll talk for hours. Now, you have to know your own work. You have to have something to add. But the fear of authority, the fear — I mean, I remember going to Princeton and middle-class kids, a lot of middle-class kids get in there and next thing you see, the rich kid, you know, 'Oh my god, they went to prep school with the rich kids.' And it was so insightful. My first roommate was a very wealthy — well, not very wealthy, but he was from a dominant New York family and famous. And he took me back to his house and I realized other than they have the best sheets in the planet because in middle class you didn't have those beautiful sheets, right? You just had normal sheets. I was like, 'Yeah, mom made us breakfast, nice friends, like using the same toilet.' And at Princeton, there weren't like fancy dorms. Everyone was in the same dorms. And at that point, all that really mattered was could you flirt with girls? Like it was sports, girls, and a little bit academics. And he had no advantage over the rest of us. And so I was like, 'Yeah, I'm just as worthy of being in the room.' And that feeling of my voice mattered, that I'm just as worthy — I think I inherited from my mom or whatever. I didn't realize until later that that's very difficult for a lot of people. They get nervous to come talk to the boss. And I try to get people to say, 'Hey, how do you get less nervous?' You do some homework. But you got to learn to feel comfortable with yourself. And that's like a life journey. There's 8 billion people on the planet think they're not enough. It's the one thing that makes us all human. They're not smart enough. They're not tall enough. Boobs are too big. Their boobs are too small. They're too fat. They're too skinny. I mean, there's a thousand 'I'm not enoughs.' And therefore I won't be loved. And so like the journey in life is to figure out, you know, what you're perfect. You're plenty. And easy to say, hard to do. That's the work of living a great life, to realizing that you're enough to be loved. And often that's literally the core work of therapy, of ayahuasca, of whatever journey you want to go on to be in yourself is understanding the impact your parents had on you and realizing that there was traumas and non-traumas and all that background. Understanding they did their best and letting it go, letting all their mistakes go and loving them anyway. Then you're an adult. Because the people I love in life, they cheer for other people's successes. They don't feel belittled by other people's successes. I've always been enthusiastic about, 'Oh my god, you're killing it,' right? Even if I'm not doing well, your success doesn't make me feel worse, it makes me feel better just because I know you. I get to share a little bit in your glory. Listen, I want my own glory. I want to do well myself. But that mindset is so powerful because it's infectious. And the scarcity mindset, if you do well, I don't do well. It's a negative energy.

Yeah.

Yeah, I work to try to believe that. We had a gospel brunch this weekend at Rikers Island, which was a cool thing because I have gospel brunches and the guy who now runs prisons for New York, he came to the office, he said, 'Hey, would you do one of those brunches at Rikers?' I'm like, 'Of course I would.' And so we brought 25 or 30 visitors plus some great food and great music, gospel singers, this one woman, Victory Boyd, who was just a beautiful soul. We got together with 70, 80 inmates and celebrated. Had a three-hour concert and preaching and eating and just community. And it was so joyful. You saw tears and laughter and joy. And the message there was, guys, we're all human. We make mistakes. There's redemption. There's redemption in the gospel, but there's redemption in life. And you deserve to be treated like a human even if you made mistakes, that you're enough. And for me, it turned out to be a beautiful, brilliant day. And everyone who went there was touched. The people that were in Rikers were touched. In fact, the guy at Rikers who was running it said, 'I think this might have been the best day at Rikers in the last 30 years.' And so everyone's patting me on the back and giving me, you know, 'Thanks so much for doing this.' And that feels awkward even because you're like, I didn't really do that much. It was my idea — it was actually his idea and I told my staff and it was the music and like I was a part of it just because. But it was funny because I had a funny, funny relationship with being thanked. I was like, 'Leave me, let me out of this thing.' And one of my friends who's a real Christian man says, 'Guy, just relax.' Just where's that resistance coming from? So even in that moment of kind of glory, there was for me, there was some resistance. I didn't feel comfortable being thanked. You're not enough.

I think there are plenty of times I don't feel like I'm enough still and then you're like, 'Well, that's stupid. It's not my dominant way of life.'

Yeah. All the time.

Yeah.

I like money because money allows you to do things in a way of abundance. Like I have no idea what the gospel brunch cost me, but it wasn't nothing, you know, food and transportation. And I work mostly because I have all these plans to build a hotel and to give it away. And so I think what motivates me is I'm 62, who I hope to have 30 good years left of way to make a positive impact and that costs money. It's not just money. George Soros once said that I thought it was so interesting. He said, 'I got to keep working because I got to keep giving.' Paul Jones is the best at it. We still wake up at 3 in the morning and are trading. And like if you're Paul Jones, that just turned 72 today, happy birthday Paul, or me, or Stan Druckenmiller. Like the guys that are — and I don't even put myself in their category. Those guys are an elite level of just commitment and success as investors. That doesn't come without working. They work their tails off and both of them work to give it away. We have enough houses.

No.

Like there's an adrenaline to doing it. You stay young by being curious. I started that with — I'm in the hotel business. And the markets are like the ultimate curiosity machine, right? Every day there's new stories. I have spent so much time even today trying to understand AI, demand for power, data centers, data center politics. Those are all interesting narratives and they tie together with a broader narrative: Is AI going to be good for society or bad for society? How do we make it? And so each one of us have the ability to call experts, to have them come into our office, to get up to speed, to then have a seat at the table possibly on what policy should be. And so that alone fills your day with something that is nourishing, that gives you energy, right? As opposed to you're retired and you're like, 'Oh, who are we going to golf with today?' and we're going to read the newspaper and try to understand the thing but not do the extra work to really understand it and then not have a seat at the table, not be able to impact people's lives. You know, I think the guys that work well past the retirement age are people that just have a different approach. I mean, look at Warren Buffett even. He never ate well. He drank a Coke every day, but unbelievably curious mind.

It's funny because there's the narrative that I lost a fortune and my kid was like, 'Dad, this is such a bullshit narrative because like even when you left Fortress, you know, you were still worth $600 million or some crazy fortune.' And even when I left Goldman Sachs, I was still worth $15 million, which was a crazy fortune. And so I have had big fluctuations in my P&L because my personal wealth has often been tied to a stock price. Right? Fortress stock went from 35 all the way to one and then they sold at eight. What a ride. I don't tie who I am to that number.

You know, unfortunately or maybe nowadays because I have money outside of Galaxy and I have money in Galaxy and the stock price moves every day. It's like Google Alert — not Google Alert, but it literally seems to show up almost every freaking week. And I'm like, 'Yeah, they're pretty close.' But it doesn't impact me anymore. The first time you make a million dollars, you're like, 'Wow, a millionaire.' I remember I was 31 years old. Nothing really because I have always spent more money than I had. I've always been in debt. I always had confidence I'd make money. So even in college, I borrowed so much money from rich kids with no way of paying it back. Matter of fact, I actually was going to work in Washington and the best job I could get out of the army was like $16,000 a year. And I was like, 'Dude, I owe my roommate more than that.' And so some wise guy said, 'You should go to New York and make your impact first and come back to DC when you actually learn something.'

The only way people get rich is either to create something so spectacular that you're going to get a multiple on it. So build a company and those are the richest people in the world, right? Or to bet on something with leverage. So, the first way most Americans get their nest egg is real estate. Why is that? Because they can put 5% down with an FHA loan or 15% down or 20% down, get leverage, non-recourse leverage in most cases, and buy an asset. And that asset for the last 50 years went up. So, my parents, whose $70,000 house is now worth a million, are millionaires because they were able to get leverage. Well, ideally you want to make more of a percentage than you're borrowing, right? You need to get that spread. That's the key part.

Yes. Leverage, well, leverage is the wealth engine. Leverage, too much leverage or foolish leverage, or the biggest cause of death in financial markets is an asset-liability mismatch. I'm buying a five-year asset, but I'm borrowing in three-month increments. Well, if the rates change or my access to that borrowing goes away, I'm dead. There are two ways people die in financial markets: asset-liability mismatch and excessive leverage. But that's what used to drive me crazy in crypto. Crypto was this wildly volatile asset. Yet, the exchanges would offer 50, 60, 100 times leverage. I was like, taking 50 times leverage on a 60-vol asset is the definition of insanity. You can be stopped out in seconds and it's almost like buying a lottery ticket. We do a job globally and certainly in the US of giving people a decent financial education or an investing education. And I know there's some — you know, when you sign up at a brokerage firm, you have to fill out, you know, what your risk tolerance is. And it doesn't come close to trying to give people — they make us take a driver's test to drive a car. I always thought you should have to take a gun test to own a gun. And quite frankly, to learn to be a speculator, there should be some test before your parents or yourself let you play the markets.

We have this gambling culture that has overtaken America. Listen, I was part of it. So I'm not trying to be a hypocrite. Like crypto was a speculative — it's moving from speculative to useful, but the first 10 years was purely a speculative asset. One of the reasons it had a little lull is because people are like, 'Now I can do sports betting or prediction markets or online gambling.' And we have way too much of young people's mind shift and capital going into just speculative games where most of them don't have any real skills. Some learn skills, right? I got a son-in-law who's a really good memecoin trader and when I sat with him, his charting system was more sophisticated than mine. I was like, 'Show me what you're doing here.' There's lots of ways to learn online. There's courses, there's, you know, podcasts, but it's not necessarily the most productive use of a young man's time. And it's rampant — and it's saying it's zero part of a woman's time. Like I have two daughters, two sons. My daughters are not in chat groups about — they don't bet on sports. They're not crypto traders. Every one of the guys, their husbands, they're all in Telegram chats with their friends. And men bond around gambling or men bond around investing. Partly because men have always felt like they need the money to make the next step in life. And that wasn't part of the training of women. Even though a woman wants to live on her own, she needs money. This — I'm not saying it's the reality, but the ethos. And so it's really interesting. Talk to 25 to 30-year-old men, ask them how many chat groups they're in off the charts and ask that same question to women: none.

You know, it's a contextual question. I remember one day I had this weird instinct that dollar-yen was going to fall. This was when I was back at Fortress and volatility was low. So I said, 'Go buy me $500 million of a one-day 40-basis-points-out-of-the-money option.' So it was like just a lottery ticket. I love gambling a little bit. Like the lottery. I play the lottery every time it's over a billion dollars.

I do. The big one. The big one.

I do.

I have been really lucky my whole life.

Just because I just like the spirit of the lottery. So I've...

Quick pick.

I don't — just when the Mega gets big, Powerball or the Mega at the big numbers, I go buy 100 tickets.

I used to pick my own numbers but then when I need to buy 100 tickets I just have the auto-pick.

It's fun. I mean, that is entertainment. Sports betting is fun. If I go to the track, I want to put a bet on it, racehorses, but you have to have a budget. You have to realize it's entertainment value. It's not a long-term plan. It's not economic wealth creation.

Unless you dedicate your life to it, you're not going to beat the odds. The house wins. Let's go to Atlantic City. I'll have a bunch of Jack Daniels. I will hit the craps table or the blackjack table and have fun with a budget and I love it. But I don't do it very often. But when my friend says, 'I think I got a system,' you're like, 'Just hang up.' Like, you don't have a system. The house has a system. The house has an edge.

Jane Street is the house in same-day options, right? Like they are — that's why they make money, Jane Street and those groups. And so you've been very careful in gambling, right? So in options, you know, your defined loss, you can get huge leverage. In general, most options over time, the house wins, right? So Jane Street and Jump have made fortunes because all these young kids are doing same-day options and they take the other side and because volatility plays out. And so there's a lot of lottery ticket to it. I got lucky and the timing or my instinct was right. And so I would rather have people spend money on premium so you know exactly what you could lose than sell options. Nobody who's non-professional should ever sell options. It's like literally the definition of insanity. And even for pros, you really better know what the downside is. It's like shorting stocks. Shorting stocks can be so dangerous because as they go up, your position infinitely grows. And so you short something at two that goes to 10 and you're like, 'Oh, is my whole life now worse?' And I know like in one hand we think finance should be democratized. That doesn't mean everyone should be a player. Just like we should have access to healthcare, but I shouldn't be able to do neurosurgery on you. And being a great investor takes a lot of training, it takes a lot of skill, it takes a lot of experience. There's a conflict between the term democratization of finance, where I do believe everyone should have access to great products and everyone should have access to the same — the rich guy shouldn't have a separate lane, 'Oh, I get to invest in the good stuff and you don't,' right? I made a fortune in SpaceX because I had access to SpaceX in 2014 and you didn't. I'm positive if you had access and someone said — if I had said, 'Hey, put a little money in space because these are the three reasons why: Elon Musk has already done it with Tesla, he's got a monopoly in space, and space is going to be a big deal just from all these different reasons' — you'd probably put a little money in there. You didn't have the option. So like that's the democratization of finance that we need, not meaning everyone should be their own speculator.

Yeah, the self-attestation doesn't really make sense.

I haven't figured that out per se. And I don't want the nanny-state label. I just think even here, like we were thinking about our wealth management business. And I was like, maybe one of the goals of the whole firm should be we want our clients to get wealthier, right? That's not the goal. If you're — I'm not going to pick on Binance, but any of the big exchanges, right? They set up these amazing platforms to get people access. And you know, when you're giving all this leverage, almost by definition, you know, you're going to burn through clients.

Well, you could take some leverage, right? Like again, I take leverage all the time, but... So what would that look like? That would look like, hey, I think Bitcoin's at 83,000 right now, and I think there's a real shot we get up to 100,000 by year end, but if it goes below 80 or 79, I think this could be a false sense of enthusiasm. We could go back down. So now I'm going to buy at 83 and I'm going to have a stop loss at 79, right? So I know I'm going to lose four — whatever that would be on 80 is probably 6%. So I'm going to risk 6%. So it doesn't matter my notional. I mean, so how much money am I willing to lose? So I'm willing to lose $600, I'll buy $100 million. I look at the amount I'm willing to lose. And so you get more leverage if your entry point is closer to your stop loss. Of course, there's more risk there, but you get more leverage for the same bet. So much of importance in markets, if you're trading as opposed to investing, is your entry point, right? If you bought Bitcoin at 60, you feel much better here at 82, 83 than if you bought it at 84, emotionally. And so patience to get in right is really important. If you're a long-term investor and you're not close enough to market that you think you should be a market timer, then you've got to be in because you just in two weeks had the whole year's move, 60 to 80. And so if you're waiting, you missed it. And so you've got to determine to start: am I trading or am I investing? And there are different time horizons and there are different volatility horizons you're willing to take.

10% of their net worth is about the right amount. Maybe 15.

Well, listen, I think Bitcoin is becoming a core holding of anyone's portfolio. We have a government that has proven itself completely ineffective at reining in the amount of debt we have as a country. We had a good chance, right? We had DOGE that was going to cut government inefficiency and try to reduce the spending. And we had Scott Bessent, who is a very smart guy, who said, 'I'm going to go for 3% budget deficit, 3% growth, right? $3 oil.' And guess what? Scott got 7% budget deficit, right? $45 oil. Like we're off. They lost. And DOGE was a complete failure. And debt instead of going from 39 trillion to 38.12, it's 40, 41, on its way to 50. As long as that debt is heading higher and heading higher at an accelerating rate, the story for Bitcoin is just too real. And we will monetize our way out of this one way or the other, which will create inflation. It's creating pain for the bottom shape of the K-shaped recovery. New York is so much more expensive than it used to be. All of America is. Six years ago, before Biden got elected the first — his only time, right? So, six years ago, you buy a medium-sized Diet Coke for 99 cents and today it's $2.30 at McDonald's. That's — I got this from Ken Griffin, who drinks Diet Coke every day on his way to work. Like, that's a lot of inflation, right? That's, you know, 120% in six years. You look at eggs, you look at gas, you look at rents in New York. I mean, quite frankly, you can't live in New York anymore for under 80 grand. So the minimum wage, if you believed in the minimum wage, should be 50 bucks an hour, not 16. You go to Alo or Nike and you talk to — I do this all the time. I talk to the workers and ask them what they're making. 'What do you pay for this job?' It's always 16.75 an hour. That doesn't pay their rent, right? And so we have a real problem in America. And the only way we're going to get rid of this debt is inflation, which just is a tax against the middle class and the working class.

I think you should look at it as a 14-year-old asset versus a 3,000-year-old asset. And these both are assets about narrative. And they will get more or less volume energy around their...

narrative at different times with the same similar story. Who's buying gold at central banks? It's big old institutions and they were the biggest buyers of gold. And then for a while we got taxi cab drivers in, right? Silver went crazy and then you had a bubble. It popped and then it came way down and now it's been reconsolidating for the next time that story goes away. What I'm here to say is until we get fiscal responsibility, financial market prudence in the West, that narrative is just going to keep just coming back and coming back. So, Bitcoin looked dead in the water most of this year. People ask me, 'What about crypto?' I would use the word meh.

And all of a sudden Scott Bessent says, 'I'm going to buy treasuries. I'm going to put my finger in the dyke and try to buy treasuries back that we've issued to adjust the curve.' The entire world was like, 'Oh [ __ ] we're screwed. There's a bubble in the government bond market and he just admitted it.' And Bitcoin goes 60 to 80. It was that that brought the narrative back in play and now it's back in play. It's not going away. And so we're going to have — I'm not saying we're going to go straight up, but we saw the ETF market re-energize. We saw institutions re — we had a sovereign wealth fund in here last week say, 'I got to get money into it.' Like the Bitcoin narrative is starting to come back. And remember, markets are always about energy. Where's the energy? Where's the — what are people talking about? Why Korean memory stocks were the greatest thing is because a) they're cheap companies and everyone started talking about them. And so it's like a hive of bees that go to where the energy is. And there was zero energy in crypto until six weeks ago. Bessent makes one comment — one comment — it triggered all the light bulbs on.

We speculated on these tokens that were going to help change the future. Some will, a lot won't. And so you basically had speculative communities that could pump themselves up on a narrative. And once that narrative ran out of gas, their prices went way down. Now, you're going to need — because there's so many other ways to speculate, there's so much other energy. AI is a bigger story than crypto. Sorry, crypto guys. It just is. You're going to need things that actually work. And so something like Hyperliquid, which is up 230% this year when basically all the crypto is down 3 to 5%. One's up 230, everything else is down 3 to 5 because it works. You actually get paid to use it. As they make money, they buy their token back. So, it feels more like an equity. But mostly all the offshore people first were trading crypto on there. Now they're trading equities on there. So you've converted a lot of crypto power users to equity speculative power users, right? To commodity speculative power users all on XYZ that runs on top of Hyperliquid.

If you build something that people use, you're going to see money flow back into it. And now prices might even go further than they should. The old versions of crypto — like I don't think the Celestia token, which was the first modular blockchain and everyone loved Celestia, it was the hardest thing to get in — that thing ain't coming back. You know, some of the core infrastructure pieces will, because the story of tokenization being built on top of Ethereum or Solana is a real story and that's bringing narrative back. But we really need to see tokenization being built on top of those things for that story to continue.